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Couple Allegedly Pulls Off the World's Most Unlikely $8 Billion Bitcoin Heist

by
Rebekah Barton
on
6/30/2022
Couple Allegedly Pulls Off the World's Most Unlikely $8 Billion Bitcoin Heist

New York City-based YouTube rapper Heather Morgan and her husband, Ilya Lichtenstein, a startup founder, have been accused of pulling off history's biggest Bitcoin heist. 

The situation took weeks to unfold as the couple -- who were unknown, of course, at the time of the heist -- spent weeks inside of Bitfinex servers learning system commands to override the company's security system.

Then, per a Bloomberg article about the wild incident, "at 10:26 a.m. on Aug. 2, 2016, the hackers raised the exchange’s daily withdrawal limit from 2,500 Bitcoins to 1 million, more than enough to empty out the whole vault. Then, using the private keys, they started broadcasting instructions to transfer Bitfinex’s Bitcoins to addresses they controlled on the blockchain."

Over the course of 3 hours and 51 minutes, the unlikely hackers stole 119,754 coins, which totaled over half of Bitfinex's total at the time. 

When Bitfinex executives realized they had been had, so to speak, they hired a private security company to look for clues within their servers' memories. The hack, Bloomberg notes, "was ambitious and sophisticated, and some users suspected an inside job."

It was an IRS agent working from his basement in Grand Rapids, Michigan who finally connected that the wallets were connected to Lichtenstein and Morgan, both in their early 30s.

Bloomberg provides the following description of the couple, who don't fit the profile of criminal masterminds:

Judging from social media, these two didn’t exactly appear to be criminal geniuses. Lichtenstein, who goes by Dutch, had curly hair and an impish grin, like a baby-faced Elijah Wood. He seemed very fond of the couple’s Bengal cat, Clarissa. Morgan’s thing was music—extravagantly bad music that she wrote, performed, and released in videos on YouTube and TikTok.

The BitGo software, which Bitfinex began using after a 2015 hack, was programmed to automatically approve transfers under a specific limit -- similar to an ATM machine -- but a Bitfinex executive had to sign off on larger withdrawals. In theory, this meant that only a small number of Bitcoins would be stolen if a hack were to occur. 

But Lichtenstein and Morgan figured out a way around this -- the withdrawal threshold could be changed with a computer command sent by someone with a Bitfinex executive’s electronic credentials.

The couple used a "remote access Trojan" virus to get the credentials they needed, and the rest, as they say, is history.

After a lengthy investigation, warrants for cloud account searches -- and a huge thanks to Chris Janczewski, the aforementioned IRS agent -- Lichtenstein and Morgan were apprehended. 

At a press conference following the duo's arrest, Deputy Attorney General Lisa Monaco said, “Today, the Department of Justice has dealt a major blow to cybercriminals looking to exploit cryptocurrency."

Razzlekhan -- Morgan's online rapper name -- became one of social media's most notorious figures, and even national television programs got in on the action. “The Bitcoin crimes are nothing compared to calling this sh** rap,” Daily Show host Trevor Noah said.

NDTV provided an update about the couple's current status -- which is nearly as bizarre as the entire tale:

They both pleaded not guilty. Lichtenstein was held without bail, and Morgan was released on $3 million bond. She argued that she wasn't a flight risk because she was storing frozen embryos in New York and planned to have a child with Lichtenstein via in vitro fertilization. Morgan returned to her apartment, but in May she put many of her belongings up for sale on the building's message board, including three electronic deadbolts and a fake Banksy print. According to copies of the posts provided by a neighbor, she's moving and needs to downsize. Prosecutors said in a May 30 court filing that they were talking with the couple's lawyers about a plea bargain. The next hearing is scheduled for August.

As for Janczewski, he left the IRS in March 2022 to lead global investigations for blockchain intelligence firm TRM Labs.

The US Marshals are still holding the recovered bitcoin on thumb drives in an undisclosed location. Per NDTV's report, nearly "a fifth of the missing Bitcoins are still unaccounted for. Roughly $70 million worth was sent to Hydra Market, a Russian dark web site, according to crypto-analysis firm Elliptic Enterprises Ltd."

From there, nobody knows where the missing cryptocurrency ended up. Despite federal agents' best efforts, the funds' whereabouts may forever remain a mystery.

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Rebekah Barton

Rebekah Barton

Rebekah's search engine optimization career began completely by accident as a college student. Over the course of her career so far, she has "grown up" with the SEO industry, from writing content while juggling classes to managing her own teams of writers and overseeing SEO strategy in subsequent roles. She is excited to bring her passion for high-quality content to CountingWorks, Inc.

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