Frozen embryos will prevent accused money launderers from fleeing: lawyer

A lawyer for the New York couple accused of an “extraordinarily complex” scheme to launder $4.5 billion worth of stolen Bitcoin argues in a court filing that they pose no flight risk because, among other things, they want stay close to their frozen embryos.

Morgan and her husband, Ilya “Dutch” Lichtenstein, “have already frozen several of her embryos in a New York hospital in anticipation of starting a family, as she can only conceive through in vitro fertilization because she has endometriosis,” said attorney Samson. Enzer wrote on file.

“The couple would never flee the country at the risk of losing access to their ability to have children, which they talked about having this year until their lives were disrupted by their arrest in this case,” wrote Enzer.

The lawyer also argued that Morgan, an aspiring rapper going by the name Razzlekahn, and Lichtenstein, who holds dual American and Russian citizenship, were not at risk of fleeing because they “were both staying at their downstairs residence. of Manhattan…even after the government investigation targeting them in this case” several months ago.

The filing came ahead of the couple’s scheduled bail hearing in the US District Court in Washington, DC on Monday, when Judge Beryl Howard is expected to review their bail conditions imposed after their arrest. Tuesday at their residence. Howard ordered Thursday that the couple be transported from New York City jail to Washington for that hearing.

Morgan, 31, and Lichtenstein, 34 are accused of conspiring to launder $4.5 billion worth of bitcoins which was stolen in 2016 during the Bitfinex virtual currency exchange hack. They are not accused of the hack itself.

The Justice Department said on Tuesday it had seized more than $3.6 billion worth of bitcoins linked to the hack, which were believed to have been in crypto wallets under the couple’s control. This is the largest financial seizure ever made by the department.

At the time of the breach, the hacker transferred nearly 120,000 bitcoins into a crypto wallet that Lichtenstein in January of this year gained access to, prosecutors say.

Although the bitcoin in this wallet was worth $71 million at the time of the hack, its value had risen to over $4.5 billion by January.

Enzer said Judge Beryl Howell should uphold bail conditions imposed on Tuesday by Manhattan federal court Judge Debra Freeman, who set bail at $5 million for Lichtenstein and $3 million for Morgan, with home confinement conditions and location tracking devices.

That bail decision was temporarily blocked by Howell on Tuesday night after prosecutors urged her to do so, arguing they were at risk of fleeing.

Prosecutors in their emergency request had said that although authorities had seized “the majority of the stolen funds” from the hack, “there are at least 24 current virtual addresses linked to the hack.” [and believed to be in the defendants’ control] which law enforcement does not have the private keys.”

These addresses contain approximately 7,500 bitcoins, “which are currently valued at over $328 million,” prosecutors said.

“The defendants are sophisticated cybercriminals and money launderers who pose a serious flight risk and should be held pending trial,” they added.

But Enzer, in his filing to Howell, said: “Judge Freeman correctly held that the government had failed in its duty to show that there were no bail conditions which would secure reasonably that Ms. Morgan and Mr. Lichtenstein will appear as required for other court proceedings in this matter.”

“This court should affirm Judge Freeman’s well-reasoned bail decisions,” he wrote.

Enzer wrote that the couple were informed in November by an internet service provider that prosecutors had served a grand jury subpoena on the provider “a year earlier to seek records relating to them.”

And on Jan. 5, the attorney noted, “The government has asked law enforcement officers to execute a search warrant at their New York residence.”

“Although federal agents seized Mr. Morgan 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 had been granted as part of an investigation into a money-laundering conspiracy and other alleged crimes), the couple took no steps to flee,” Enzer wrote.

The couple’s attorney added that the defendant “continued to stay home” during phone and email discussions between Enzer and federal authorities, who “provided a written summary of his alleged money laundering theory.” money about our customers”.

Enzer also wrote that “Ms. Morgan and Mr. Lichtenstein have no reason to flee to avoid the government’s allegations, as the government’s complaint reveals significant flaws in the government’s case against them, particularly with respect to Ms. Morgan”.

“The money laundering charges in the government complaint are based on a series of inferences and circumstantial assumptions drawn from a complex web of convoluted blockchain and cryptocurrency tracing claims,” the author wrote. ‘attorney.

If the couple are held without bail, Enzer argued, it will severely limit their ability to cooperate with their attorney to prepare their defense at trial, and pose “potentially serious health risks to” Morgan, who is recovering from a heart attack. surgery to remove a lump from her breast on January 31. Endometriosis, a painful gynecological condition, is one of the main causes of infertility.

Morgan would also be at increased risk of Covid-19 if kept in jail, as she suffers from asthma and “has pre-existing lung damage from a previous episode of Middle East Respiratory Syndrome, or MERS”, said writes the lawyer.