The District of Columbia court released Heather Morgan on a $3 million bond, accused of laundering assets stolen from the Bitfinex bitcoin exchange. Her husband and co-defendant, Ilya Lichtenstein, remains in custody, according to CoinDesk.
On February 8, Lichtenstein and Morgan detained on charges of laundering 119,754 BTC, stolen from Bitfinex in 2016. Authorities said they seized $3.6 billion worth of bitcoin from the couple. They face up to 25 years in prison.
The defendants were not released on an $8 million bond, despite a magistrate judge in the Southern District of New York having issued an order granting them such release. At the hearing, the prosecutor said the couple has access to $330 million, which they could use to flee.
At the February 14 hearing Howell supported this position. According to the prosecution, Lichtenstein and Morgan were preparing to flee to Russia or Ukraine.
As evidence, prosecutors cited the results of a search. Law enforcement found evidence of the registration of phone numbers and financial accounts during a trip to Ukraine in 2019, as well as files on Lichtenstein’s computer. The latter, the agency says, contain stolen Russian and Ukrainian identification documents for a man and a woman.
The prosecution also noted that keys to the $3.6 billion BTC wallet were found on Lichtenstein’s computer, so the stolen cryptocurrency would have been controlled by him. The defense described the prosecutors’ arguments as “specious,” “confusing,” and “circumstantial.”
“I completely disagree with such a characterization,” Howell emphasized.
During the hearing, prosecutors said about 7,500 BTC were sent from Lichtenstein’s wallet to 24 addresses, presumably controlled by the couple. The prosecution did not rule out that they were “savings accounts.”
The judge acknowledged that there is no substantial evidence against Morgan beyond the claim that she “allegedly received funds related to the case.” The defense also pointed to health problems of the client.
Howell ordered Morgan released on bail with conditions previously set by the magistrate in the Southern District of New York. The conditions are:
- The bond is $3 million, including her parents’ home in Northern California;
- an electronic bracelet;
- house arrest with no access to internet-connected devices;
- a ban on trading cryptocurrencies.
The defense noted that the house arrest of her parents’ home — their only asset — would be a “moral suasion” measure that would compel Morgan to cooperate.
“With hundreds of millions of dollars in cryptocurrency, the defendants could buy their parents a private island,” the prosecution countered.
For Howell, the Morgan case is not the first involving digital assets. In 2020, the judge said that Bitcoin is a form of money and falls under anti-money-laundering laws.
The ruling allowed the court not to drop the charges against Coin Ninja CEO Larry Harmon. In August 2021 he pleaded guilty tomoney laundering of more than $300 million.
Authorities traced those involved in the Bitfinex-hack assets to the couple thanks to the takedown of the AlphaBay darknet marketplace.
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