Crypto couple's US bail request denied in $4.5bn hack

US government believes the married couple still has access to 7,506 Bitcoins, worth more than $328mn

A US judge halted a decision to grant bail to a married couple accused of conspiring to launder billions of dollars in cryptocurrency. AP
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A Washington judge has halted a decision to grant bail to two people charged with trying to launder billions of dollars worth of Bitcoin stolen in a 2016 hack of the Bitfinex currency exchange.

The judge granted an emergency request late on Tuesday by the US government to continue to hold Ilya Lichtenstein and Heather Morgan in jail while the bail decision is reviewed.

“The defendants are sophisticated cyber criminals and money launderers who present a serious risk of flight,” prosecutors said in their filing.

The government said that while the majority of the stolen funds have been seized, there are several other virtual currency addresses that the government believes the couple control that hold about 7,506 Bitcoin, valued at more than $328 million.

Mr Lichtenstein and Ms Morgan had been granted bail by a judge in lower Manhattan on Tuesday night after being arrested at 7am in New York. They face trial in Washington.

The US government said it seized about $3.6 billion worth of cryptocurrency from the married couple, the largest financial seizure ever. The two allegedly conspired to launder 119,754 Bitcoin, currently valued at about $4.5bn, stolen after a hacker breached Bitfinex’s systems.

US Magistrate Judge Debra C Freeman had set bail at $5m for Mr Lichtenstein and $3m for Ms Morgan. Both bonds were to be secured by their parents’ homes. But prosecutors asked a judge in Washington for an emergency delay to allow that court to consider whether Mr Lichtenstein and Ms Morgan should be released. Chief Judge Beryl Howell agreed with the government on Tuesday night in a one-page order.

Ms Morgan, who was born in Oregon and grew up in California, has foreign ties, the prosecutor said in court. She has lived in Hong Kong and Egypt and is studying Russian, her social media posts show.

She’s a journalist and economist and travels internationally for work, the government said.

Mr Lichtenstein holds dual US and Russian citizenship.

They have been a couple since 2015, the government said.

Mr Lichtenstein’s lawyer told the New York judge that his client didn’t flee despite being fully aware of the investigation for months, after being informed in November by an internet service provider. His lawyer also said there was no proof against Ms Morgan.

But prosecutors argued they shouldn’t be freed, noting that the accused used false identities in their crimes. Mr Lichtenstein had a folder named “personas” on his computer and there was also a file on a computer with the name “Passport_ideas” with links to phoney identification and passports, the government alleged.

A search of their apartment found a plastic bag under the bed labelled “burner phones”, a prosecutor said.

A lawyer for the accused, Anirudh Bansal, declined to comment on the case outside the Manhattan courtroom.

Updated: February 09, 2022, 11:45 PM
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