In a twist that could be ripped from a Hollywood script, the self-proclaimed ‘crocodile of Wall Street’ rapper known as Razzlekhan has been sentenced to 18 months in federal prison for her role in laundering proceeds from the notorious 2016 Bitfinex cryptocurrency exchange hack. Heather Morgan, 32, will soon trade her recording studio for a jail cell after pleading guilty to conspiring to launder nearly 120,000 stolen Bitcoins, worth a staggering $9 billion at today’s prices.
Morgan’s sentencing comes just one week after her husband, Ilya ‘Dutch’ Lichtenstein, received a five-year prison term for his role in the audacious cyber heist. According to court documents, Lichtenstein masterminded the hack itself, pilfering the massive Bitcoin trove from Bitfinex’s digital coffers in 2016. The couple then embarked on an elaborate money laundering spree, utilizing a dizzying array of techniques to obscure the illicit source of their suddenly-acquired crypto fortune.
A Rapper’s Remorse
Speaking at her sentencing hearing, a contrite Morgan expressed deep regret for her criminal actions. “I am extremely sorry and deeply ashamed of my conduct,” the erstwhile rapper told the court. “I spent my time and energy doing harm when I should have been doing good, and I’m embarrassed by that.”
Morgan, who performed under the stage name Razzlekhan, had cultivated an eccentric public persona prior to her arrest. Her self-released music videos feature the bespectacled blonde spitting verses about being a “real risk taker” and a “crocodile of Wall Street.” Lyrics that, in retrospect, seem to allude to her illicit activities.
The Laundering Playbook
Court filings detail the sophisticated steps Morgan and Lichtenstein took to launder their pilfered crypto. The pair allegedly employed a virtual smorgasbord of obfuscation techniques, including:
- Routing funds through darknet markets
- ‘Chain hopping’ by converting Bitcoin to other digital assets
- Using cryptocurrency ‘mixers’ to scramble transaction trails
- Purchasing physical gold coins to be resold for clean cash
- Funneling money through a web of U.S. bank accounts
Prosecutors say this crypto laundering playbook allowed the couple to wash up to 20% of the hacked Bitfinex funds before their February 2022 arrest. Upon their apprehension, federal agents seized over $3.6 billion worth of cryptocurrency — the largest financial seizure in Justice Department history.
Paying The Piper
While Lichtenstein pled guilty to masterminding the actual Bitfinex hack, Morgan maintains she only learned of the heist after the fact. Still, her admitted role in the subsequent money laundering earned the fledgling rap star an 18-month stint in federal custody.
“This case shows that we can use criminal forfeiture to recover stolen cryptocurrency and return it to victims even years after a hack.”
– Damian Williams, U.S. Attorney for the Southern District of New York
The Bitfinex hack sentencing sends a clear message that U.S. authorities are cracking down on crypto-related crime, even if it means pursuing unorthodox suspects like Razzlekhan. With billions in digitally-stolen assets now in its possession, the government faces the unusual challenge of sorting out how to return the recovered Bitcoin to its rightful owners.
As for Morgan, she’ll have plenty of time to contemplate her illicit crypto exploits — and perhaps even write some new rap lyrics — as she serves out her sentence. A fitting finale for the crocodile of Wall Street, now headed up the river after swimming a bit too close to the criminal underworld.
