Accused crypto scammer Ilya “Dutch” Lichtenstein was ordered held without bond following a bail hearing on Monday during which prosecutors laid out what “could literally be called the electronic version of the smoking gun,” Chief Judge Beryl Howell of the Washington, D.C. federal district court said Monday.
Lichtenstein, 34, and his wife, 31-year-old tech entrepreneur and aspiring rapper Heather Rhiannon Morgan, are accused of attempting to launder billions of dollars in Bitcoin stolen in a 2016 hack. The cryptocurrency, worth about $71 million at the time, was worth $4.5 billion by the time they were arrested on Feb. 8. The feds have so far seized $3.6 billion of that total, which constitutes the largest financial seizure in U.S. history.
The couple had managed to liquidate roughly $2.9 million of the purloined Bitcoin before getting caught, according to prosecutors, who said the couple thought they had “succeeded in outsmarting” the feds up until they were taken into custody, Assistant U.S. Attorney Catherine Pelker said during today’s three-hour-plus court session. Investigators have still not succeeded in cracking at least 24 accounts allegedly controlled by Lichtenstein that contain roughly $328 million in illicit crypto.
Lichtenstein and Morgan appeared in court wearing prison greens and face masks, with their parents observing the proceedings from the gallery. Prosecutors warned that Lichtenstein, who was born in Russia and grew up outside of Chicago, is a dual citizen of the United States and Russia, which does not have an extradition treaty with the U.S. Further, the government said Lichtenstein and Morgan were in the planning stages of starting a new life as fugitives, using Ukraine or Russia as a “launching point” to go on the run elsewhere under false identities.
Arguing against allowing Morgan—whom the couple’s shared defense lawyer, Samson Enzer, attempted to portray as significantly less culpable than Lichtenstein—to remain free pending trial, prosecutors discounted “this suggestion that Ms. Morgan is some sort of naive wife who may have been unwittingly co-opted into her husband’s scheme here.” (Enzer’s co-counsel, Anirudh Bansal, missed the hearing after getting stuck on a train from Connecticut to D.C. Howell recommended heading down the night before for future hearings.)
“It bears noting that Ms. Morgan is highly intelligent, with a graduate degree in economics, and has sufficient cryptocurrency and technical know-how such that if...
