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The Bizarre True Story Of ‘Bitcoin’s Bonnie & Clyde’ in Netflix’s Biggest Heist Ever

BBG News

In the realm of digital gold rush tales, few have captivated my attention quite like the saga of Ilya and Heather. This duo, who seemed to have it all – youth, wealth, and audacity – plunged headfirst into the murky depths of cryptocurrency crime, leaving a trail of stolen bitcoins and questionable ethics in their wake.

In 2016, a cyber attack on Bitfinex, a cryptocurrency exchange based in Hong Kong, resulted in the theft of around $72 million worth of bitcoin. This incident was the second-largest hack of its kind in history. The incident caused widespread panic across the crypto market, leading to a 20% drop in the value of bitcoin within hours. Unfortunately, many Bitfinex customers, who had invested their life savings into bitcoin, lost thousands of dollars overnight. Over the subsequent five years, the initial stolen amount grew significantly in value, reaching approximately $4.5 billion (now estimated to be worth around $10.8 billion).

However, unlike other bitcoin heists where the culprits escaped without consequences, this time the hackers didn’t get away scot-free. Five years after the theft, the FBI apprehended a married couple, Heather “Razzlekhan” Morgan and Ilya “Dutch” Lichtenstein, who were accused by the Justice Department of conspiring to launder $4.5 billion in stolen bitcoin. The news of their arrest quickly spread like wildfire, not just because of the staggering amount of money at stake, but also due to the peculiarities of Morgan and Lichtenstein’s online presence. In 2019, Morgan took on a rap persona named Razzlekhan and produced hundreds of YouTube videos filled with cringe-worthy crypto-themed raps.

Netflix is set to premiere a fresh documentary titled “Biggest Heist Ever” on December 6, which chronicles the intriguing tale of Dutch and Razzlekhan. Directed by Chris Smith (known for “Bad Vegan“, “Fyre“) and featuring investigators, ex-cybercriminals, former associates of the couple, this documentary delves into the initial Bitfinex hack to shed light on Morgan and Lichtenstein, who are now infamously referred to as “Bitcoin Bonnie and Clyde.” The documentary also sparks new discussions about the heist, hinting at potential concerns related to national security and Lichtenstein’s links with Russia.

Let’s dissect the actual events surrounding “The Biggest Heist Ever” and explore the loose ends that remain unsolved in this tale.

Who are Heather Morgan and Ilya Lichtenstein?

Heather Morgan, aged 34, is a dynamic entrepreneur and budding rap artist hailing from the city of Chico, California. She obtained her bachelor’s degree in Economics and International Relations from the University of California, Davis, in 2011. Additionally, she holds a master’s degree in the economics of international development from the American University of Cairo, as per her LinkedIn profile.

Following her graduation, Morgan embarked on a career in Silicon Valley, working for a startup named Tamatem. At a technology conference, she crossed paths with Lichtenstein. Subsequently, they decided to relocate to a condominium in New York City. Morgan engaged in various ventures, such as writing articles for Inc. and Forbes magazines, launching SalesFolk – a copywriting and email marketing agency, and pursuing her rap career under the alias Razzlekhan. In her role as an entrepreneur, she also cultivated a persona as an influencer on Instagram; her bio remains: “I provide a welcoming space for the unconventional. ‍♀️ Artist, rapper @Razzlekhan and tech entrepreneur with synesthesia.

35-year-old Lichtenstein, known as “Dutch” (after a character from Red Dead Redemption 2), hails from Glenview, Illinois, and his family originates from Russia. At the time of his arrest, his LinkedIn profile presented him as a tech entrepreneur, coder, and investor with an inclination towards blockchain technology, automation, and big data. Lichtenstein earned his bachelor’s degree in psychology from the University of Wisconsin-Madison.

In late 2016, Lichtenstein departed from his joint venture, MixRank – a tool designed for monitoring contextual and display ads as stated on their website. The subsequent year saw him and Morgan relocate to New York City.

Who (or what) is Razzlekhan?

Morgan assigned herself the nickname Razzlekhan in the world of rap music. In a 2019 video, she shared that her motivation behind this pseudonym came from being inspired by the well-known rapper and actress Awkwafina. After experiencing a phase of work exhaustion, Morgan explains that she felt unsatisfied with her professional life and was searching for something more meaningful.

In a 2022 article for Vanity Fair, author Nick Bilton suggests to filmmakers: “If you’re Ilya and Heather with all that money, you might be quite anxious about getting caught. Different people handle stress in various ways – some may experience panic attacks, while others might become compulsive exercisers. It seems to me that for Heather, creating Razzlekhan and rapping was a way of releasing the pressure, like steam escaping through a valve.

Initially released on YouTube in 2019, Razzlekhan’s music video for “Versace Bedouin” received a lot of ridicule and didn’t gain much traction. However, it became viral three years later, following the news about the couple’s arrest.

What new information does Biggest Heist Ever uncover? 

Beyond outlining a chronology from the 2016 Bitfinex hack up until now and explaining how federal agents uncovered Morgan and Lichtenstein’s role in these events, Biggest Heist Ever poses fresh queries regarding the hack and its repercussions. Notably, this documentary proposes that Lichtenstein might have been motivated to execute the Bitfinex hack, in part, by his father, Eugene, who had previously breached the First National Bank of Indiana and a Secret Service computer system.

According to the documentation, a hacker known by the alias “Deuce” (Eugene) sought advice from Brett Johnson, a former government informant and cybercriminal, on how to convert his ill-gotten gains from bank hacks. In 2005, the Secret Service interrogated Eugene regarding hacking into their system and the Indiana Bank heist. Although admitting to the Indiana Bank hack and choosing to collaborate with the Secret Service as an informant, Eugene was never indicted for any misconduct. Later in life, Eugene Lichtenstein became a real estate agent in Chicago. He declined invitations to participate in the making of the film.

The largest heist on record reveals that Eugene’s old hacker alias was Manus Dei, a name he abbreviated as Deuce, or “Hand of God” in Latin. Concurrently, Lichtenstein went by the name Deus Machina but was commonly known as Deus, which means “God Machine.

Johnson suggests in the movie that Ilya might be making a tribute or showing respect, perhaps symbolically, to someone like a father figure. This is reminiscent of the concept where the father represents God, and the machine represents God’s work. In other words, Johnson thinks the Bitfinex hack bears a striking resemblance to Eugene’s actions from 2005 when he manipulated the First National Bank of Indiana.

How were Lichtenstein and Morgan caught?

The pair transferred the pilfered cryptocurrency, initially stored in AlphaBay, to various wallets and accounts worldwide. This is as stated in a 20-page report submitted to the IRS by Special Agent Christopher Janczewski, who was featured in the documentary.

Back in 2017, I witnessed an intriguing turn of events when the FBI swooped in and confiscated the servers of AlphaBay, effectively taking down the online marketplace. This decisive action proved instrumental, as it led investigators right to the doors of Lichtenstein and Morgan.

Back in January 2022, authorities served a search warrant on my Wall Street abode, as well as my electronic gadgets. Upon entry, they uncovered a trove of international currencies, hollowed-out literature, and a sack plainly marked “burner phones”. Quite the intriguing find, I must say!

Additionally, federal investigators uncovered an encrypted worksheet listing approximately 2,000 digital wallet addresses associated with virtual currencies and their respective private keys, which were connected to the hack and traced back to the stolen assets. Lichtenstein and Morgan were apprehended in February 2022.

What were the couple charged with?

In a criminal case, it was alleged that Lichtenstein and Morgan collaborated on washing the illicitly obtained bitcoins, not on the original theft itself. (It’s important to note that neither Lichtenstein nor Morgan were implicated in the initial hacking incident; as Ari Redbord, TRM Labs’ head of legal and government affairs, explained to TIME in 2022, proving the hack can be challenging.)

After his imprisonment, Lichtenstein was barred from leaving jail because the court thought he might try to escape the country. (Lichtenstein holds a Russian passport, and the couple had made frequent trips to Ukraine in the past year, causing investigators to suspect they planned to establish a new life abroad.) However, Morgan was granted bail and allowed to work remotely from home instead.

In August 2023, during a plea hearing, Lichtenstein confessed to the hack, revealing to the court that he had access to Bitfinex’s system. He admitted to obtaining usernames and passwords and operating independently. However, at some point, he claimed Morgan joined in the money laundering process.

Initially, Morgan wasn’t aware of the situation regarding Lichtenstein’s bitcoin, but later on, she figured out it was stolen. Subsequently, she took actions to disguise the earnings from this theft. Furthermore, Morgan acknowledged her role in concealing evidence, such as discarding a laptop into a garbage chute and burying gold coins, which were later recovered by authorities.

In cooperation with the FBI, Lichtenstein helped them locate the remaining cryptocurrency. As part of a plea bargain, he was given the option to join the witness protection program, which he agreed to. The reasons behind this aspect of the agreement remain unknown. However, in November 2022, prosecutors submitted documents suggesting that the investigation had become a matter of national importance, though they did not elaborate on the reasons.

On November 14, 2024, Lichtenstein received a sentence of five years in prison followed by three years of supervised release. At his sentencing, Lichtenstein expressed remorse, stating, “I regret using my talents for crime rather than making a constructive impact on society…” He went on to say, “I want to take full responsibility for my actions and make amends in any way possible.” When asked additional questions, he chose not to respond. However, in May 2022, he did issue a statement to director Chris Smith:

Dear Chris, appreciate your thoughtful message. Just as you’ve pointed out, I can’t delve into the case at the moment. I’m eager to offer my viewpoint when the opportunity arises. Your intuition might be correct – there seems to be more to this situation than we initially perceive. Wishing you all the best with your movie production!

On November 18th, Heather received a sentence of 18 months in prison followed by three years under supervised release. She chose not to join “The Biggest Heist Ever”. In a video shared on X, Morgan expressed: “It’s all concluded now, and I am thrilled that I will soon be able to share my experiences, express my thoughts, and give you insights into the creative projects and other ventures I have been engaged in.

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2024-12-06 18:07

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