How did the couple "fall" from tech stars and thought leaders to suspects in the biggest financial case in the history of the U.S. Department of Justice?

David Jeans, Cyrus Farivar

Ilya Lichtenstein, nicknamed "Dutch," and his wife, Heather Morgan, tech entrepreneur and thought leader, appear to have lived successful lives before. The former invested in startups with heavyweights like Marc Benioff and founded his own company with the support of Mark Cuban, while the latter was a prolific thought leader who not only posted online about women's leadership, but also built himself into a silly YouTube rapper Razzlekhan to deliver ideas about success and money to a wide range of fans.

But IRS investigators say the couple has a secret behind them. Just this Tuesday, Morgan, 31, and Lichtenstein, 34, were arrested in New York and accused of trying to launder $3.6 billion in bitcoin that hackers stole from the Bitfinex exchange six years ago. If convicted, the two face up to 25 years in prison. While the allegations did not include the two men carrying out the hack, court documents detailed a careful plot to launder money and hide the source of stolen bitcoins.

Prison photos of Ilya Lichtenstein, 34 ,left) and Heather Morgan, 31,31 (right).

Since they met about 10 years ago, the two have struggled to gain a foothold in silicon valley and new york tech. Lichtenstein has gone through a series of failed ventures, including running a fan site for Rep. Ron Paul in Texas and building a nutritional supplement company that promotes brain development. Lichtenstein then co-founded MixRank, a venture-backed sales and marketing company. But in 2016, Lichtenstein abruptly left MixRank, and in the same year, Bitfinex was hacked.

During that time, Morgan packaged himself as an expert in "cold mail" (unsolicited communications) and used this capacity to publish articles and attend various sales conferences.

Travis Lybbert, an economics professor at the University of California, Davis, said: "She (Morgan) feels like a sleek person, but never arouses suspicion. "In 2011, Lybbert hired Morgan as a research assistant." She is a very confident, professional young man who looks for and creates opportunities. ”

People who knew the couple said they were shocked by the arrest. In a telephone interview with Forbes, Lybbert said Morgan was a promising student and his understanding of the Middle East was impressive. In their co-authored academic book, Lessons from the Arab Spring: Food Security and Stability in the Middle East and North Africa, Morgan "earned a place" for himself as a co-author, he said.

The professor also said that when Morgan attended UC Davis, he gave a guest lecture in a class the latter took. After graduation, Morgan approached Lybbert, hoping to gain some research opportunities to "pursue graduate studies in economics, especially international and development economics."

"She's always looking for the next opportunity, and she has high ambitions for the career she wants to pursue." Lybbert said.

According to Lybbert, when he and Morgan worked together in 2011 and 2012, the latter showed a state of ambition and busyness. Lybbert said that after graduating from the University of California, Davis, Morgan went to Hong Kong, China, to work as an event planner, applied to graduate school in economics, and founded his own copywriting consulting firm SalesFolk.

Morgan's LinkedIn page shows that she later moved from Hong Kong to Cairo, where she completed a master's degree in economics and international development at American University. In 2013, Morgan returned to California to work for a company called Tamem Inc., an Arabic-language mobile game publisher incubated by venture capital firm 500 Startups. Around the same time, Morgan launched SalesFolk. Beginning in June 2013, archival copies of her website describe her as an "analytical ninja," a "published writer," and seven years of copywriting experience.

Morgan seems to have met Lichtenstein at this point. At the bottom of her Salesfolk page, there was a review from Lichtenstein, who gave the former a good rating for his service, calling it "enthusiastic, smart, and focused," adding that "an hour of brainstorming with Heather (Morgan) pays off immediately." ”

So far, Morgan has received recognition beyond her own website. In August 2015, she was interviewed online by a sales management software company called Ambition, which described her as someone who was "rewriting the cold mail promotion rules for global (SaaS) companies." Burbrian Trautschold, the current AMBITION chief operating officer who interviewed Morgan, expressed shock at Morgan's charges for federal crimes. In a phone interview with Forbes, he said it was "crazy." "She was speaking at a SaaS conference at the time and there was no indication she wasn't focused on email counselling... More than seven years later, we see a different side of the story, which is shocking. ”

In the months leading up to the Bitfinex hack in August 2016, Morgan became a freelance writer for the business magazine Inc., which described her "from sleeping on the couch to starting a seven-figure business called SalesFolk from scratch." The following year, Morgan also became a contributor to the "ForbesWomen" section of the Forbes.com website. There, Morgan published articles on topics including music and food. In a 2019 article, Morgan discussed how he grew up with a language disorder and was bullied by other students at school.

In addition, she hinted at the legal problems she had encountered before in this article. During a business trip to Asia, Morgan received unclear "legal threats," learned that her employees were "making up numbers, and that she was being bullied by old friends, according to her description. In a routine semi-annual review in September 2021, Forbes removed Morgan as a contributor.

Morgan wrote in the Forbes article that it was because of such professional setbacks that she decided to become a rapper and named herself Razzlekhan. In an Instagram post in January 2019, Morgan wore a black leather jacket and another woman stood behind her. "So some people in the tech world are a little worried about my rap level and aren't sure if I should have a rap song, which includes some people in the corporate world," she said. "But you know what, I remember a lot of people telling me not to take risks, not to start a company, not to be an entrepreneur." But since Morgan's arrest on Tuesday, many of Razzlekhan's Videos on YouTube have appeared private or deleted.

Since bitfinex was hacked in 2016, the couple has posted up showing off their extravagant lifestyles, like Morgan documenting their travels from Panama to Malaysia and Mexico on social platforms.

The same month that the alleged hack took place, Morgan posted a photo on Instagram showing her and Lichtenstein sitting on a blue satin couch smiling. "I always like to get in trouble with this crazy guy," she wrote. "Thank you for always inspiring me to be a better entrepreneur!"

For his part, Lichtenstein had already made a small role in the tech investment community in New York. The Justice Department said he lived in an apartment at 75 Wall Street, an upscale neighborhood where an ordinary condominium was worth more than $1 million.

This is the image of Success that Lichtenstein has created over a decade. Based on forbes' discovery of his footprints on a website that has now been discontinued, after graduating from the University of Wisconsin-Madison with a degree in psychology, Lichtenstein sought out like-minded entrepreneurs and headed to Silicon Valley to thrive. There, he met other techno-liberals. One of Lichtenstein's most famous websites is RonPaulFan.com, which contains a flurry of news and support for the former Republican presidential candidate, and Ron Paul later became a well-known cryptocurrency advocate. The site's banner shows that it is "the first source of all Ron Paul news."

It was at this time that Lichtenstein began selling brain supplements, claiming that he had created a supplement called Instant Focus, which promised to "increase people's productivity." In an article published in Hacker News in October 2010, Lichtenstein said the supplement could help him "write code longer and be more productive." Lichtenstein also started a weight loss website with MyNaturalWeightLossDiet.com that mainly promote colon cleansing and acai (acai) supplements. He also founded a series of dating sites such as adultfriendgrinder.com, findgeekgirls.com, etc.

While these businesses failed, he had even greater success as the co-founder of MixRank. MixRank is a data-driven marketing startup that was incorporated into Y Combinator's accelerator program in 2011. At the time, Lichtenstein was trying to establish himself as a thought leader in Silicon Valley through a blog post called Influence Hacks. He wrote in a blog post: "How much money you make has nothing to do with how hard you work... What the market really rewards is risk. ”

MixRank's early backers included billionaire investor Mark Cuban and 500 Startups, according to Pitchbook, but both companies sold their stakes sometime between 2012 and 2015 to an unnamed buyer. Scott Milliken, another founder of MixRank, did not immediately respond to a request for comment when this article was published. Cuban said in an email that he had "never met Lichtenstein."

Later, Together with Morgan, Lichtenstein founded Endpass, a blockchain-based cybersecurity firm, and an investment firm called DemandPath. In just over a decade, Lichtenstein has also invested in startups, including enterprise-grade payments and receipts service providerRoutable. In addition to Lichtenstein, who is an angel investor, the company has more than a dozen other investors, such as California Bay Area billionaire Scott Belsky, Box founder Aaron Levie and Salesforce founder and co-CEO Mark Benioff. There is no indication that Lichtenstein knew other investors or had ever spoken to them.

In a LinkedIn post in 2021, Lichtenstein wrote that he was "proud to be one ofRoutable's earliest investors," while Omri Mor, routable's co-founder and CEO, responded: "It's an honor to have you involved from the start." Mor did not respond to a request for comment.

Far less active on social media, Lichtenstein is far less than his wife, whose Twitter account has remained silent for nearly seven years, from 2013 to 2020. But in January 2021, Lichtenstein complained about what he called a "#大技术审查" (#BigTechCensorship). Last month, he targeted a16z founder, Marc Andreessen, and mocked a meme released by the latter. "How crazy is it that billionaires in the world who can do anything choose to post second-rate memes on Twitter?"

Lichtenstein's father, Yevgeniy Lichtenstein, was contacted by phone, but he declined to talk about his son's plight. "Sorry, I don't want to discuss this."

IRS Agent Christopher Janczewski wrote a 20-page written statement accusing Morgan and Lichtenstein of transferring stolen bitcoins to "more than a dozen accounts" through "thousands of transactions" in their own names and companies. One of the companies, according to the testimony, was SalesFolk, Morgan's copywriting consultancy.

The allegations allege that Morgan converted his personal Bitcoin account on a virtual currency trading platform into a business account in June 2019 (the trading platform was identified as "VCE 7" in court filings). "To reduce VCE 7's scrutiny of its transactions, Morgan liquidated its holdings in large quantities," the testimony showed.

But it was Lichtenstein's use of cloud storage accounts that led to the collapse of the conspiracy. There, the government decrypted a file containing a list of 2,000 virtual currency addresses, along with the corresponding private key. The U.S. Department of Justice said nearly all of these addresses were linked to bitfinex theft, and that the cryptocurrencies were handled by Entities owned by Morgan.

Lichtenstein and Morgan's lawyer, Anirudh Bansal, did not respond to Forbes' request for comment.

At a detention hearing in federal district court on Tuesday, Lichtenstein and Morgan were released on bail despite prosecutors' objections. Reasons for opposition included Morgan's alleged "attempt to lock her phone to block law enforcement's inspections" and the two 'engaged in an extremely sophisticated money laundering campaign' in order to "launder" some of the bitcoins stolen from Bitfinex. Eventually, Chief Justice Beryl Howell ordered the couple to remain in detention, and a hearing will be held this Friday.

In August 2019, Morgan gave a lecture in New York City titled "How to Social Engineer Your Way Into Anything." When an audience member asked Morgan where the boundaries of social engineering should be, the latter replied, "I do think it's reasonable to be unscrupulous for an end at times." My ultimate goal is not bad or evil. I'm not trying to cheat people out of money or hurt people in any way. ”