Financial Crime: Crypto couple had Russian bank accounts and traveled to Ukraine to collect fake IDs, feds say — ‘Pulled from the pages of a spy novel’

United States

The hipster New York couple charged in one of the world’s biggest crypto-currency thefts had been quietly setting up bank accounts in Russia and had traveled to Ukraine in order to obtain false identity documents, authorities said.

Federal prosecutors laid out the new details of the couple’s financial movements and travels as part of the government’s appeal of a judge’s ruling earlier this week to grant Ilya Lichtenstein and Heather Morgan bail.

The judge granted the 34-year-old Lichtenstein bail of $ 5 million and the 31-year-old Morgan bail for $ 3 million, but the pair remain in custody as the government appeals the ruling, arguing that the couple represented a serious flight risk. 

Prosecutors have said they believe the couple still have control over crypto accounts containing $ 328 million and had experience creating false identities and procuring false identity papers through the dark web in order to set up bank accounts under fake names.

“The defendants have not just a strong incentive to flee, but the means to do so, and they appear to have taken meaningful steps toward establishing new identities and financial accounts in Ukraine and Russia to enable this flight.”

— Court filing from the U.S. Attorney for Washington, DC

Earlier this month, investigators were able to seize $ 3.6 billion worth of bitcoin from crypto wallets controlled by the couple. They said the money had been traced directly to that stolen in a 2016 hack of the Bitfinex exchange. The Department of Justice said It was the largest single seizure of money in its history.

In the new court filing, prosecutors detailed a 2019 trip Lichtenstein and Morgan had made to Ukraine during which they appeared to have received multiple packages containing false Ukrainian identity documents, bank cards and SIM cards for their mobile phones.

“The couple’s activities in Ukraine at times appear pulled from the pages of a spy novel,” the court filing read. 

Prosecutors said they believed the trip was a trial run for the couple’s eventual plan to leave the United States. They also said they had determined that Lichtenstein and Morgan had set up numerous accounts with Russian financial institutions. 

Lichtenstein is a dual U.S.-Russian citizen and had renewed his Russian passport in 2019, prosecutors said. Russia doesn’t extradite its own citizens and Morgan would be eligible for Russian citizenship due to her marriage to Lichtenstein, prosecutors said.

“The defendants have not just a strong incentive to flee, but the means to do so, and they appear to have taken meaningful steps toward establishing new identities and financial accounts in Ukraine and Russia to enable this flight,” prosecutors wrote. “The defendants’ access to hundreds of millions of dollars in cryptocurrency, ability to procure false identity documents on the darknet, and history of extensive deceitful behavior weigh heavily in favor of detention.” 

An attorney for the couple declined to comment on the new court filing, but had previously argued in court papers that the couple had been aware they were under investigation as early as November and had made no efforts to flee and noted that both the couple’s parents were required to put up their homes as security as part of the bail conditions.

The filing also said that Lichtenstein had left Russia with his family at the age of 6 to flee religious persecution and that the family had lived in the suburbs of Chicago ever since. 

The couple have for years been serious globetrotters, traveling extensively in Europe, Asia and the Middle East. Morgan had lived for extended periods in Egypt and Hong Kong. People who knew the couple said they had become very cautious during the pandemic and had severely imited their travel. 

Attorneys for the couple have said Morgan had previously contracted the MERS virus during an outbreak in the Middle East in 2012, and suffered from asthma, making her high risk for becoming seriously ill from COVID-19.

Numerous electronic devices seized

The new government court filing also detailed what had been seized from the couple’s Wall Street apartment during the execution of a search warrant on Jan. 5. Investigators said they found bags containing multiple cell phones and SIM cards under the couple’s bed, including a bag marked “burner phones.” In all, 50 electronic devices were taken from the home, some of which are still being examined, according to the court filing. 

Prosecutors also said that Morgan at one point attempted to lock out a phone to make it harder for investigators to examine it and that the device had to be wrestled away from her.

Investigators also seized some $ 40,000 in cash, both in U.S. dollars and foreign currencies. They also uncovered evidence that the couple had acquired some 70 gold coins, but were unable to locate them,