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It’s a Very Crypto Scandal, But the Charges Are Serious

The value of the coins Heather Morgan and Ilya Lichtenstein are accused of laundering has climbed from $70 million to $4.5 billion.

Lichtenstein and Morgan

Lichtenstein and Morgan

Source: @heatherreyhan/Instagram
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Here is the worst possible way to become a social media star. In her 2019 rap video, Heather “Razzlekhan” Morgan dances on the steps of Federal Hall in New York’s Financial District, wearing a shiny gold jacket and a wide-brim cap and proclaiming herself the “Crocodile of Wall Street.” You probably missed it when it came out. This February, however, Morgan and her husband, Ilya Lichtenstein, co-founder of a Y Combinator-backed tech startup, have been charged by federal prosecutors with conspiring to launder 119,754 Bitcoins that were stolen in a 2016 crypto exchange hack. Pretty soon, Razzlekhan was all over Twitter.

The charges Morgan and Lichtenstein face are serious—if convicted, they could go to prison for 20 years. The money is serious, too: The hoard of stolen Bitcoins was estimated by the U.S. Department of Justice to be worth $4.5 billion at recent market prices. The couple wasn’t accused of the theft. In a memo on bail conditions, their lawyers said the government’s complaint “depends on circumstantial inferences drawn from so-called ‘tracing’ analysis of a confusing series of blockchain transactions” that don’t prove criminal intent.