Rapper “Razzlekhan,” Heather Morgan, received an 18-month prison sentence for laundering funds obtained from the 2016 Bitfinex cryptocurrency exchange hack. Morgan’s punishment followed her guilty plea to charges of conspiracy to commit money laundering and deceiving the United States.
Her husband, Ilya Lichtenstein, was behind the breach that transferred nearly 120,000 bitcoins, worth $71 million at the time, from Bitfinex to his personal wallet. The stolen Bitcoin had risen to a staggering $10.8 billion by the time of their arrest in 2022.
Morgan first claimed ignorance of the hack but eventually helped to launder the proceeds using various means. These included using cryptocurrency mixers, chain-hopping between tokens, and transferring funds to accounts in Russia, Ukraine, and other countries. The pair laundered approximately 25,000 bitcoins, accounting for roughly one-fifth of the stolen sum.
Morgan apologized for the harm she caused and admitted to concealing the stolen monies in court. Judge Colleen Kollar-Kotelly acknowledged Morgan’s sorrow and her previous clean record, but emphasized that her role was insignificant compared to that of Lichtenstein. However, the judge stressed the need for deterrence in an era of rising cryptocrime.
Lichtenstein received a five-year prison sentence for cooperating with police and assisting with other investigations. The prosecutors highlighted his cooperation and lack of prior criminal history as reasons for lessening his sentence.
Morgan’s counsel emphasized her shattered reputation and the public scrutiny she received as a result of her unorthodox rapper identity. Despite requests for leniency, the judge imposed an 18-month sentence, emphasizing the gravity of her role in one of the greatest cryptocurrency thefts in history.
This case concludes a tale that not only exposed flaws in cryptocurrency exchanges but also served as a warning about the potential implications of cryptocrime.
