Narrator: In this episode of "American Greed"...
Billions of dollars in stolen cryptocurrency.
Narrator: someone's laundering a crypto fortune.
Is it a genius hacker,
a state-sponsored terrorist?
After six mysterious years, the alleged launderer is unmasked...
This is the craziest story of the day, So here we go.
♪ Razzlekhan, the Versace bedouin ♪
♪ Crocodile of Wall Street ♪
Narrator: Heather Morgan... A businesswoman,
social-media influencer, and journalist
with a bizarre alter ego called Razzlekhan.
She saw herself as a real entrepreneur,
making things happen.
Narrator: Her husband...
Ilya Lichtenstein, a budding tech mogul.
He's, like, an opportunist and a greedy one.
Narrator: They've got it all,
and they love nothing more than to flaunt it online.
Aah!
We call them the Bonnie and Clyde of crypto.
♪ Our mission is noble, yeah, I wanna be a mogul ♪
Watkins: They were either really brilliant or really stupid
or just crazy.
Narrator: The government says this crypto odd couple laundered
$4.5 billion in stolen bitcoin,
smashing records...
This is the largest seizure of cryptocurrency ever
by U.S. law enforcement.
Narrator: "American Greed" takes you
inside the investigation
and online with the self-styled crocodile of Wall Street,
while the case is still unfolding.
Hey, we have an announcement.
Could she and her husband have razzle-dazzled
one of the boldest and strangest digital crimes of all time?
Shin: The notion that they could be laundering
$4.5 billion worth of bitcoin blew people's minds.
Razzle dazzle! Agh!
♪♪
Narrator: Cryptocurrency...
A fledgling market of digital coins just a decade ago
that has exploded into a trillion-dollar industry.
Some people ask like, "Is this a new frontier in finance
or is it some kind of goofy Beanie Babies type phenomenon?"
And the truth is that it's both.
The overall crypto market broke $2 trillion this month.
Narrator: The market grows so quickly
that law enforcement can barely keep up.
Brown: Cryptocurrency is kind of the Wild West
in terms of regulation.
There's a lot of room for criminal actors.
Narrator: In this new frontier of digital scammers,
one of crypto's most notorious heists
occurs on August 2, 2016, when someone hacks
a virtual currency exchange called Bitfinex.
Shin: It was hacked for 119,754 bitcoin.
And this was actually a really startling event.
Man: Trading on the digital currency exchange
was suspended after that breach was discovered.
Narrator: The stolen currency
is worth $71 million at the time.
Stealing all those funds is a curse in many ways
because this was obviously a huge amount
and one that was certainly going to attract the attention
of United States law enforcement.
Narrator: So who has the skills, guts or foolishness
to commit such a brazen crime?
♪♪
The crypto industry booms despite the Bitfinex hack,
especially in the Bay Area, where Heather Morgan,
who presents herself like many other young strivers,
dreams of launching the next big thing.
Morgan's come a long way
from her humble Northern California roots
in Tehama, California, a town of 400 people.
Growing up, I did not have a lot of friends.
Narrator: She reflects on her childhood in a video
posted on her YouTube channel,
one of nearly a dozen social-media accounts
in which Morgan shares intimate details of her life.
When you have 20 kids in the class
and they've all known each other from first through eighth grade,
and you're kind of weird and different,
you're gonna get bullied mercilessly.
She said that she didn't really ever fit in.
She had a speech impediment
and sometimes she would get bullied
and people just didn't have this ambition that she had.
And I remember thinking, "The ocean, yeah, it's big,
but I'm a shark, I belong in the ocean,
not in a mud puddle or a pond!"
Narrator: Morgan leaves behind the mud puddle
and has no intentions of ever returning.
She earns scholarships
to the University of California, Davis,
graduating in just three years with a degree in economics
and international relations.
She documents her travels to Asia and the Middle East
and begins collaborating after graduation
with an economics professor
named Travis Lybbert on an academic paper.
She had a very quick mind. She was very professional.
You know, very put-together, very aware of her image,
all in the way that you would expect
of an aspiring young professional.
Narrator: Though they communicate
through Skype and e-mail,
Morgan's ambition cuts through cyberspace.
Lybbert: There was kind of a restlessness to her.
Always kind of angling for the next thing.
She saw herself as a real entrepreneur,
as someone who was, like, making things happen.
Narrator: After their 8-month collaboration ends,
Lybbert agrees to write Morgan
a letter of recommendation to PhD programs in economics.
But she never takes him up on it.
Looking back, I mean, the one thing that does stand out
is her signature block
had evolved over that brief period.
And under her name was,
"economist, entrepreneur, hustler."
Narrator: Morgan closes the chapter on academia
to pursue more lucrative ventures.
She had basically told a friend,
"I need to go home and make money."
So she comes back to Silicon Valley
in the startup tech, entrepreneur space.
Narrator: Morgan meets a mild-mannered,
Russian-born entrepreneur named Ilya "Dutch" Lichtenstein.
Watkins: He's almost the polar opposite of Heather Morgan.
He doesn't seem to want attention.
Narrator: Nor could their backgrounds be more different.
Lichtenstein grows up
in an affluent Chicago suburb called Glenview.
His parents had emigrated from Russia
to avoid religious persecution.
Lichtenstein meets Charles Austin
in a computer coding class at Glenbrook South High School.
Austin: I would say Glenbrook South's
a pretty typical suburban high school
where you have some of, like, the sort of John Hughes
archetypal tropes of, like, jocks, nerds, et cetera.
We're definitely, obviously, nerds, right?
We're not [bleep] football quarterbacks here, but...
And I think he's sort of underrated as a funny guy
because he was probably very quiet and kept to himself,
but once you start to, like, get to know him, it's like,
"Oh, yeah, I really like this guy, he's cool."
Narrator: They aren't jocks,
but they still like to have a good time.
Austin: Me and whoever was in our lunch group at the time
would just drive over to my place
and play poker for, like, 40 minutes,
keep that game set up, and then come back the next day
and keep playing till we finished the game.
There was nothing remarkable about him
as a poker player.
It's not like it was like, "Oh, damn, he's running the table."
But again, he just, like, fit right in,
and it was fun to play with him.
Yeah. Well, this is something we just stumbled on here...
Photos of 2006 prom from the very end of high school
and it's very funny that the comment on these two photos
from a friend of his is "Ilya with a date?
I don't believe it."
I skipped prom to play poker,
so it's news to me that he went to it.
Narrator: Lichtenstein majors in psychology
at the University of Wisconsin
and heads to San Francisco after graduation.
He tries his hand at several fruitless ventures,
including a Ron Paul website and a brain-supplement business.
He also had a couple of other websites
that were sort of in the dating realm.
One called Adult Friend Grinder
and another one called findgeekgirls.com.
Narrator: Lichtenstein's fortune improves
when he launches a marketing company called MixRank,
getting seed money from backers like Mark Cuban.
Lichtenstein's luck changes on the romantic front, too.
He finds a soul mate in Morgan,
who shares his entrepreneurial drive and sense of adventure.
So it seems like they did start jet-setting pretty soon
after they met each other.
There's photos of the two of them together
in, like, a private jet, standing on the tarmac,
him hanging out with a monkey in Hong Kong.
She has qualities that he doesn't have
of she is more social and outgoing.
You would expect her to be the big entrepreneur before him
because she is willing to put herself in front of everybody
and, like, make a sort of character out of herself
in a way that he never would.
Narrator: Morgan channels her wits and moxie
into her own startup, a company called SalesFolk
that helps businesses craft cold-e-mail pitches.
That was one of the skills
that she seemed to be the proudest of
because she would send cold e-mails or finesse her way
into connecting with people and getting what she wanted.
Narrator: The company motto
captures Morgan's towering ambition...
[ Laughs ] I mean, it's, like, comically meme-worthy.
Goat is obviously the greatest of all-time.
Clearly even in fashioning her branding, she was really leaning
into this kind of underbelly of Silicon Valley
that's, like, the weirdest, the boldest.
So my first question for you is...
Narrator: Lichtenstein offers advice to Morgan and sits
for an interview on her company YouTube channel,
while she off-handedly gives friends a hint
of what he may really be up to.
Heather introduced him as a black hat hacker.
A black hat hacker is a type of hacker
that pursues exploits with malicious intent.
So they not only have these wild sides,
but then I think they probably foster that in each other
and sort of feed off of that.
Narrator: Morgan posts a testament to her boyfriend
in August 2016...
The Bitfinex hack occurs one day later,
and someone's about to start laundering
all that stolen crypto.
Up next on "American Greed,"
Morgan unleashes a brash alter ego,
but could her lyrics reveal a little too much?
Narrator: It's one of the biggest
cryptocurrency heists ever...
120,000 bitcoins, then worth $71 million
drained from accounts
in the Bitfinex virtual currency exchange
in August 2016.
The hackers stash the currency in a digital wallet,
a virtual account guarded by a set of private keys,
like a pin code.
Shin: Whoever had the private keys, that they were the only person
who was going to be able to do anything with that money inside.
Narrator: But there's a catch.
All that loot is hiding in plain sight.
Bitcoin was once touted as anonymous,
but every transaction gets permanently logged
on the blockchain...
A public ledger maintained by computer networks.
The strange thing about a cryptocurrency theft
is that you can see that these 120,000 bitcoins
worth a fortune have moved into a specific address,
but they don't know who the thieves are.
It's like just beyond their reach.
Narrator: It's a crime unlike any other
Ali Watkins has covered
on "The New York Times" metro beat.
It was like a huge bank robbery happened,
but then the money just sat outside the bank
in a locked getaway car and no one could touch it.
No one could solve it.
No one could figure out who put it there in the first place.
And it just sort of had this lore around it.
Narrator: A small portion of bitcoins
begin flowing five months after the hack.
Jonathan Levin co-founded Chainalysis,
a company that helps governments and banks
solve high-profile crypto crimes.
Money started to move
through lots of different intermediary wallets
and money ended up going into AlphaBay.
Rabenn: AlphaBay was a dark-web marketplace,
so that's essentially like an Amazon.com
but for bad things.
You could buy drugs, stolen credit cards.
You could pay for money-laundering services
and you could even buy poison if you wanted to kill someone.
It also offered mixing and tumbling services.
These are services in which you,
John Doe, can send your dirty cryptocurrency to AlphaBay
and AlphaBay will then mix it up with other funds
that have been sent to it.
So it kind of acts, if you imagine taking your dirty cash,
putting it into a washing machine.
Narrator: Meanwhile, Heather Morgan and Ilya Lichtenstein
are growing restless.
Morgan struggles to keep SalesFolk profitable,
while Lichtenstein suddenly moves on
from his startup, MixRank.
The couple exchanges the California sunshine
for Manhattan's bright lights.
♪♪
Morgan and Lichtenstein rent
a $6,500-a-month apartment on Wall Street.
She furnishes it with animal pelts and taxidermy,
including a crocodile skull,
detailing this and nearly every facet of her life
with Lichtenstein on TikTok and other social media.
This is my current look. What do you think?
Watkins: It reminded you of that really quirky art friend
who everybody says has good taste,
but you're afraid to tell them
they actually have really bad taste.
Narrator: Morgan branches into journalism,
contributing dozens of columns to "Inc." and "Forbes."
Watkins: She just sort of willed herself into this expert space.
How did she do that?
She started writing as if she was an expert,
as if she was an entrepreneur, as if she was successful.
I made my own path as being both a writer,
a software entrepreneur, and a creative.
Narrator: Nearly a year after the Bitfinex hack,
Morgan and Lichtenstein are hardly a blip
on the Justice Department's radar,
but that's about to change.
♪♪
Today the Department of Justice announces the takedown
of the dark-web market AlphaBay.
Narrator: In July 2017,
federal authorities shut down AlphaBay.
This is the largest dark-market web-place takedown
in world history.
Narrator: Law enforcement
seizes AlphaBay's main server in Lithuania.
And so suddenly, this thing that had been a kind of,
I don't know, black hole in the middle of the blockchain
is in the hands of the feds
and they can see all the transactions.
Narrator: According to a complaint later filed,
the trove of illicit transactions
will lead directly to Morgan and Lichtenstein.
Brown: AlphaBay offered money-laundering services
and the records associated with these money-laundering services
may have played an important role
in allowing the government to connect the stolen bitcoin
in this case to Ilya, um, Lichtenstein and Heather Morgan.
I think that when that AlphaBay server
ended up in federal law enforcement's hands,
that was probably the beginning of the end.
I feel like I live in two worlds.
Narrator: But as the feds close in, Morgan hardly lays low.
Instead, she announces a new career
after complaining of professional burn-out.
I think I was pretty unhappy.
So she started rapping as a way to deal with the burn-out.
Narrator: Morgan creates a shameless alter ego.
♪ Razzlekhan, the Versace bedouin ♪
♪ Come real far but don't know where I'm headed ♪
♪ Crocodile of Wall Street ♪
♪ Silver on my fingers and boots on my feet ♪
Watkins: She's running all over Wall Street
in these insane outfits.
She's making obscene gestures
in, like, very buttoned-up areas of New York in broad daylight.
Narrator: While Razzlekhan apparently shells out big bucks
on rap videos,
IRS agents dissect the blockchain,
inching closer to identifying suspects
they believe are laundering the stolen money
in one of crypto's biggest heists.
Rabenn: Not only do blockchains not lie
no matter how they're designed,
cybercrime, in general, is difficult
because there are little bread crumbs that are left everywhere
unless you're the perfect criminal.
Narrator: Lichtenstein certainly seems to know his way
around the blockchain.
In March 2018, he forms endpass...
A cyber company intended to secure personal assets.
We protect your funds with multiple layers of security.
Shin: You know, they didn't appear to have much traction.
Their businesses were certainly not ones
that would generate a ton of income.
Narrator: Morgan and Lichtenstein's companies
may not be earning much,
but that doesn't stop them from jetting off
to exotic locations on a moment's whim.
Their 2019 summer itinerary includes a month in a place
that's not a typical tourist hotspot... Ukraine.
But are Morgan and Lichtenstein merely on vacation
or up to something far more suspicious?
Up next on "American Greed"...
The government compares this trip to a spy novel.
♪♪
Narrator: It's been three long years
since one of cryptocurrency's most notorious heists.
Hackers stole nearly 120,000 bitcoins
from the Bitfinex virtual currency exchange
and stashed them inside a digital wallet.
Someone's been laundering the currency
by siphoning a portion
through a dark website called AlphaBay.
But that's just one of many tactics uncovered by the IRS.
Another branch of it, though, that's more mysterious
goes into a cryptocurrency called monero.
Monero is a secure, private, untraceable currency.
It is open-sourced, decentralized,
and freely accessible to all.
What we see oftentimes in criminal investigations
is that criminals who are sophisticated
use multiple different forms of cryptocurrency
and sometimes move between different cryptocurrencies
in order to try and obfuscate the flow of funds.
Narrator: Exchanging one form of crypto for another
is a laundering technique called chain hopping.
And monero is generally thought to be
pretty untraceable.
Narrator: The IRS has never revealed it can trace monero,
but Andy Greenberg thinks the Bitfinex investigation
may show it can.
And the government reportedly has some help.
Greenberg: There is an entire industry now of companies
who pull apart these blockchains to follow the money.
I would be very surprised if Chainalysis was not involved
in this massive Bitfinex case.
Narrator: Chainalysis co-founder Jonathan Levin
declined to comment on whether his company assisted
the government's investigation.
While authorities say the digital clues
left in the blockchain
will eventually lead to Heather Morgan
and Ilya Lichtenstein's doorstep,
the luxury apartment, lavish travel, and elaborate rap videos
displayed in their numerous online posts
reveal a lifestyle that appears to be far beyond
what their small businesses can provide.
♪♪
And yet, they show no sign of slowing down.
Lichtenstein announces their engagement
on Facebook that summer.
It's like the most groan-worthy proposal
I can think of.
Narrator: He describes hiring an advertising agency
to help him propose
to "my best friend and the woman of my dreams!"
Watkins: Ilya took Heather Morgan to Times Square,
where he had put all of these billboards up about Razzlekhan,
who was clearly this alter ego that meant a lot to her.
Narrator: The proposal doesn't come cheap.
A Times Square billboard can run from $5,000 up to $50,000.
The next month, Morgan delivers a curious speech
at a New York City salon series, bragging about having the skills
one might need to pull off a crime
like the one the feds are now investigating.
She had a lot of skills of persuasion
and she used them for all kinds of intents and purposes.
I mean, some of the things that she was talking about was,
you know, like crashing people's weddings and stuff like that,
or figuring out a way to talk to, like, a famous person
or, you know, things like that.
Still, a skill is a skill.
Narrator: The Justice Department
later says Morgan and Lichtenstein
weren't simply wedding crashers.
They used their skills to launder billions of dollars
of bitcoin stolen from Bitfinex.
♪♪
The government points to a trip
that Morgan and Lichtenstein took to Kyiv,
the Ukrainian capital, later that summer.
The government compares this trip to a spy novel.
It seemed to be kind of their test balloon of,
you know, how can we get fake identities delivered?
Narrator: One package was reportedly delivered to a hotel
from Vladivostok, Russia, on September 9th.
The Justice Department alleges Lichtenstein created files
with detailed information
about Russian personas the very next day.
Rabenn: The implication is that they had ordered
fake identity documents
to be sent to them in the Ukraine
that potentially they could use
if they ever had to flee the United States.
Watkins: The whole thing is always just a knife's edge away
of either being James Bond or knockoff Austin Powers.
They were either really brilliant or really stupid
or just crazy.
♪♪
Narrator: Back in Manhattan,
Morgan and Lichtenstein resume business as usual.
He launches an investment firm called Demandpath.
Morgan expands her digital footprint,
pushing content across social media.
Another interesting part about her Forbes profile is her bio.
She writes...
She wrote an article...
Narrator: In light of her warning,
Razzlekhan's new rap video
contains lyrics that sound rather ironic.
Fishing in general is where someone will try to get you
to hand your password over to them so that they can,
in this case, transfer your funds,
Rewind that. What? Did she really just say that?
Like, rewind that and play it again.
Make sure we heard that right.
Um...[laughs]
Narrator: All this time,
the value of the bitcoin stolen from Bitfinex soars...
From $71 million in August 2016
to nearly $3.5 billion in January 2021.
And federal authorities are now convinced
Heather Morgan and Ilya Lichtenstein
are the ones laundering the crypto.
Up next on "American Greed,"
Morgan and Lichtenstein head to the altar
with the feds right on their heels.
♪ Turkish Martha Stewart! ♪
Narrator: Four years after someone began laundering bitcoin
stolen from the Bitfinex virtual currency exchange,
Heather Morgan and Ilya Lichtenstein
seem to be thriving,
at least to friends and family in their hometowns.
The handful of people that I've kept in touch with
at high school,
they definitely saw him as successful.
Like, this guy is making money and doing his thing
and doing well, yeah.
Narrator: Projecting an image of success
on social media isn't a crime,
but Morgan takes it to a whole different level.
But I also am a writer, I'm a rapper,
I designed some streetwear fashion
and a bunch of other stuff with surrealistic art.
So I, right now, am basically living my ideal life.
That's it. Razzle dazzle! Agh!
She does this gesture a lot.
Like, she goes like this a lot.
And be sure to razzle dazzle! Agh!
Agh! Agh! Agh!
Shin: It's like not a pretty look, and she loves it.
She, I think, was trying to shock people.
She would talk about "gilfs."
Grandmothers I'd like to,
you can fill in the blank on that.
Grandmother I'd like to [bleep]
♪ Maybe a grandma, but still a sex symbol ♪
♪ Keep the... more nimble than a gimbal ♪
♪ Hella, gilfalicious, looking so delicious ♪
Narrator: Morgan's constant urge to broadcast every facet
of her life can grate on her more reserved fiancé.
And in some of the videos, he can seem
a little bit uncomfortable with being on camera.
Are you going to keep filming me,
expecting something to happen?
What do you want me to do? You just want me to, like,
shove something up my [bleep] and do a little dance?
Watkins: I do still wonder, like,
where did that actually come from?
Like, who was she when nobody was TikToking her?
She was really loved by this small group of friends
and people spoke very highly of her,
said she was a very loyal friend.
Said she was there for them
during some really traumatic life experiences.
So you wonder how much of it
was just escalated for clicks and for online attention.
Rabenn: I see an individual
who seems to be somewhat detached from reality.
And appears to me to be someone who would be likely
to get involved in something like this.
♪ I'm a [bleep] lizard, married to a God[bleep] wizard ♪
Their view of the world doesn't quite match up
with how others see it.
Your real self is always your best self.
Razzle dazzle! Stay awkward and weird!
Narrator: Morgan and Lichtenstein
don't seem to realize time is running out.
Aah!
In a government complaint, the IRS shows how it traced
the flow of stolen Bitfinex bitcoin
through several virtual currency exchanges
and foreign e-mail addresses
to financial and business accounts
belonging to Lichtenstein and Morgan,
including their companies SalesFolk,
Demandpath, and endpass.
They cash out of about $2.9 million worth of the money.
As far as I can tell, I think they largely spend it
on themselves.
Narrator: Investigators connect the laundered crypto
to purchases made in Lichtenstein
and Morgan's names for Uber, hotels.com, Sony PlayStation,
and a $500 Walmart card.
So these were very small expenses, not, you know,
buying expensive cars or buying a yacht or buying a house,
but rather the types of expenses that are indicative of someone
who's desperate, who can't actually monetize
the large amount of funds that they have.
It's actually probably easier to just put stacks
of hundred dollar bills in a washing machine
and launder them through a casino
than it is to launder $3 billion of anonymous, hacked bitcoin.
Narrator: The government obtains a search warrant
for Morgan and Lichtenstein's e-mail accounts
in August 2021,
while they're busy planning their wedding.
Hey, we have an announcement.
The fiancés catch wind of the subpoena in a notice
from their Internet service provider.
It didn't seem to concern them because they go
and throw this huge wedding anyway.
This is not your typical wedding.
This is more like a concert, a festival.
Narrator: Morgan is no blushing bride
at their Los Angeles wedding.
She's carried into the ceremony on a royal bed
and performs one of her signature raps.
♪ Turkish Martha Stewart! ♪
Narrator: But their honeymoon is short.
[ Knock on door ]
They've been married less than two months
when surprise visitors show up.
Up next on "American Greed," the feds hunt for evidence,
and they claim the crocodile of Wall Street
has no intention of going down without a fight.
Shin: They had $40,000 worth of cash
and plastic bags with electronics inside
and the bag was labeled "burner phone."
Narrator: Want more "Greed"?
Follow us on Instagram, connect on Facebook
and listen to the "American Greed" podcast
wherever you get your podcasts.
We'll be right back.
♪♪
Narrator: Federal agents execute a search warrant
at Heather Morgan
and Ilya Lichtenstein's apartment on January 5, 2022.
According to the government,
they seize a trove of evidence implicating the couple
in a scheme to launder stolen bitcoin.
Shin They had $40,000 worth of cash
and plastic bags with electronics inside
and the bag was labeled "burner phone."
Narrator: Agents also find fake passports and two books
with compartments cut into their pages.
They're empty, but the government suspects
this couple hatched an escape plan and accuses Morgan
of doing whatever she can to cover their tracks.
And as they're going through this apartment,
Heather goes to get their cat.
Morgan: Clarissa!
Watkins: As she's going to get the cat from under the bed,
she actually pivots and grabs her phone
and tries to lock her phone.
And they struggle.
They had to, like, wrest it out of her hand.
Watkins: The intention obviously being that Heather knew
that if she locked the phone, it would be a lot harder
for government agents to get into it.
Narrator: Federal authorities are more interested in encrypted files
on Lichtenstein's cloud storage account.
The government suspects they hold the keys
to solving a 6-year-old crime...
Private keys linked to a digital wallet
containing bitcoin stolen from Bitfinex in 2016.
The bizarre thing about bitcoin
is that you can, like, see the money right there
and you can't do anything with it,
you can't retrieve it until you have those keys.
Narrator: While the government
tries to decrypt Lichtenstein's files,
he and Morgan hire attorneys
at a white-shoe law firm called Cahill.
Despite their legal troubles, Razzlekhan keeps on tweeting.
Brown: It's very possible that the defendants believed
that that encryption was strong enough to protect them
from any law-enforcement investigation.
Narrator: And yet, the government says
it breaks the encryption
on Lichtenstein's files within weeks.
They find exactly what they're seeking,
according to a criminal complaint...
A list of private keys to the digital wallet
associated with the Bitfinex hack.
The IRS says the wallet still contains
nearly 95,000 of the 120,000 bitcoins
stolen from Bitfinex six years earlier.
But that's not all they reportedly find
in Lichtenstein's files.
Paúl: They found the document of him searching for Russian
and Ukrainian nationalities and passports.
They found the spreadsheet of all the crypto accounts
and the companies that they were linked to and that was the end.
They really didn't stick that landing of like,
"I would never do something like that
and even I wouldn't be putting these passwords and stuff
on my computer." Like, come on, man.
And I think what that really shows is the confidence
that they had in their laundering techniques
that they thought they couldn't be identified
in the first place.
Narrator: Morgan and Lichtenstein
strike a united front in a final selfie
on January 31, 2022,
while the government closes in,
scooping up the 95,000 bitcoins in the digital wallet
the IRS says Lichtenstein controlled.
Today the Justice Department announced it seized billions
of dollars in stolen cryptocurrency.
Narrator: The value of the bitcoin
taken by the Justice Department has risen to $3.6 billion,
the largest seizure in its history.
U.S. authorities making an arrest in an alleged conspiracy
to launder billions of dollars in stolen cryptocurrency.
Narrator: Federal agents arrest Morgan and Lichtenstein
a week after seizing the stolen bitcoin.
Up next on "American Greed"...
♪ Razzlekhan, the Versace bedouin ♪
Narrator: Razzlekhan earns worldwide attention...
but not quite the way she had hoped.
Noah: The bitcoin crimes are nothing
compared to calling this [bleep] rap.
♪ Always be a goat not a God... ♪
♪♪
A massive crypto bust.
31-year-old Heather Morgan
and her 34-year-old husband, Ilya Lichtenstein,
were arrested in New York this morning.
Narrator: Just hours after authorities arrest
Heather Morgan and Ilya Lichtenstein,
the Justice Department announces charges against them
for their alleged roles in a conspiracy
to launder stolen cryptocurrency
taken during the 2016 Bitfinex hack.
Today the Department of Justice
has dealt a major blow
to cybercriminals looking to exploit cryptocurrency.
Narrator: The value of the 120,000 bitcoins
has ballooned from $71 million at the time of the theft
to $4.5 billion.
This is the largest seizure of cryptocurrency ever
by U.S. law enforcement.
Narrator: If convicted,
the charges carry a prison sentence of up to 25 years.
A federal judge in Washington, D.C., releases Morgan
to house arrest on $3 million bond
but orders Lichtenstein held without bail.
We called them the Bonnie and Clyde of crypto.
Narrator: The headlines stun people who knew them.
Austin: Everyone just started texting each other who knew him,
like, "Get a load of this" kind of thing.
Like, no one expected it from him.
Again it's not surprising that he would be
a relatively successful guy, but there was no hint
that he was prone to any kind of criminality.
I think he's not a bad person.
I think he's probably an opportunist and a greedy one.
Total shock.
Total shock because it was just a wholesale transformation.
I think I understand that there was something
always inside of her
that was hungry for success and attention
and always kind of looking for an angle.
I would love to understand
what the specific set of incentives were
that pushed her to transform so radically.
Roarr!
Narrator: The public can't get enough of Razzlekhan.
Parsing every TikTok video, Instagram post and YouTube rap.
♪ I'm a... bad... ♪
♪ Go on make me a sammich ♪
The bitcoin crimes are nothing
compared to calling this [bleep] rap.
♪ Bad... bad... bad... ♪
Shin: The notion that someone who kind of
had such a goofy social-media presence,
could be laundering $4.5 billion worth of bitcoin
was just something that blew people's minds.
Gotta say, I waited for this day,
I waited for this moment
where society has finally generated to my level.
Lichtenstein: Degenerated.
But perhaps one of the, like, most notorious videos
is the fluffy pancakes one.
Lichtenstein: These are famous pancakes.
Watkins: People have been waiting for years to see
who could have possibly been the evil geniuses behind this.
And then the first thing you see
is that video of her having an episode over pancakes
and the entire Internet was just like, "Really?"
When alleged criminals like these are busted, everybody,
especially in the cybersecurity and the hacker community,
likes to point to them and say, "Look at all the mistakes
they made, look at these buffoons."
You know, they did try very sophisticated
and rare techniques, this dark-web thing,
the use of monero.
And yet somehow IRS criminal investigators
and I believe almost certainly a company like Chainalysis
were able to cut through all of that and follow the money.
Narrator: The government charges Morgan and Lichtenstein
in a detailed criminal complaint
but holds off on indicting them.
The evidence as laid out by the government
in the complaint shows
that both Morgan and Lichtenstein
were pretty deeply involved in the criminal conspiracy.
I would assume that the defense really want to claim
that they're two babes in the woods
and they just sort of happen to get caught.
Narrator: The complaint accuses Morgan and Lichtenstein
of laundering the stolen bitcoins
but not the actual hack.
Well, there are a lot of questions here,
including who did the original hack here back in 2016,
leaving open the possibility that there's more to this story.
Rabenn: There's some connection there, right?
You just don't wake up one day
and your crypto wallet is funded with $3.5 billion.
So either he was directly involved in it
or had some connection to the individual
or group of individuals who were behind it.
Narrator: Though defense attorneys
have argued the government complaint
reveals significant holes, a judge granted a request
to waive their clients' right to a speedy trial...
A sign both sides may be working on a plea agreement.
Lichtenstein and Morgan may have at least one bargaining chip.
Or rather, 7,500.
That's the amount of bitcoins the government says
they believe the couple still controls
in hidden accounts linked to the hack.
They're now worth $146 million.
This is an important case for the Justice Department
because it's a precedent setter.
The message to criminals is clear...
Cryptocurrency is not a safe haven.
We can and we will follow the money,
no matter what form it takes.
Crypto's not going away; we know that.
It's certainly gonna fluctuate.
It's gonna have its ups and downs,
but for so long, these spaces were seen as lawless.
This changes that.
Narrator: Ilya Lichtenstein
remains in federal custody in Alexandria, Virginia.
He declined an interview request, writing...
And as for the crocodile of Wall Street...
Heather Morgan is on house arrest,
a mud puddle of her own making,
with strict limits on Internet usage.
And so, while much of her social media remains online
for everyone to see, she can't shape her own story.
And for Razzlekhan, that may be the worst punishment of all.
You can completely create your own destiny
with words and software.
So that's it for now.
Be sure to follow to see more videos.
Razzle dazzle!
Captions by VITAC... www.vitac.com
♪♪