How 'entrepreneur, rapper' Razzlekhan laundered $4.5 billion in Bitcoin with husband

Heather 'Razzlekhan' Morgan and Ilya Lichtenstein were arrested last year. (Image: @HeatherReyhan/Twitter)

A husband and wife cyber-crime duo has admitted that they attempted to launder a staggering $4.5 billion worth of Bitcoin stolen in a 2016 hack. Heather Morgan and Ilya Lichtenstein were caught in New York last year after a relentless police pursuit traced their ill-gotten gains back to the crypto heist.

The audacity of their criminal escapade reached new heights as Morgan masqueraded as a rapper and tech entrepreneur while evading law enforcement. They have now pleaded guilty to money laundering and conspiracy charges.

Morgan, going by the pseudonym "Razzlekhan," published numerous music videos and rap songs filled with expletives, portraying herself as a "bad-ass money maker" and "the crocodile of Wall Street." Meanwhile, articles in Forbes showcased her as a successful tech businesswoman, an "economist, serial entrepreneur, software investor, and rapper."

Behind this façade, Morgan and her computer programmer husband were orchestrating a sophisticated plan to cash out their stolen fortune from the crypto exchange Bitfinex.

Court documents revealed a meticulous process in which the couple split the Bitcoin into tiny amounts and transferred them to thousands of different crypto wallets, using fake identities.

They mixed their illicit funds with other criminal cryptocurrency on the darknet marketplace Alphabay, purchased gold coins, and set up shell companies to lend an air of legitimacy to their ill-gotten gains.

The operation came crashing down when police linked the couple to the proceeds of the Bitfinex hack through Walmart gift cards they had purchased with stolen funds.

"Buying gift cards and moving between different exchanges and different cryptocurrencies never actually created this sort of break in provenance that the couple intended," Jonathan Levin told BBC, founder of cryptocurrency investigators Chainalysis, which was involved in the investigation.

Upon raiding the couple's Manhattan apartment, law enforcement discovered hollowed-out books concealing mobile phones, dozens of burner handsets, several USB sticks, and a staggering $40,000 in cash.

A detailed spreadsheet’s decryption revealed the couple's intricate money laundering techniques, leading to the recovery of nearly the entire stolen amount.

Prosecutors found communication records indicating Morgan and Lichtenstein were planning to flee to Russia, Lichtenstein's country of birth, in a bid to evade arrest. If successful, they could have lived a billionaire lifestyle, far from the grasp of US authorities.

The hack in 2016 had dealt a severe blow to Bitfinex customers, who suffered a 36% loss of their assets held by the crypto exchange. By 2019, the company had reimbursed the victims, raising hopes for a windfall once the recovered Bitcoins are returned to the exchange and the affected customers.

Lichtenstein will potentially be serving a maximum 20-year prison sentence and Morgan is facing up to 10 years.