Justice Department seizes $3.6B in bitcoin in its biggest finance bust ever

Authorities arrest two people in connection with an alleged conspiracy to launder billions in bitcoin. One of them is a YouTube rapper.

Julian Dossett Writer
Julian is a staff writer at CNET. He's covered a range of topics, such as tech, travel, sports and commerce. His past work has appeared at print and online publications, including New Mexico Magazine, TV Guide, Mental Floss and NextAdvisor with TIME. On his days off, you can find him at Isotopes Park in Albuquerque watching the ballgame.
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Daniel Van Boom is an award-winning Senior Writer based in Sydney, Australia. Daniel Van Boom covers cryptocurrency, NFTs, culture and global issues. When not writing, Daniel Van Boom practices Brazilian Jiu-Jitsu, reads as much as he can, and speaks about himself in the third person.
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Julian Dossett
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3 min read

Authorities said they seized stolen bitcoin by gaining access to the private keys of a digital wallet that contained the cryptocurrency.

Angela Lang/CNET

The US Justice Department seized on Tuesday $3.6 billion in bitcoin that it says is linked to the 2016 hack of the Hong Kong cryptocurrency exchange Bitfinex, which was one of the world's biggest crypto companies. Authorities also arrested two people in Manhattan, charging them with conspiracy to launder cryptocurrency stolen during the hack. The bitcoin total taken in the hack is currently valued at $4.5 billion.

Officials seized over 94,000 bitcoin from Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31. The DOJ said that the seized bitcoin are valued at $3.6 billion, making this the largest financial seizure in the department's history. The seizure shows that law enforcement can follow money through the blockchain, the DOJ said.   

"We will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within our financial system," Kenneth Polite Jr., assistant attorney general for the DOJ's criminal division, said in a statement.

As momentous as the bust is, Morgan has garnered a huge amount of interest because of her odd online past. On her LinkedIn profile, she describes herself as an economist, entrepreneur and irreverent rapper. That's led to viral sharing of articles she's written for the likes of Forbes, including one titled: "Experts share tips to protect your business from cybercriminals." That article includes comments from BitGo, which provided security support for Bitfinex at the time of the 2016 hack.

Then there are the rap videos, performed under the alias Razzlekhan, wherein she variously calls herself the "Turkish Martha Stewart" and "The Crocodile of Wall Street." Her song Versace Bedouin begins: "This song is for the entrepreneurs and hackers, all the misfits and smart slackers." The videos have been taken down on YouTube, but remain shared on Twitter.

The Justice Department's ability to track the allegedly laundered bitcoin is significant. Cryptocurrencies like bitcoin and ether are exchanged on decentralized blockchains, which allow people to send and receive the tokens with anonymity. That anonymity has attracted criminals, with bitcoin and the like often being used as black market currency. 

Cryptocurrency use in crime totaled about $14 billion in transfers to illicit addresses last year, according to a January report from Chainalysis. However, crime accounted for less than 1% of cryptocurrency transactions last year.   

The DOJ said, citing court documents, that the Bitfinex hacker sent 119,754 bitcoin to Lichtenstein's digital wallet through a series of 2,000 transactions. Around 25,000 bitcoin -- today worth about $1 billion -- were transferred out of his wallet. Lichtenstein allegedly attempted to disguise these stolen tokens, but the DOJ said it was able to follow his transactions on the blockchain. The department alleges that some bitcoin were used to buy gold and NFTs, while others were translated into funds that appeared in Lichtenstein and Morgan's bank accounts. 

The remaining 94,000 bitcoin are what was seized Tuesday. If convicted, both Lichtenstein and Morgan could face up to 20 years in prison for conspiracy to commit money laundering, plus five years for conspiracy to defraud the United States.