Man who stole and laundered roughly $1B in bitcoin is sentenced to 5 years in prison

WASHINGTON (AP) — A computer expert who stole bitcoin worth billions of dollars at current prices — and then spent years laundering some of the hacked cryptocurrency with help from his wife — was sentenced on Thursday to five years in prison.

Ilya Lichtenstein masterminded one of the largest-ever thefts from a virtual currency exchange before he and his wife, Heather Rhiannon Morgan, carried out an elaborate scheme to liquidate the stolen funds, according to federal prosecutors.

U.S. District Judge Colleen Kollar-Kotelly told Lichtenstein that his theft was “meticulously planned” and not an impulsive act.

“It's important to send a message that you can't commit these crimes with impunity, that there are consequences to them,” she said.

Lichtenstein, who gets credit for the two years and nine months that he has spent in jail since his February 2022 arrest, expressed remorse for “wasting my talents on crime instead of a positive contribution to society.” He said he hopes that he can apply his expertise to fight cybercrime when he gets out of prison.

“I want to take full responsibility for my actions and make amends any way I can,” he said.

The judge is scheduled to sentence Morgan on Monday. Lichtenstein pleaded with the judge to spare his wife from prison, blaming himself for her involvement.

In August 2016, Lichtenstein hacked into a virtual currency exchange, Hong Kong-based Bitfinex, and stole approximately 120,000 bitcoin. It was worth approximately $71 million at the time of the hack and would be valued at more than $7.6 billion at current market prices, according to prosecutors.

Several months later, Lichtenstein began moving the stolen bitcoin in a string of complex transactions designed to conceal its path across a series of accounts and platforms. He enlisted his wife’s help in cleaning the stolen funds.

Lichtenstein, an entrepreneur and cryptocurrency investor, is a U.S. citizen who was born in Russia and grew up in a Chicago suburb. Morgan, a business owner and writer, adopted the alter ego “ Razzlekhan ” for performing rap songs and recording videos for her music.

Lichtenstein and Morgan were living in New York City when they were arrested in February 2022. They had been living in San Francisco around the time of the hack.

Prosecutors recommended a five-year prison sentence for Lichtenstein, who pleaded guilty in August 2023 to one count of money laundering conspiracy. They recommended an 18-month prison sentence for Morgan, who pleaded guilty to the same charge.

“Neither the hack nor the laundering scheme was an impulsive decision. The defendant (Lichtenstein) spent months attempting to gain access to Bitfinex’s infrastructure and get the accesses and permissions he needed in order to orchestrate his hack,” prosecutors wrote.

Lichtenstein told his wife about the hack over three years later, but he initially solicited her help in laundering the proceeds “without explaining exactly what he was doing,” according to prosecutors.

Morgan “was certainly a willing participant and bears full responsibility for her actions, but she was a lower-level participant,” prosecutors wrote.

During family trips to Kazakhstan and Ukraine, Lichtenstein met with couriers who delivered him money that he smuggled back into the U.S.

“Over half a decade, the defendant engaged in what IRS agents described as the most complicated money laundering techniques they had seen to date,” prosecutors wrote.

Bitcoin is the largest and oldest cryptocurrency, which is digital money that typically isn’t backed by any government or banking institution. Transactions get recorded with technology called a blockchain.

The couple successfully laundered about 21 percent of the funds stolen from Bitfinex. The laundered money was worth at least $14 million at 2016 prices. Its value would have exceeded $1 billion at the time of their 2022 arrest.

Authorities seized the remaining funds, collectively valued at over $6 billion at current prices.

“He became one of the greatest money launderers that the government has encountered in the cryptocurrency space,” prosecutors wrote.

An attorney for Bitfinex said the hack “devastated” its finances and its reputation with its customers, with the stolen funds accounting for approximately 36% of the company's assets at the time of theft.

“Bitfinex had to take unprecedented and immediate action to ensure that any losses from the Hack would ultimately be borne by Bitfinex and its shareholders alone, not its customers,” the lawyer, Barry Berke, wrote in a letter to the judge.

A prosecutor said Lichtenstein immediately began cooperating with federal authorities after his arrest, helping them with other cybercrime investigations.

Over 96% of the stolen funds have been recovered, with help from Lichtenstein, according to defense attorney Samson Enzer. The “vast bulk” of the stolen money was never spent, the lawyer said.

“This is not an evil person,” Enzer said. “This is a good person who made some very bad mistakes.”

FILE - Bitcoin logos are displayed at the Inside Bitcoins conference and trade show on April 7, 2014, in New York. (AP Photo/Mark Lennihan, File)

SAN FRANCISCO (AP) — A tech consultant charged with murder in Cash App founder Bob Lee’s stabbing death sparred with the lead prosecutor at trial Thursday, interrupting questions asked of him with his own questions as he was grilled on his testimony.

Nima Momeni, 40, had to be told several times by the judge to provide responsive answers.

He broke his public silence after 18 months when he took the witness stand Wednesday to explain how Lee was found staggering on a deserted downtown San Francisco street at 2:30 a.m. on April 4, 2023, dripping a trail of blood and calling for help. He later died at a hospital.

Momeni testified Lee, 43, suddenly pulled a knife on him after he cracked a “bad joke” suggesting Lee should spend his last night in the city with family instead of trying to visit a strip club. He said Lee later walked away, showing no signs he was injured.

His testimony stunned Lee's father, brother and ex-wife, who have been a steadfast presence in the criminal trial. They say Lee was big-hearted and gentle, and close to his two children and ex-wife.

“What you have seen is Nima be aggressive on the stand, you’ve seen him just trying to take control of this room, his arrogance and his entitlement are on full display here,” said the victim's brother, Timothy Oliver Lee, speaking with reporters outside the court room Thursday.

“This is insane,” he said. “All of this is ridiculous.”

The trial is in its fifth week. Momeni faces 26 years to life if convicted.

Lee’s death stunned the tech community as fellow executives and engineers penned tributes to the charismatic entrepreneur’s generosity and brilliance. He was chief product officer of cryptocurrency platform MobileCoin when he died.

Prosecutors say Momeni planned the April 4 attack after a dispute over his younger sister, Khazar Momeni, with whom Lee was friends. Momeni had picked up his sister from the home of a drug dealer introduced to her by Lee, and she said she may have been sexually assaulted after ingesting a date-rape drug called GHB.

They say Momeni was angry with Lee so he took a knife from his sister’s condo, and after the pair was kicked out of her place at 2 a.m., he drove Lee to a secluded area and stabbed him three times and then fled.

Omid Talai, the assistant district attorney, grilled Momeni on Thursday on details of exactly how the attack unfolded. He asked Momeni why he did not call police after the attack and learning Lee had died, and why he did not respond to his sister's text asking where he had dropped off Lee.

Momeni said he did not learn of Lee’s death until the following day and was puzzled by his sister’s query. He said he thought Lee could have been stabbed by someone else shortly after he saw him walk off, unharmed.

In response to questions, Momeni said he didn't know what the prosecutor was getting at, accused him of misrepresenting his statements and said he had already answered.

At one point, San Francisco Superior Court Judge Alexandra Gordon said that the prosecutor had no obligation to provide him with a printout of the texts he was questioning him about or to put them on the multimedia screen.

“Gotcha,” said Momeni, dressed in a blue suit and tie. “Thank you for clarifying.”

Prosecutors have video showing Lee and Momeni leaving Khazar Momeni's condo after 2 a.m. and driving off together in Momeni’s BMW. Video also shows the two men getting out of the car in an isolated spot by the Bay Bridge.

Prosecutors say that is where Momeni stabbed Lee, while the defense says that is where Lee attacked Momeni, erratic and aggressive from a multi-day bender of cocaine, ketamine and drinking.

A knife recovered from the area where Lee was stabbed showed Momeni's DNA on the handle, but the defense said the handle should have been tested for fingerprints, namely Lee’s.

Momeni said he and Lee were on friendly terms when they left his sister's condo, but prosecutors say the defendant grilled the entrepreneur earlier in the evening about what might have happened to his sister at the drug dealer's apartment.

The prosecutor pointed out multiple times Thursday that Momeni was questioning him the way he grilled Lee.

Nima Momeni was 14 when his mother, Mahnaz Tayarani, took him and Khazar to the U.S., fleeing Iran and a husband who had inflicted years of abuse and violence on the family, she wrote in a letter submitted to the court in support of her son’s pre-trial release.

She has sat on one side of the courtroom while Lee's family members sit on the other.

FILE - Nima Momeni, the man charged in the fatal stabbing of Cash App founder Bob Lee, makes his way into the courtroom for his arraignment in San Francisco, May 2, 2023. (Gabrielle Lurie/San Francisco Chronicle via AP, Pool, File)