Crypto Heist couple set for US plea deal over bitcoin laundering

A social-media rapper, who dubbed herself the “Crocodile of Wall Street,” and her husband have reached a plea deal with prosecutors in a case that involved laundering billions of dollars of stolen Bitcoin, according to a court filing and a person familiar with the matter.

Heather Morgan and Ilya Lichtenstein are scheduled to appear for a plea hearing on Aug. 3, more than a year after they were charged, according to a filing Friday in federal court in Washington. The couple were arrested in February 2022, but requested delays in their case to facilitate plea discussions, which could indicate they are cooperating with authorities.

While the court filing didn’t provide details about expected pleas, US District Judge Colleen Kollar-Kotelly ordered the parties to provide paperwork for the hearing by July 27, along with a “copy of the plea agreement.”

Defense lawyers for Morgan and Lichtenstein didn’t respond to requests for comment, and neither did prosecutors at the US Justice Department.

The government accused the couple of conspiring to launder 119,754 of Bitcoin stolen after the 2016 hack of cryptocurrency exchange Bitfinex. They allegedly used fake identities to set up online accounts and hid the trail of transactions by depositing and then withdrawing stolen funds from virtual currency exchanges and darknet markets.

Some of the money they cashed out of Bitcoin ATMs was used to buy, among other things, NFTs, gold and a Walmart gift card, according to the government. But prosecutors didn’t accuse the couple of the actual hack.

Morgan, who also called herself “Razzlekhan,” appeared on social media rapping about investment strategies and calling herself a risk-loving moneymaker who was “sly as a gator.” Lichtenstein, who used the nickname “Dutch,” marketed himself as an angel investor in technology companies, according to his LinkedIn profile.

At the time of the Bitfinex hack, Bitcoin was trading under $1,000. When they were arrested in February 2022, it had topped $44,000, boosting the value of the stolen assets to about $4.5 billion — of which $3.6 billion had been recovered by authorities. Since then, Bitcoin has dropped to around $30,000.

The case is US v. Lichtenstein, 23-cr-00239, US District Court, District of Columbia (Washington, DC).