In three weeks, on November 14 and 15 to be exact, 36-year-old Russian and US citizen Ilya Lichtenstein and his 34-year-old American wife Heather Morgan will be sentenced in the federal court of the District of Columbia in Washington.
Ilya's surname in America, of course, is pronounced "Lichtenstein", or even "Lichtenstin", but I will write and pronounce it in the old Russian way. Arrested in February 2022 in New York, where they lived, the couple were accused of laundering money earned by hacking and stealing approximately 120 thousand bitcoins from the international Hong Kong cryptocurrency exchange Bitfinex. In the affidavit of Christopher Janczewski, a special agent with the U.S. Internal Revenue Service, Morgan and Lichtenstein are accused of transferring stolen bitcoins "through thousands of transactions to more than a dozen accounts" on their own behalf and on behalf of their companies. According to the testimony, one such company was SalesFolk, Morgan's copywriting firm.
Allegedly, in June 2019, Morgan changed her personal bitcoin account to a business account she held on a virtual currency exchange (the service is designated "VCE 7" in court documents) "in order to attract less attention from VCE 7 to her transactions while she was selling her BTC en masse," the testimony says. However, the cloud account used by Lichtenstein led to the collapse of the alleged plan. Authorities decrypted a file that contained a list of 2,000 virtual accounts, as well as secret keys to them. According to the U.S. Department of Justice, almost all of these addresses were linked to the Bitfinex heist. Representatives of the ministry also reported that the cryptocurrency was transferred through organizations owned by Morgan.
After the arrest, the couple pleaded not guilty and were released on bail - he under 5 million, and she under 3 million dollars. On August 3, 2023, they made a deal with the prosecution, and Lichtenstein agreed to receive up to 20 years in prison for deceiving the United States and money laundering, and Morgan up to 5 years for the same plus fraud, but on a smaller scale. On October 9 and 15 of this year, U.S. Attorney for the District of Columbia Matthew Graves, through his assistants Christopher Brown and Jessica Peck, sent a "Memorandum in Aid of Sentencing" to Judge Colleen Collar-Kotelli, who is in charge of the case, in which the prosecutor's office asks the judge to sentence Hisel to one and a half years and Ilya to five years in prison, leaving the last word to the 81-year-old Collar-Kotelli. which was appointed by President Bill Clinton in 1997. During this time, she made a number of bold decisions and, in particular, in 2017 blocked the order of the Commander-in-Chief of President Donald Trump not to accept transgender people into military service.
On the one hand, the prosecutor's office advised the judge to be strict in sentencing Lichtenstein, as he "spent months developing a scheme to gain access to Bitfinex systems and carry out his attack," and on the other hand, to take into account that Ilya "will be able to use his considerable skills for legitimate purposes, and it is hoped that he will make a positive contribution to the areas of cybersecurity and anti-money laundering". The memorandum noted that "Liechtenstein's risk of recidivism is low", referring to his age at the time of the crime, while at the same time asserting that "unfortunately, the defendant fits the profile of many of the cybercrime defendants the government has faced. Many of them start as young people who acquire impressive technical skills from an early age. In adolescence, they feel socially isolated and seek out communities online. They are subjected to criminal activity in these online spaces, and this activity is normalized in such a way that its impact on the victims becomes trivial. They start engaging in online crime in their teens and become bolder because of their success – both in committing a crime and in not being caught." Of Heather Morgan, prosecutors wrote that "in a sense, she was drawn into a serious criminal scheme without her initial consent and undoubtedly felt compelled to support her out of a sense of devotion to her husband and a desire to keep them living together", which negates the seriousness of her behavior as she eventually joined her husband's plot and used her own skills, to help and strengthen his criminal undertakings".
Ilya Lichtenstein was born in 1987 in Rostov-on-Don. His great-great-grandfather and great-great-grandmother on his father's side, Jews Ber Gershevich and Gitel Moiseevna Vinokurov, were killed by the Germans in 1942. In 1993, when Ilya was 6 years old, his parents Evgeny Lichtenstein and Irina Shepotinskaya immigrated to the United States of America, where they settled in Illinois, their youngest son Michael was born there. Evgeny worked as a mortgage broker, and Irina taught at the university. Ilya graduated from high school and got a job as a technical assistant at Northwestern University in Evanston, where he worked for a year before entering the University of Wisconsin-Madison, where he received a bachelor's degree in psychology in 2010. During his years at university, Lichtenstein tried his hand at marketing, launching an advertising campaign for the Avanoo educational platform. After gaining experience, he founded Nexus Global Inc., which was engaged in affiliate marketing and lead generation, and in 2011, 24-year-old Ilya Evgenievich co-founded the MixRank service, created to track the effectiveness of advertising campaigns of brands and startups. At the same time, he began to provide services as a business consultant to various companies, including 500 Startups and SalesFolk. A new chapter in his business biography came in 2018, when Lichtentein moved to New York, where he continued to provide consulting services to Endpass and Demandpath, as well as investing. And so it went...
It is known about Heather Morgan that she was a promising student at the University of California, after graduating from which she went to Hong Kong, where she worked as an event organizer, applied for a master's degree in economics and founded her own copywriting company SalesFolk. From Hong Kong, she moved to Cairo, where she received a master's degree in economics and international development from the American University. In 2013, Morgan returned to California and got a job at Tamatem Inc., which produced mobile games in Arabic and participated in the 500 Startups incubator. Around the same time, Morgan founded SalesFo and met Ilya Lichtenstein, whom she interviewed for her YouTube channel in 2014 and asked him questions about his company, MixRank, in a video titled "Make Your First Million in Enterprise Sales Without Marketing Costs." In an article for Forbes in 2019, she hinted at problems with the law in the past and wrote that during a business trip to Asia she received some "threats of lawsuit", learned that her employees "adjusted the numbers" and was harassed by old friends, which is why she decided to become a rapper under the pseudonym Razzlekhan - a mixture of the expression "razzle-dazzle" and the name of Genghis Khan. By the way, Ilya Lichtenstein had a network pseudonym Dutch - "Dutchman". Later, Lichtenstein co-founded with Morgan a blockchain cybersecurity company called Endpass and an investment firm called DemandPath.
After their arrest in February 2022, Ilya and Heather were accused of stealing approximately 120 thousand bitcoins from the international Hong Kong cryptocurrency exchange Bitfinex. At the exchange rate on February 22, when this money was stolen, 1 bitcoin was worth $71 million, that is, they stole more than $4.5 billion, and at the same time, Forbes correspondent David Jeans called it "the largest hacker attack on a cryptocurrency exchange". The Deputy Minister of Justice for Criminal Affairs, Lisa Monaco, was of the same opinion. Before the arrests, the couple managed to find and seize about 95 thousand bitcoins in cryptocurrency wallets, and after the arrests, about $475 million more.
