August 14, 2023
By Anjali Kochhar
In a significant development, Ilya Lichtenstein has confessed to being the hacker behind the 2016 cyberattack on Bitfinex, a cryptocurrency exchange based in Hong Kong.
This long-standing mystery in the crypto world was unravelled recently. Lichtenstein, along with his wife Heather Morgan, who is known as a rapper on social media and goes by the nickname “Crocodile of Wall Street,” admitted their involvement in a money-laundering scheme connected to the theft of billions of dollars’ worth of bitcoin from Bitfinex.
The identity of the hacker responsible for the Bitfinex attack had been a subject of speculation, much like the true identity of Bitcoin’s creator, Satoshi Nakamoto. A detailed report published by the South Morning China Post states Lichtenstein, aged 35, openly acknowledged his role in orchestrating the hack during a court hearing before US District Judge Colleen Kollar-Kotelly. This attack resulted in the theft of 119,756 bitcoin from Bitfinex, an amount valued at around $71 million at the time.
Lichtenstein and his wife, Morgan, entered guilty pleas as part of cooperation agreements with prosecutors. They were arrested in New York in February 2022. The charges against them related to conspiring to launder the stolen bitcoin. Although they weren’t accused of carrying out the hack itself, a detailed report released during their arrest explained how they managed to move the stolen funds after the attack.
Morgan, who also used the name “Razzlekhan,” revealed that she was unaware of the hack until 2020, and she initially thought that her husband’s funds might be linked to illegal activities like drug dealing or tax evasion. Morgan, 33, had gained popularity on social media by rapping about investment strategies and presenting herself as a bold risk-taker in finance.
As part of their agreement with the government, the couple agreed to forfeit nearly $73 million combined. Morgan, in addition to pleading guilty to conspiracy to defraud the US government, faces a potential maximum sentence of five years in prison for her charges.
During the court hearing, it was disclosed that Lichtenstein carried out the hack and later involved Morgan in concealing the origins of the stolen funds. Morgan admitted to helping launder the money at Lichtenstein’s direction. She also acknowledged that she was unaware of Lichtenstein’s other hacking activities until his arrest. The couple had used fake identities to create online accounts, making it difficult to trace the transactions. They also employed various tactics to move the stolen funds, including purchasing nonfungible tokens (NFTs), gold, and Walmart gift cards.
The hacking incident occurred when bitcoin was trading at under $1,000. By the time the couple was arrested in early 2022, the value of bitcoin had surged to $44,000, causing the stolen assets’ value to increase to $4.5 billion. However, authorities managed to recover $3.6 billion of the stolen funds. Since then, the value of bitcoin has dropped to around $29,000.
This development sheds light on the identities behind a major cryptocurrency hack and serves as a reminder of the ongoing challenges associated with security in the digital financial realm.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
