Versace

The DOJ arrests a quirky couple after seizing $3.6B in stolen bitcoin, as regulators crack down on crypto crimes

Thursday, February 10, 2022 by Robinhood Snacks |
[OLIVIER DOULIERY / Getty Images]

[OLIVIER DOULIERY / Getty Images]

Bring on the Netflix drama... On Tuesday the Justice Department said it had seized $3.6B in bitcoin stolen in the 2016 hack of digital-currency exchange Bitfinex. The department said it had managed to recoup 80% — worth $71M at the time, but now worth $4.5B — in its largest financial seizure ever. That's not even the interesting part:

  • The incident: The DOJ arrested married couple Heather Morgan and Ilya Lichtenstein in connection with plotting to launder 119,754 bitcoins stolen from Bitfinex. (It’s unclear whether the two were also behind the hack.)
  • The characters: The NYC-based 30-somethings appear to be the crypto-bro versions of Bonnie and Clyde (cringe warning). Morgan is a rapper, "international economist," and "serial entrepreneur," so her Forbes contributor page says. If you're into finance rap, you might know her by "Versace Bedouin." Lichtenstein (nickname: "Dutch") is a self-described startup investor who’s active on Twitter.
  • The plot: Prosecutors say the couple used “sophisticated laundering techniques” to convert stolen bitcoin into legit-seeming cash (and gold… and Walmart gift cards). But they were able to launder only a fraction of the coins before the DOJ stepped in.
  • The denouement: The couple could face up to 25 years in prison. The DOJ says it’s working on ways to return the snatched crypto.

Digi-thug life… Crypto crimes are on the rise, and regulators are watching. Scammers took home a record $14B in crypto last year, while the DOJ set up a special enforcement team to target crypto crimes. In June, US officials recovered $2.3M in bitcoin paid as ransom.

THE TAKEAWAY

The crypto crackdown could be good for bitcoin… Crypto has a bad rap for its role in scams and other crimes. But the DOJ is starting to back up its claim that crypto isn’t a criminal “safe haven.” The Bitfinex fail shows how difficult it can be to launder bitcoin undetected. While BTC is often used by criminals because of its hard-to-trace nature, it’s less anonymous than cash because the blockchain logs a permanent public record of all transactions.