Heather Morgan allegedly spent stolen Bitcoin on NFTs and Ubers. Photo / Instagram
Crouching beneath a statue of George Washington, Heather Morgan raps to the camera and crowns herself the "Crocodile of Wall Street".
"Always be a goat, not a god damn sheep," she tells viewers of her music video. "Everyone worries too much 'bout what's proper / But not Razz; no shame; that don't stop her."
Now, she may be cursing her own bravado. Along with husband Ilya Lichtenstein, Morgan – also known as Razzlekhan – today faces up to 20 years behind bars for her alleged role in one of the biggest cryptocurrency heists on record.
Using a "labyrinth" of transactions to mask their identities, the couple are accused of conspiring to launder US$4.5bn (NZ$6.8bn) worth of bitcoin stolen from an online exchange.
The scheme is reported to have unravelled after US officials including FBI agents swooped on the pair six years later, announced on Tuesday.
Lisa Monaco, US deputy attorney general, warned: "The United States will not allow cryptocurrency to become a vehicle for criminals to operate without consequences."
Morgan, 31, is a US citizen who has previously described herself as a "serial entrepreneur, prolific writer, irreverent comedic rapper, and investor".
She speaks six second languages, including Russian, Japanese and Turkish, and holds a degree in economics and international relations from the University of California, Davis, according to her Linkedin profile.
In 2009, Morgan started her business, Salesfolk, offering advice on "cold email" marketing and in 2017 was taken on as a columnist for Forbes.
If I have to suffer through this, so do you.
— Connor Sephton (@ConnorSephton) February 8, 2022
Heather Morgan — the woman arrested on suspicion of laundering crypto linked to the Bitfinex hack — is also an amateur rapper. pic.twitter.com/qAK9WUfZCy
She later created rapper alter-ego Razzlekhan to help herself overcome burnout, she wrote in an article, fulfilling a dream harboured since childhood – when she was bullied for having a speech impediment.
On her website, Morgan describes her performance as "like Ghenghis Khan, but with more pizzazz" and has released several expletive-laden songs including 'Cutthroat Country', 'Pho King Badd Bhech' and 'Bleeding Buckets'.
She also claims to have synesthesia, a condition where the brain processes data using multiple senses, such as manifesting music as colourful swirls.
Just over two years ago, she became engaged to Lichtenstein, known as "Dutch", after he paid for her music to be advertised on electronic billboards in New York's Times Square. The 34-year-old Russian bills himself as a "technology entrepreneur, coder and investor" and co-founded MixRank, a sales tech firm.
The pair share a two-bedroom, two-bathroom apartment in Lower Manhattan's Wall Street – not far from where Morgan filmed the music video for song 'Versace Bedouin' – alongside Clarissa, their Bengal cat.
Now, they have been propelled into the limelight with the story of their alleged money laundering scheme stretching back to 2016, when cryptocurrency exchange Bitfinex fell victim to a cyber attack.
An unnamed computer hacker is said to have carried out more than 2,000 unauthorised transactions, looting 119,754 bitcoin from customer wallets, worth about $71m at the time. Since the hack, the value of the stolen funds has ballooned to $4.5bn.
According to American prosecutors, some of this money was then funnelled through a string of other accounts in a complex series of transactions, eventually ending up in accounts controlled by Lichtenstein and Morgan.
Prosecutors said they spent it on pre-paid $500 debit cards from Walmart, used to pay for Uber taxis, hotels and a PlayStation video games console.
But they also splashed on more luxury items. Court documents say some of the cash was splurged on gold and "non-fungible tokens" – digital collectables that have become popular in the past year.
Their tactics to disguise the stolen funds and their criminal activities, prosecutors allege, included the use of false names, computer programmes and vast numbers of transactions to make the stolen cash harder to track, multiple exchanges and business accounts.
When questioned about the source of her wealth by one exchange, court documents say Morgan responded: "My boyfriend (now husband) gifted me cryptocurrency over several years (2014, 2015,), [sic] which have appreciated. I have been keeping them in cold storage."
However, after tracking the money, investigators gained access to Lichtenstein's personal files, stored online in the cloud, which allegedly contained a list of digital wallets and passwords connected to the hack.
This included details for the account involved in the original hack, which still contained around 94,000 bitcoin in January – by that stage worth $3.6bn. While the pair have not been accused of directly carrying out the hack, they have been accused of laundering that sum of money.
The US government said that while the majority of the stolen funds have been seized, there are several other virtual currency addresses the couple are believed to control which hold about 7,506 Bitcoin, valued at more than $328m.
Now, with the funds frozen, the pair were arrested on Tuesday and charged by US law enforcement. The same day, they appeared in a Manhattan court and a judge ordered them to be released on bonds worth $8m in total.
A Washington judge, however, is reconsidering that order after prosecutors claimed there was a risk the pair could flee the country.
Monaco, speaking at a Department for Justice press conference, said the charges sent the message that cryptocurrency is no longer a "safe haven" for crooks.
"We can and we will follow the money, whatever form it takes", she said. "As the defendants tried to launder funds through various virtual currency exchanges, many asked questions about where the money came from or froze funds based on their suspicions.
"Several exchanges enforced anti-money laundering policies and 'know your customers' requirements that proved key to this investigation, showing how cryptocurrency can become safer and more reliable when we work together to root out its abuse."
Bitfinex wrote on its website: "Bitfinex will work with the U.S. Department of Justice and follow appropriate legal processes to establish our rights to a return of the stolen bitcoin."
For Morgan and Lichtenstein, the scheme could prove to be a costly endeavour if they are found guilty.
Each has been charged with conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison, and conspiracy to defraud the US, which carries a maximum sentence of five years.
Whatever the outcome, it is likely to mean infamy for the "Crocodile of Wall Street" – just maybe not the kind she used to brag about.
- Telegraph Media Group
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