• The New York couple accused of a scheme to launder $4.5 billion in bitcoin might be cut up up after a decide granted bail to spouse Heather Morgan however not husband Ilya Lichtenstein.
  • The ruling got here Monday because the couple appeared in a Washington, D.C. court docket for the primary time since their arrest on February 8.
  • The decide in contrast the non-public keys to crypto wallets found in Lichtenstein’s cloud storage to ” the smoking gun.”

WASHINGTON, D.C.—A federal decide dominated {that a} 34-year-old US-Russian twin citizen accused of attempting to launder $4.5 billion in stolen bitcoin should await trial behind bars, however ordered his co-defendant and spouse, Heather Morgan, launched to dwelling incarceration.

Morgan, 31, and her husband Ilya Lichtenstein, have been arrested on February 8 at their residence in New York Metropolis on expenses associated to the 2016 hack of the cryptocurrency trade Bitfinex.

The couple’s Silicon Valley pedigree and Morgan’s facet hustle as a rapper with the pseudonym “Razzlekhan” has captivated the general public’s consideration and shocked acquaintances, lots of whom instructed Insider they may not think about the quirky however in any other case unremarkable duo to be able to pulling off the flowery crime that prosecutors allege. 

In a courtroom empty apart from attorneys and members of the family on Monday, the couple sat subsequent to one another sporting inexperienced jumpsuits and respiratory masks of their first court docket look because the day of their arrest. Because the decide handed down the ruling, Lichtenstein and Morgan handed a observe to their attorneys, however in any other case the couple appeared to stay silent and calm for many of the 3-hour-plus court docket listening to.

Choose Beryl Howell mentioned on Monday that non-public bitcoin keys found in a web based account related to Lichtenstein have been the “digital model of the smoking gun in his hand,” rejecting arguments by the couple’s attorneys concerning the power of the proof.

“I completely disagree with that ascertainment and outline,” the decide instructed the couple’s lawyer earlier within the listening to. “It is not flimsy proof.”

In court docket paperwork filed final week, prosecutors described reams of proof, together with non-public keys to cryptocurrency wallets related to the hack, in addition to folders detailing faux personas, and transport data for faux IDs ordered on the darkweb.

Whereas looking the couple’s dwelling on January 5, US authorities additionally found hollowed-out books, 50 digital units, a number of {hardware} wallets, and a bag labeled “burner cellphone” in addition to greater than $40,000 in money and “what seems to be a considerable quantity of international forex,” in accordance with the submitting. 

Regardless of prosecutors’ arguments that the couple introduced a big flight danger due to their ties to Russia and Ukraine nonetheless, the decide dominated Monday that Morgan might stay in her dwelling with location monitoring till the trial.

Protection lawyer Samson Enzer had argued in the course of the listening to that Lichtenstein and Morgan remained in New York after the January raid on their residence.
“They didn’t run. They didn’t go wherever,” Enzer mentioned. “They’d the means to flee and a warning to flee however did not flee.”

The couple constructed a life in New York Metropolis, and just lately renewed their lease for a yr, Enzer mentioned. Additionally they froze embryos in New York, and “would actually be leaving their future behind in the event that they left,” he mentioned.

The choice Monday partially reverses an earlier ruling by a Justice of the Peace decide in New York, who launched Morgan  on a $3 million bond, and Lichtenstein  on a $5 million bond. They have been every required to get 5 co-signers on their bond and submit their dad and mom’ houses as safety, along with being tracked electronically and forfeiting the usage of sensible telephones. Morgan might be launched underneath the identical circumstances. 

On the listening to Monday, which members of the media watched on TV from a room down the corridor, Lichtenstein and Morgan’s protection attorneys argued that the Justice Division has not introduced proof of the fees. However Choose Howell posited that that the non-public keys, present in a cloud storage account belonging to Lichtenstein, appeared like “fairly clear direct proof of the fees.”

“I might say so, your honor,” Pelker, a prosecutor, agreed.

“Kind of just like the smoking gun?” the decide then requested.

“Sure, your honor,” Pelker replied. 

Though legislation enforcement has seized the vast majority of the stolen funds, there are at the least 24 digital forex addresses linked to the 2016 hack that prosecutors imagine are nonetheless within the couple’s management. Legislation enforcement was not capable of finding the non-public keys within the on-line accounts for which a warrant was granted. These 24 addresses comprise roughly 7,506 BTC, which is at the moment valued at over $328 million.

The listening to was the primary time that the couple, who married after getting engaged in 2019, signaled that they may not transfer ahead within the case as a staff. The protection attorneys argued that prosecutors didn’t have sufficient proof towards Morgan specifically to withhold her bail, and Choose Howell questioned whether or not the protection attorneys had potential conflicts of curiosity representing each events.

A federal prosecutor mentioned the Justice Division believes she was an “integral a part of the scheme,” partly due to her information of economics and familiarity with cryptocurrency, and pushed towards the notion that she was a “naive spouse unwittingly coopted into her husband’s scheme.”

Prosecutors painted the image of their court docket filings of a pair whose actions “seem pulled from the pages of a spy novel.” For acquaintances of Morgan and Lichtenstein, the depiction of cloak-and-dagger tradecraft has been powerful to reconcile with a younger couple they describe as kooky startup entrepeneurs who have been recognized for strolling a leashed Bengal cat round city and incessantly posting movies on social media.


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