How A $500 Walmart Gift Card Helped Feds Catch Thieves Involved In $4.5 Billion Bitcoin Heist

The cryptocurrency-thieving couple suspected of being involved with a $4.5 billion bitcoin heist may have gotten away with the historic robbery if it wasn’t for a $500 Walmart gift card.

In 2016, thieves pulled off what many are calling the “heist of the century.” Hackers were able to steal 119,754 BTC from the cryptocurrency exchange Bitfinex, which was worth $71 million at the time but are now valued at approximately $4.5 billion.

A husband and wife team are suspected of funneling the stolen bitcoin into a digital wallet. The U.S. Department of Justice claims that Ilya “Dutch” Lichtenstein (34) and Heather R. Morgan (31) used money laundering techniques to convert and deposit about 25,000 bitcoin into their financial accounts.

“According to the government’s Statement of Facts, the stolen bitcoin was ‘layered’ and ‘chain-hopped’ through a series of virtual wallets to the ‘darknet market AlphaBay’ and then back, and finally on to accounts where it was converted into fiat currency, gift cards and precious metals and withdrawn as cash from bitcoin ATMs, the Guardian reported.

“Authorities said more than 80% of the stolen currency remained untouched in accounts associated with the couple and money-laundering allegations against them identify only small sums, including the purchase of a $500 Walmart gift card and gift cards for Uber, Hotels.com, and PlayStation,” the outlet added.

The Wall Street Journal reported on how a Walmart gift card lead to the arrest of the married couple:

On May 3, 2020, a fraction of a bitcoin went from the cluster to an exchange that sells prepaid gift cards. In return, a $500 gift card for Walmart was sent to a Russian-registered email. The transaction, however, was conducted via an IP address linked to a cloud service provider in New York that investigators linked to Mr. Lichtenstein, according to the agents.

Portions of the gift card, filings said, were then redeemed through Walmart’s phone app. Three purchases were conducted online using Ms. Morgan’s name, using one of her emails, and the couple’s apartment address was provided for delivery.

Between February 2019 and December 2020, bitcoin worth about $7.8 million today flowed through the cluster to and from accounts at various crypto exchanges that investigators said in court documents are tied to Mr. Lichtenstein and Ms. Morgan.

According to reports, federal investigators obtained a warrant to search the couple’s email accounts and later a search warrant for the Lichtenstein’s Wall Street apartment over suspicions regarding the bitcoin heist.

Federal investigators searched the couple’s apartment on Jan. 6, and discovered a plastic baggie marked “burner phone,” more than $40,000 in cash, and more than 50 electronic devices, according to prosecutors.

Vice reported:

The federal government says Lichtenstein and Morgan are criminals, masters of “deceit and deception,” and flight risks. In a court filing Thursday, prosecutors say that they seized dozens of burner phones, more than $40,000 in USD and foreign currency, hardware crypto wallets, and books with hiding places cut into the pages for storing USB drives. The filing states that while their home was being searched, Morgan asked federal agents for permission to retrieve her cat (who features prominently on Morgan’s TikTok) from under the bed. While doing so, she tried to lock her phone.

“While Morgan was crouched next to the bed calling to the cat, she positioned herself next to the nightstand, which was still holding one of her phones,” the filing states. “She then reached up and grabbed her cell phone from the nightstand and repeatedly hit the lock button. It appeared that Morgan was attempting to lock the phone in a way that would make it more difficult for law enforcement to search the phone’s contents. Law enforcement had to wrest the phone from her hands.”

Guardian noted that Morgan called herself by numerous names, including “the Crocodile of Wall Street,” “Turkish Martha Stewart,” the “Waffle Queen of Korea,” “Razzlekhan,” and as a rapper with “more pizzazz than Genghis Khan.”

Lichtenstein and Morgan have been charged with conspiring to commit money laundering – which has a maximum sentence of 20 years in prison, and conspiracy to defraud the United States – which carries a maximum sentence of five years in prison.

You can see the criminal complaint regarding the bitcoin heist here.