A judge appeared more concerned by the flight risk posed by Ilya Lichtenstein than by his wife, Heather Morgan, in a case accusing them of a sweeping scheme to launder stolen cryptocurrency.
Ilya Lichtenstein, left, and Heather Morgan were charged with scheming to launder billions of dollars’ worth of Bitcoin.
WASHINGTON — A federal judge on Monday ordered the pretrial detention of a man charged with overseeing a sweeping scheme to launder billions of dollars of stolen Bitcoin while upholding a decision by a New York judge to release his wife pending trial.
Chief Judge Beryl A. Howell of the Federal District Court in the District of Columbia said Ilya Lichtenstein, 34, a Russian émigré and tech investor, appeared to have significant motivation to flee, and might have resources to do so that investigators had overlooked. But she ruled that his wife, Heather Morgan, 31, an entrepreneur and a self-styled rapper known as Razzlekhan, met the criteria for supervised release.
Mr. Lichtenstein and Ms. Morgan had been arrested and accused of a scheme to launder the 119,754 Bitcoin stolen in a 2016 hack of Bitfinex, a cryptocurrency exchange based in Hong Kong, placing them at the center of a global financial mystery.
Investigators told the judge that they had found no evidence the couple was involved in the theft, but they presented a sprawling network of accounts through which they said the pair was working to launder the funds.
The confiscation of the Bitcoin that remained in Mr. Lichtenstein’s wallet on Feb. 1, worth roughly $3.6 billion at the time, was the Justice Department’s largest financial seizure ever, officials have said. The case has been seen as a watershed in the regulation and perhaps investigation of the murky and often illicit world of cryptocurrency.
In reviewing the case against the couple, Judge Howell appeared to conclude that Mr. Lichtenstein was more adept in the type of financial sleight of hand needed to launder the stolen funds and potentially secure a future for the pair outside the United States. Given what she described as a familiarity with false identities and skill at moving financial assets discreetly, Judge Howell expressed concern that Mr. Lichtenstein was a flight risk.
A lawyer representing the couple denied that they had ever planned to flee, citing their family ties in the United States, as well as the fact that they had embryos frozen in New York in hopes of conceiving a child, and that they had not tried to leave the country even after indications that they were under investigation last year.
But a prosecutor stressed that while the government had secured the bulk of the stolen funds, the couple had been recorded moving stolen money between various cryptocurrencies and had the experience with encrypted accounts necessary to duck investigators in moving assets overseas.
Judge Howell expressed concern that Mr. Lichtenstein and Ms. Morgan were being represented by the same lawyer, especially as she appeared to conclude that Mr. Lichtenstein’s involvement and planning far outweighed that of Ms. Morgan.
Although she said the severity of the charges had increased the motivation to flee “exponentially,” she left intact a previous judge’s ruling that Ms. Morgan be released on $3 million bond, posting her parents’ home as collateral.
Source: nytimes.com
