> Officials said Ilya Lichtenstein, 34, and his wife, Heather Morgan, 31, were arrested on charges of conspiring to launder money. They are accused of trying to launder 119,754 bitcoin that were stolen after a hacker breached Bitfinex, a cryptocurrency exchange, and initiated more than 2,000 unauthorized transactions. Prosecutors said the bitcoin was sent to a digital wallet controlled by Lichtenstein.
From the actual charging statement (https://www.justice.gov/opa/press-release/file/1470186/downl...), the Feds have more details and fascinating traces through the various methods which the accused laundered the funds. Raises the question of whether they would've attracted so much attention if it were "only" a $70M hack instead of the multibillion dollar one due to BTC appreciation.
> In or around August 2016, a hacker breached Victim VCE’s security systems and infiltrated its infrastructure. While inside Victim VCE’s network, the hacker was able to initiate over 2,000 unauthorized BTC transactions, in which approximately 119,754 BTC was transferred from Victim VCE’s wallets to an outside wallet. At the time of the breach, 119,754 BTC was valued at approximately $71 million. Due to the increase in the value6 of BTC since the breach, the stolen funds are valued at over $4.5 billion as of February 2022.
> The 2017 transfers notwithstanding, the majority of the stolen funds remained in Wallet 1CGA4s from August 2016 until January 31, 2022. On January 31, 2022, law enforcement gained access to Wallet 1CGA4s by decrypting a file saved to LICHTENSTEIN’s cloud storage account, which had been obtained pursuant to a search warrant. The file contained a list of 2,000 virtual currency addresses, along with corresponding private keys.
> ...The connection among the VCE 1 accounts was further confirmed upon reviewing a spreadsheet saved to LICHTENSTEIN’s cloud storage account. The spreadsheet included the log-in information for accounts at various virtual currency exchanges and a notation regarding the status of the accounts
> ...Lichtenstein Email 2 was held at a U.S.-based provider that offered email as well as cloud storage services, among other products. In 2021, agents obtained a copy of the contents of the cloud storage account pursuant to a search warrant. Upon reviewing the contents of the account, agents confirmed that the account was used by LICHTENSTEIN. However, a significant portion of the files were encrypted
One of the first Google results for the names returns 'Get your first $1 million in enterprise sales with zero marketing spend' https://www.youtube.com/watch?v=DuIr5IFQ9Xg
Heather R Morgan
Serial entrepreneur SaaS Investor Razzlekhan = Surrealist Artist, Rapper & Fashion Designer with synesthesia Also Forbes writer
https://www.inc.com/heather-r-morgan/dont-hire-a-salesperson...
"As I build a sales team for my latest software startup, Endpass"
Endpass "Bringing you the delightful and secure Ethereum wallet that's easy enough for grandma to use."
Wait, so did Feds nab them for running Ethereum wallet startup and claim $3B in client wallets as theirs? Or did the pair start Ethereum wallet company to wash stolen coints?
- Laundering happened before Tornado Cash existed, so Tornado Cash was not used
- They used something like Tornado Cash, but the funds were still traceable
In the same way that if someone takes your cash into their possession, they might not have legal ownership, but now they have to somehow be involved in its' future transfer (even if that's like, handcuffing them and forcing them to hand it over).
In a cryptographic system you need the key in order to do things. Whether you think it's good or bad to apply that principle to the concept of money is orthogonal to the ground reality of how it actually works.
The original Bitcoin whitepaper explicitly refers to itself as a peer to peer electronic cash system (https://bitcoin.org/bitcoin.pdf). It's the 7th word in. It's designed to operate in a cash-like manner as opposed to a referential (credit-like? not sure what the term is for this) as in a bank ledger or similar.
https://www.reddit.com/r/blockfi/comments/skxiei/blockfi_hor...
Example?
The US sentencing guidelines[1] considers multiple factors other than "value stolen"
https://www.ussc.gov/guidelines/2021-guidelines-manual-annot...
https://www.justice.gov/opa/press-release/file/1470186/downl...
Why anyone with a significant amount of crypto assets isn't going to insane extremes in terms of secrecy and durability is beyond me.
https://learn.hashicorp.com/tutorials/vault/rekeying-and-rot...
> In order to prevent one person from having complete access to the system, Vault employs Shamir's Secret Sharing Algorithm. Under this process, a secret is divided into a subset of parts such that a subset of those parts are needed to reconstruct the original secret. Vault makes heavy use of this algorithm as part of the unsealing process.
I don't think he will be commenting anytime soon again if this really is him
https://news.ycombinator.com/threads?id=il
like your neighbor being a serial killer or something
$25,000 bounty seems pretty small, considering.
That's exactly what's happening, according to this page that was on the HN front page a few days ago: https://news.ycombinator.com/item?id=30224637
Later, the UK, Portugal, and Poland seized $1B or so of Bitfinex customer funds due to the funds being delivered by Crypto Capital Corp who was found to be engaged in money laundering. Bitfinex issued LEO tokens to make up for that asset seizure, and have a clause that if the 2016 stolen bitcoins were recovered, they'd be used to retire the LEO tokens. That's why LEO has greatly increased in value recently. https://cryptowat.ch/charts/BITFINEX:LEO-USD?period=1d
yes, they're legally presumed innocent but they have a LOT of 'splaining to do.
Lichtenstein and Morgan are charged with conspiracy to commit money laundering
If so, this means that (outside tax obligations) they may have gotten away with it essentially by sitting on the money doing nothing for 5 years and then openly transferred it to themselves. Since they took actions that were meant to launder the money, they opened themselves up to the money laundering charges on their own.
https://www.law.cornell.edu/uscode/text/18/3282
This is similar to many financial regulations where you can have completely legally obtained money but if you deposit $9,000 followed by depositing $1,000 thereby avoiding a CTR notification to the government required for a $10,000 deposit, you're guilty of "structuring" your deposits.
https://www.fincen.gov/sites/default/files/shared/CTRPamphle...
1. https://www.bhlawfirm.com/blog/2021/05/the-federal-convictio....
>As the anarchists and idealists on HN will soon learn, the decentralized nature of Bitcoin won't make a difference if anyone transmitting it is in violation of federal law.
https://news.ycombinator.com/item?id=5714963
Did he change his mind?
Another fascinating detail.
Source: https://twitter.com/ncweaver/status/1491118233973571585
https://www.europol.europa.eu/media-press/newsroom/news/800-...
This article says 97%: https://www.nbcnews.com/think/opinion/prisons-are-packed-bec...
Why are people so eager to confess their guilt instead of challenging the government to prove their guilt beyond a reasonable doubt to the satisfaction of a unanimous jury?
The answer is simple and stark: They’re being coerced.
https://news.ycombinator.com/item?id=30162085
So government was moving bitcoins not hackers. Like I said in that thread it is easier to launder cash than bitcoins because bitcoins are on chain forever and cold cash can be laundered in numerous ways.
A page recently posted here ([1], citing [2]) claimed that there's a market for freshly mined Bitcoin (i.e. with no history), with people paying as much as 20% markup for it to avoid such risks.
I didn't make any attempt to verify this claim.
[1] https://sethforprivacy.com/posts/fungibility-graveyard/
[2] https://news.bitcoin.com/industry-execs-freshly-minted-virgi...
https://en.m.wikipedia.org/wiki/Rahzel
And Khan is from Genghis Khan, as mentioned here:
https://www.lyrics.com/sub-artist/Razzlekhan/28366
But this is all just a guess.
https://twitter.com/matthewesp/status/1491116443207094272?s=...
But you can refer to https://hashcat.net/hashcat/
https://twitter.com/BillSPACman/status/1491131214014869505
Edit: whoops. That video is fake. It's from
https://www.tiktok.com/@realrazzlekhan/video/690851478968159...
My online bio need some levelling-up.
https://www.buzzfeednews.com/article/sarahemerson/crypto-lau...
Heather Morgan explaining how you can social engineer yourself out of a bad situation, can't make this shit up.
Hint: Millions of people use Bitcoin as a:
- store of value to protect purchasing power over time
- inflation hedge to protect savings from the ravages of inflation
- a hedge to protect against corrupt governments manipulating currency
- protection from negative real interest rates
- censorship-resistant payments
- anonymous payments with instant finality (Lightning)
Money is a tool like any other. Cash, gold, NFTs, Bitcoin, and credit cards can be used for good or evil, lawful or unlawful purposes. The technology isn't inherently moral or immoral. It is just a tool.
The "it's really for nazis" argument is particularly weak. The critics must be getting desperate.
"CoinJoin is a trustless method for combining multiple Bitcoin payments from multiple spenders into a single transaction to make it more difficult for outside parties to determine which spender paid which recipient or recipients. Unlike many other privacy solutions, coinjoin transactions do not require a modification to the bitcoin protocol."
Like it or hate it, there is a sea change happening in how governments treat cryptocurrency."
Your Wikipedia link cites a 2019 paper published in the Georgetown Technical Law Review whose analysis (https://georgetownlawtechreview.org/wp-content/uploads/2019/...) on page 415-6 says that 2016 US v 50.44 Bitcoins (https://casetext.com/case/united-states-v-5044-bitcoins) determined "cryptocurrencies do not meet the UCC's definition of money" and thus bona fide acquisition is not sufficient to prevent the crypto from being legally seized from the possessor and returned to the original owner.
https://www.wilsonelser.com/files/repository/PHLY_Article_Cl...
https://www.cnbc.com/2021/08/11/bitcoin-family-hides-bitcoin...
As the anarchists and idealists on HN will soon learn, the decentralized nature of Bitcoin won't make a difference if anyone transmitting it is in violation of federal law. --
This was inevitable. People can wax rhapsodic about the decentralized nature of Bitcoin, but once the feds freeze a few million dollars of a major exchange's assets, as they have done with every single anonymous digital currency since the beginning of time (e-gold,1mdc,Liberty Dollar) and launch a criminal investigation, the currency will be severely destabilized. Within the next year I expect to see a cottage industry emerge where the true believers cash out frozen bitcoin accounts for pennies on the dollar.
and a few other:
Presumably, this would do the trick.
https://arstechnica.com/tech-policy/2020/02/man-who-refused-...
To me that indicates they have been able to turn off alphabay for a long time, considering how easily and well timed they did it. That also means they have had tons of time to build the case. Of course you can argue that the simplest explanation is the best one but considering law enforcement literally operated the biggest DNM for months, completely under the radar I'm not sure why "they found an email he used for a few weeks 4 years ago" would be more simple.
You can read what DeSnake, another admin of the website had to say about the takedown. He's extremely security conscious (he hasn't been caught yet afaik which is another can of worms) and he's adamant that it was not a simple bust. Actually, the whole thing was kind of a mess, with some mods getting arrested (even without making obvious mistakes like Alex did ). You can read up on the confusion here: https://www.darkowl.com/blog-content/alphabay-marketplace-re...
If I had to guess, some mod/admin informed on him (maybe even snake!) hence why they had access to an early email. But who knows? Now in cases like the silk road I'd agree that it was simply trash OPSEC but the Alphabay/Hansa takedown was so sophisticated that anything is possible
No. Normally you have to return items that were stolen from someone even if you purchased them without knowing they were stolen. But money is an exception. See:
https://en.wikipedia.org/wiki/Nemo_dat_quod_non_habet
(I don’t know whether Bitcoin would be treated as money for these purposes…)
"Between the 2016 hack and the present, LICHTENSTEIN and MORGAN further engaged in a diverse array of virtual currency transactions, including transacting in numerous altcoins, liquidating BTC through a BTC ATM,23 and purchasing non-fungible tokens (NFTs)."
https://idlewords.com/2010/05/an_annotated_letter_from_roman...
A link in there has expired. Archived here:
https://web.archive.org/web/20100130223615/http://www.thesmo...
https://twitter.com/jackdwagner/status/1491141362707996672
https://twitter.com/jackdwagner/status/1491140930090717184
https://twitter.com/rudy_betrayed/status/1491225062984531968
https://www.thedailybeast.com/heather-morgan-rapping-tech-ce...
“The only other significant deposit to the account was an approximately $11,000 U.S. Small Business Administration Paycheck Protection Program (PPP) loan advance provided in response to the COVID-19 crisis,” the complaint states.
She presents herself here: https://www.youtube.com/watch?v=mWq7JgRknTM , I suppose you know what kind of person she is right ? The kind that use pipes as in "Economist | MBA | Serial Entrepreneur | Rapper "in their linkedin profiles but do nothing at all once hired :)
She was more truthful 7 years ago: https://youtu.be/NQAA2LlabUg?t=84 where she listed her main skill as copy writing.
Technically language is very interpretable but in some very simple cases it can be mitigated to the point where it's not a realistic issue. Even your book example isn't simple enough to be completely iron clad in all cases. You can receive a book that matches the criteria you provided (say title) but it's not really the book you were thinking of [0].
For more complex things like contracts and laws you have a lot of reasonably vague points that are up for interpretation. Courts reinterpret laws an contracts all the time, it's (part of) their job. Math is nowhere near as interpretable.
[0] https://www.flavorwire.com/376237/the-doubles-10-pairs-of-gr...
> Cuban told BuzzFeed News his last email exchange with Lichtenstein was in 2012. “I also found an email saying he left MixRank 6 years ago. That’s the extent of what I know about the guy,” Cuban said.
> Y Combinator did not respond to BuzzFeed News’ request for comment.
— https://www.buzzfeednews.com/article/sarahemerson/crypto-lau...
https://www.bloomberg.com/opinion/articles/2022-01-19/washin...
> This is called “money laundering,” and the essential component of money laundering is generating fake taxable income. If you take $13,800 out of your (legitimate, previously taxed) bank account, and you use it to buy cryptocurrency in a wallet that you tell your accountant and the IRS about, and you then use that cryptocurrency to buy a Meebit, and then you take $50 million out of your sack of illegal money, and you use it to buy cryptocurrency in a wallet that you don’t tell your accountant about, and then you use that cryptocurrency to buy the Meebit from your declared wallet, and then you take the $50 million of cryptocurrency out of the declared wallet and put it back in your (legitimate) bank account, and then you write the IRS a check for $20 million saying “ah I’ve been selling NFTs, what fun I have had, but I have to pay the IRS my fair share,” then … I am obviously not going to give you advice on crime but it’s possible you’ve got something there? Like, nobody has any idea what a Meebit is worth, so this string of outlandish numbers is somewhat plausible? It’s possible that some number of NFT wash trades have a purpose other than pumping up volume on NFT platforms?
This is still true, no? Now the government has the keys, so they own it. It's clear that you can't be sloppy with your keys, because "whoever has the cryptographic keys".
If they used a brainwallet (https://en.bitcoin.it/wiki/Brainwallet), the gov wouldn't have taken those keys.
According to https://www.usgovernmentspending.com/welfare_spending_analys..., in FY2021 welfare (not including Social Security or Medicare, which are for retirees, but including Medicaid) was $2,418B across federal, state, and local, about 76.6%. Neither Zakat or US welfare spending includes discretionary charity.
Overall, US welfare spending seems to be on the same order as, albeit a little less than, a Zakat imposed on all US wealth. Also, I'm not sure if this welfare figure includes EITC, which is the logical way that additional cash benefits should be distributed (since it avoids welfare cliffs).
I agree that humans can be greedy, etc. But that's why we have a judicial system. When you look at history, the Islamic scholars took their faith extremely seriously. Their accounts and biographies are not something you'd find in Western texts, but those exceptional people truly did exist. And because of them, we had things like the Islamic Golden Age.
The governments today have way more money on their hands don't they? Especially with the insane taxation rates we see. You allude to this point when you mention secular welfare systems. But history shows otherwise when Islam was applied.
> Umayyad had a variety of religions of persons overseen by their caliphate
Islam was the dominant religion, and the majority of the population were Muslims. The non-Muslims had to pay Jizya (limited to able men, i.e. not women, children, old men, or religious priests).
One of the categories of people who are eligible to receive Zakat, are those whose hearts are inclined toward Islam. Other than that, I don't think non-Muslims receive it. That being said, poor and needy non-Muslims are definitely eligible for charity (Sadaqah), and it is the responsibility of a functioning government to ensure that its population is well taken care of. Islam guarantees the rights of non-Muslims, and is very strict about it.
> I'd also be interested in seeing the citation that poverty didn't exist under this caliphate.
I didn't claim that no poverty existed in the entire Caliphate. As you know, the Caliphate spanned several regions and districts. I mentioned the Iraqi district, but I came across this question[1], which mentions that the mayors of the Libiyan and Tunisian regions wrote to Umar ibn AbdulAziz that they could not find a needy person to give them Zakat, so he responded to give it to the poor among the Jews and Christians. They replied that still no one took it, and they were no needy among them, so Umar replied to leave it in the market for anyone to take as they need. When still no one took it, Umar ordered to purchase slaves and free them.
I'll have to validate the authenticity of this specific account, but the notion that during Umar's rule, in certain districts there were no poor people left to accept Zakat is established.
> If I wanted to enforce Zakat via inflation, I would mandate people to hold their money in bank
Ah I see. It's prohibited in Islam to hold someone's money against their will, so there goes that :)
[1] https://islamqa.info/ar/answers/182393/%D8%AD%D9%83%D9%85-%D...
https://www.reddit.com/r/CryptoCurrency/comments/sohojt/mela...
Of course. I did not want to get into such complications. This was more of a Fermi estimate to compare the amount a Zakat would raise in the US.
> It's strictly superior to have a system based on Zakat than the insane income taxes that we have today.
Maybe - remember that the US government pays for more besides bare welfare for the needy. Also the Islamic Zakat pays for more than welfare - also administration of Zakat (reasonable, but should be kept as low as possible) and Islamic missionary efforts (I don't think the US should redirect its welfare to "spreading liberty and democracy").
Even in Islam, there were more taxes than Zakat[1] - at the very least, a tax on harvests (corporate income or business reciepts tax) and a land tax - because Islamic governments also have other responsibilities besides charity. It would stand to reason that the federal and state governments would also continue to collect other taxes to support other government responsibilities. Also remember that inflation (certainly that intentionally engineered by the central bank) is effectively a wealth tax.