An attorney for Heather Rhiannon Morgan and Ilya Lichtenstein has claimed that they are not a flight risk because Ms Morgan has frozen eggs in New York City.
The pair were arrested on Tuesday on federal charges of conspiracy to commit money laundering and conspiracy to defraud the United States. They stand accused of laundering $4.5bn worth of Bitcoin acquired in the hack of the Bitfinex exchange in 2016. If they are convicted, they could go to prison for up to 25 years.
A lawyer for the couple, who has been dubbed “Bitcoin Bonnie and Crypto Clyde” by the financial newsletter Morning Brew, asked a judge to allow the defendants to be let go on their $3m and $4.5m bails. Attorney Samson Enzer argued that the couple’s decision not to flee when they were made aware of the investigation proves that they’re not a flight risk.
But prosecutors say that the couple is likely to have huge amounts of money that remain hidden from the law. Mr Lichtenstein also retains dual citizenship with Russia, possibly allowing the couple a safe place to relocate to.
Prosecutors said the Wall Street couple should be denied bail, arguing that they are a flight risk with potential access to massive hidden funds.
Mr Enzer argued that the couple would not leave Ms Morgan’s frozen eggs behind, writing in a legal filing that she “previously froze several of her embryos at a hospital in New York in anticipation of starting a family together, as she can only conceive through in vitro fertilization because she suffers from endometriosis”.
“The couple would never flee from the country at the risk of losing access to their ability to have children, which they were discussing having this year until their lives were disrupted by their arrests in this case,” Mr Enzer added.
Federal officials say they have retrieved around $3.6bn in cryptocurrency. It’s the largest seizure of financial assets ever conducted by the Department of Justice.
The seizure is connected to the attack on the Hong Kong-based virtual crypto exchange Bitfinex six years ago.
“Both stayed put in their residence in lower Manhattan ... even after the government’s investigation targeting them in this case,” Mr Enzner said concerning his clients, whose next bail hearing is set to take place on Monday at the US District Court in Washington, DC, where Judge Beryl Howell will decide what happens to the couple as they await their trial.
Judge Howell ordered that the couple be moved to the capital on Thursday. Mr Enzner asked the judge to hold up the agreement struck with Manhattan Judge Debra Freeman, who set a $5m bond for Mr Lichtenstein and a $3m bail for Ms Morgan, in addition to home incarceration and the use of location-monitoring devices.
But that ruling was blocked when Judge Freeman heard prosecutors’ arguments concerning the flight risk.
“Judge Freeman correctly decided that the government has failed to meet its burden of showing that there are no bail conditions that would reasonably assure that Ms Morgan and Mr Lichtenstein will appear as required for further court proceedings in this case,” Mr Enzner wrote. “This court should uphold Judge Freeman’s well-reasoned bail rulings.”
“The government had law enforcement agents execute a search warrant at their New York residence,” he added. “Although federal agents seized Mr Morgan’s and Mr Lichtenstein’s travel documents, numerous electronic devices, and other property from their home on January 5 (and left a copy of the warrant indicating that it was granted as part of an investigation into a money-laundering conspiracy and other alleged offenses), the couple took no steps to flee.”
“Ms Morgan and Mr Lichtenstein have no reason to flee to avoid the government’s allegations, as the government’s complaint reveals significant holes in the government’s case against them, especially as to Ms Morgan,” Mr Enzer stated in the court filing. “The money-laundering accusations in the government’s complaint are predicated on a series of circumstantial inferences and assumptions drawn from a complex web of convoluted blockchain-and cryptocurrency-tracing assertions.”
When the hack occurred, the allegedly stolen Bitcoin was worth $71m – it’s now worth $4.6bn, DailyMail.com reported.
Prosecutors said earlier this week that most of the Bitcoin had been recovered but that “there are at least 24 virtual current addresses linked to the hack [and believed to be in the defendants’ control] for which law enforcement does not possess the private keys”.
“The remaining addresses contain about 7,500 bitcoin, which is currently valued at over $328 million,” prosecutors said.
“The defendants are sophisticated cybercriminals and money launderers who present a serious risk of flight and should be detained pending trial,” prosecutors added.
