Heather Morgan, also known as “Razzlekhan,” the so-called “Crocodile of Wall Street,” has been sentenced to 18 months in federal prison for laundering crypto stolen in the infamous Bitfinex hack.
Her husband, Ilya Lichtenstein, the mastermind behind the 2016 attack, was handed a five-year sentence just last week.
Together, they turned the crypto industry into their personal crime stage, pulling off a heist worth 119,754 Bitcoin—valued at $71 million at the time but ballooning into billions thanks to Bitcoin’s meteoric rise.
Morgan wasn’t directly involved in the hack itself, but she played a critical role in helping Lichtenstein hide the loot. Court records show she laundered about 21% of the stolen funds, using a mix of small transactions, fake accounts, and darknet markets to muddy the waters.
They bought gold, NFTs, and Walmart gift cards in an attempt to clean the money. For her cooperation with authorities (and maybe for persuading her husband to assist in other crypto investigations) Morgan dodged a much harsher sentence.
The lore
The story begins in 2016, with Bitfinex, one of the largest cryptocurrency exchanges at the time, as the target. On August 2, at exactly 10:26 a.m., the hackers struck. They raised the daily withdrawal limit from 2,500 Bitcoin to one million Bitcoin, effectively draining the exchange’s coffers in under four hours.
With a few clicks and a clever exploitation of Bitfinex’s flawed security system, 119,754 Bitcoin were moved to addresses controlled by the hackers.
At the time, this haul was worth $71 million. But as Bitcoin’s value exploded, those same coins skyrocketed to over $11 billion as of current prices. The blockchain recorded every transaction, but without the hackers’ private keys, there was no way to retrieve the funds.
For years, the stolen Bitcoin sat untouched, visible to anyone with an internet connection but untouchable without the keys.
Investigators initially hit a wall. They suspected an inside job or perhaps a highly sophisticated foreign operation. North Korea’s Lazarus Group, infamous for stealing $81 million from Bangladesh’s central bank earlier that year, was briefly considered.
Bitfinex’s executives even hired outside security experts to figure out what went wrong, but the hackers had wiped their digital fingerprints clean. All they had were 34-character wallet addresses and a massive hole in their system.
Who are these people, anyway?
While the stolen Bitcoin sat idle, Heather Morgan and Ilya Lichtenstein were busy living their bizarre double lives. Lichtenstein, a Russian-born tech entrepreneur who went by the nickname “Dutch,” was the brains behind the operation.
He had a history in affiliate marketing — basically crafting sleazy ads for diet pills and gambling sites — and claimed to have made six figures while still in college. His arrogance reportedly rubbed people the wrong way, but there was no denying his intelligence.
Morgan, on the other hand, was… something else entirely. She branded herself as a rapper, writer, entrepreneur, and all-around “weird girl” under the name Razzlekhan.
Her rap videos were a mix of cringe and chaos, featuring her gyrating through Wall Street in gold track jackets, zebra-striped pants, and fanny packs. She called herself the “motherf—ing crocodile of Wall Street,” blending bad rhymes with bizarre boasts.
In one of her songs, she even joked about hacking: “Spearphish your password / All your funds transferred.” It was almost too on the nose. Her Forbes column bio described her as someone who “reverse-engineers black markets to combat fraud,” which, again, aged like milk.
She and Lichtenstein lived in a $6,500-a-month Wall Street apartment stuffed with oddities—crocodile skulls, zebra pelts, and a framed X-ray of her lungs from when she contracted MERS in Egypt.
How it all fell apart
The stolen Bitcoin might have sat untouched for years, but it wasn’t forgotten. By 2020, IRS agents using blockchain analytics began connecting the dots. The wallets holding the stolen funds were linked to Lichtenstein and Morgan, who weren’t exactly subtle about covering their tracks.
The guy opened exchange accounts under his real name and even verified them with selfies. If that wasn’t enough, they moved funds through AlphaBay, a darknet marketplace known for its illegal trades.
AlphaBay mixed crypto transactions to make them harder to trace. The couple withdrew laundered funds to various accounts, including ones linked to real identities. This was their fatal mistake. By 2022, the feds had gathered enough evidence to raid their apartment.
What they found was a treasure trove of incriminating material. There were burner phones, a bag labeled “Burner Phone,” hardware wallets holding cryptographic keys, and $40,000 in cash. Agents even found hollowed-out books used to hide devices.
Morgan, in a moment straight out of a bad sitcom, tried to create a diversion by claiming their Bengal cat, Clarissa, was hiding under the bed. Instead of retrieving the cat, she grabbed a phone and attempted to lock it. Nice try.
The legacy of the heist
At the time of the hack, Bitcoin was worth just $580. Today, each stolen coin is valued at over $90,000. The Bitfinex hack remains a glaring example of the vulnerabilities in centralized crypto exchanges.
At the time, Bitfinex’s security system was touted as state-of-the-art, using software from BitGo to manage transactions. But the hackers exploited a flaw, proving that even the most secure systems can have cracks.
The incident also exposed the crypto industry’s shaky foundations. Early exchanges like Mt. Gox, Coincheck, and KuCoin all suffered massive breaches, collectively losing billions to hackers.
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