Ilya Lichtenstein, 34, and his wife Heather Morgan, 31, were recently arrested in the largest financial seizure by government law enforcement in history. The couple has been involved in an ongoing investigation from 2016, where an online currency exchange, Bitfinex, was hacked. In this hack, nearly 120,000 Bitcoin were stolen, valued currently at $4.5 billion, and transferred to the various wallets of Lichtenstein. Although they have not been charged for executing the hack, they are deeply linked to it. The pair has been charged with conspiracy to money laundering and conspiracy to defraud the United States. Both of these charges lead to a maximum of 25 years in prison. 

The couple lives on Wall Street in lower Manhattan. Ilya is a citizen of both the United States and Russia, and is a cofounder of an online marketing firm. Heather calls herself the “Crocodile of Wall Street” in one of her rap songs under the name Razzlekahn. She claims to be many things, stating in one of her songs:

“I’m many things, a rapper, an economist, a journalist, a writer, a CEO, and a dirty, dirty, dirty dirty h*e” – Versace Baudouin by Razzlekahn.

Looking back to 2016, Morgan and Lichtenstein used different and complicated money laundering techniques in an attempt to conceal their fortune. They first set up fake identities to create online accounts, then utilized computer programs to create many transactions in a short amount of time. They deposited stolen funds into many different accounts in currency exchanges and on the dark net. From here, the couple also converted bitcoin into many other digital assets and withdrew some of these finances using US based business accounts that validated their banking schemes. When withdrawing and laundering the crypto funds, the takings were spent on a variety of investments and products, from gold and non-fungible tokens (NFTs) to Walmart gift cards. 

The couple was traced attempting to hide their newfound riches in accounts and online currencies like monero, a currency designed to conceal transactions by mixing them in with other transactions on the blockchain. They used dark web market wallets on AlphaBay, a site designed to be impenetrable from law enforcement. AlphaBay’s service in this case was used as a way to mix up currency holdings by taking the users coins and returning a different set of coins to prevent tracing on the blockchain. Of the 119,754 bitcoins (~$4.5 billion) involved in the hack, federal agents were able to recover around 94,000 bitcoin (~$3.6 billion). 

“Today, federal law enforcement demonstrates once again that we can follow money through the blockchain, and that we will not allow cryptocurrency to be a safe haven for money laundering or a zone of lawlessness within our financial system,” –  Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division.

With the ever-increasing importance of cybersecurity, we may never see a seizure of this magnitude ever again. It was both the largest seizure in cryptocurrency, as well as any financial subjugation in history. In the past, the government has seen cryptocurrency as a threat and as a place for schemes like this one to take place. However, after this triumph for law enforcement, we may see it becoming a more regulated and safe environment. 

Presently, everything seems to be moving exponentially faster. Digital currencies and online assets are growing increasingly swift. Here on the University of Minnesota campus, there is even a blockchain bootcamp offered. Within this 24-week program on FinTech, students develop real-world skills using finance related data sheets. The initiative teaches students about Python, machine learning algorithms, blockchain and many other financial technology avenues. Starting on March 8, the program will be offered three days a week through a virtual classroom experience.

Who knows? Maybe one day a University of Minnesota alum will be involved in apprehending the next Crocodile of Wall Street.