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Heather Morgan and her husband, Ilya Lichtenstein, are expected to plead guilty to bitcoin laundering. AP Photo/Elizabeth Williams

The husband and wife ensnared in charges related to a $4.5 billion bitcoin-laundering scheme are due in federal court on Thursday for a hearing and expected to plead guilty to orchestrating an elaborate plot to sell bitcoin that was stolen during the 2016 hack of Bitfinex.

Ilya Lichtenstein and Heather Morgan, an eccentric couple known for walking a leashed Bengal cat in Manhattan and for Morgan's rap performances under the name "Razzlekhan," were arrested in February 2022 following what the Department of Justice said was its "largest financial seizure ever." The second largest occurred later that same year, when the feds seized $3.36 billion worth of bitcoin that had been stolen from a dark-web site years earlier.

Lichtenstein and Morgan, Federal prosecutors have alleged, "employed numerous sophisticated laundering techniques," creating fake identities to set up online accounts, depositing the funds into virtual currency exchanges and dark-web markets, and converting them into other virtual currencies all to cover their tracks.

Lichtenstein and Morgan are charged with conspiracy to commit money laundering and conspiracy to defraud the United States. Together, the charges carry a maximum penalty of 25 years in prison.

An attorney for both Lichtenstein and Morgan did not respond to a request for comment ahead of Thursday's plea hearing.

The saga began in August 2016 when the cryptocurrency exchange Bitfinex was hacked. As Insider previously reported, Lichtenstein and Morgan were not accused of carrying out the hack itself, but as a result of the hack, 119,754 bitcoins were moved into an outside wallet Lichtenstein controlled.

That bitcoin amounted to $71 million by January 2017, at which point the IRS began tracing thousands of transactions moving through dozens of accounts eventually landing in Lichtenstein's and Morgan's personal accounts.

At the time, the couple said the bitcoin came from investments that predated 2015, but Lichtenstein kept highly detailed notes about the scheme in cloud storage, which authorities eventually gained access to. Among the documents authorities found was a list of 2,000 virtual currency addresses and their private keys, all of which could be traced back to the hack. Authorities also found a spreadsheet with login information for cryptocurrency-exchange accounts, with notes about which accounts were frozen.

Prosecutors also alleged that Lichtenstein and Morgan had been planning to flee to Russia under new identities.

Authorities found a folder in Lichtenstein's cloud storage labeled "personas" with information on how to use the dark web to obtain fake identities. While executing a search warrant on the couple's home, authorities found hollowed-out books, dozens of electronic devices, a bag labeled "burner phones," $40,000 in cash, and foreign currency.

Since their 2022 arrests, Morgan has been on house arrest on a $3 million bond, and court records said she had a new job as a "growth marketing and business development specialist" at an undisclosed tech company. Lichtenstein, whom prosecutors have described as a flight risk over his Russian citizenship, has remained incarcerated.

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'Crypto couple' to plead guilty in $4.5 billion bitcoin heist - Business Insider

What is Dogecoin?

Dogecoin is an alternative coin more commonly known as an Altcoin that was established by co-founders Jackson Palmer and Billy Markus in 2013. It was initially created as a joke based on the well-known Doge meme.

Each coin has its own blockchain infrastructure and operating system. Dogecoin runs on the same blockchain infrastructure and uses similar proof-of-work operating systems a mathematical security system used to verify transactions and approve task execution as Litecoin and Ethereum, with small modifications.

Bitcoin and dogecoin are extremely different cryptocurrencies.

Bitcoin is a widely-used, reputable coin that acts as legal tender in many countries across the world, as well as in transnational markets and industries. Dogecoin lacks the legitimacy and global infrastructure to reach the heights of Bitcoin.

They also differ drastically in market share. With Bitcoin, theres a finite number of coins available, creating a limited supply. Dogecoin has an endless supply of tokens, meaning supply can never outpace demand, leaving it in a permanently deflationary state.

Both Dogecoin and Bitcoin also run on different blockchain networks and different advancements in blockchain technologies are one of the determining factors of market fluctuations.

Bitcoin runs on its own blockchain network, whereas Dogecoin piggybacks off the Ethereum blockchain, but with its own slight changes to transaction tracking and payment recording.

Deciding which cryptocurrency is better will ultimately come down to what a user is looking for from their coin.

If users are looking for transaction speeds and lower fees, Dogecoin is superior due to the Ethereum-based blockchain, being designed specifically for rapid, seamless transactions.

However, if its accessibility, usability and value that users are looking for, Bitcoin outperforms Dogecoin because its more widely-used and available meaning users have more options when it comes to making and receiving payments.

From an investment standpoint, Bitcoin stands head and shoulders above Dogecoin. While Dogecoin is struggling to reach 1 cent in value, Bitcoin fluctuates on average between 27-30 thousand dollars per coin.

While Bitcoins value is based on quantifiable aspects like its widespread usage, user popularity and limited circulation Dogecoin doesnt have too much room for growth given its endless supply and low user uptake.

The difference between the current and historical price fluctuations of the two coins couldnt be more different.

At the height of its reign, Dogecoin peaked at 74 cents, having opened on the market at 0.017 cents per coin meaning its value went up by over 9000% during the cryptocurrency boom.

In that same period, Bitcoin had a meteoric rise peaking at over $61k and opening at $327 growing at a percentage rate of over nine million percent from opening.

Both coins have historically reached dizzying heights allowing those traders who were hot on the trends to see staggering profits.

However, the popularity, accessibility and user uptake of Bitcoin means its the more valuable coin by a wide margin.

Crypto mining is a common way for users to get hold of valuable coins.

The process of mining involves using powerful computers and high-speed internet connectivity to automatically solve a series of complex puzzles and algorithms to validate transactions and secure small portions of coins.

With enough portions, miners begin to accrue enough value to make the long process of mining worthwhile.

Despite the popularity of Bitcoin, its much more time-consuming to mine than its Dogecoin counterpart.

Bitcoin miners typically take around ten minutes to approve transaction blocks, whereas Dogecoin miners can approve them ten times faster, with a block every minute. Because Dogecoin runs on an adaptation of the Ethereum blockchain which can be mined at a rate of 13 million blocks for every 700,000 Bitcoin blocks its significantly easier to mine.

Its extremely unlikely that Dogecoin will ever reach the value of Bitcoin for three key reasons.

The primary reason is popularity. Because of Bitcoins widespread usage and popularity, its infinitely more sought-after than Dogecoin.

Secondly, the circulation of Dogecoins doesnt allow it to grow in the same way Bitcoin did. There is an unlimited number of Dogecoins, meaning the number will always be higher than demand. There is only a finite number of Bitcoins in circulation meaning that demand will likely always outstrip supply, increasing its value.

Comparatively speaking, Dogecoin is an inflationary coin and Bitcoin is a deflationary coin, meaning Dogecoin can never grow in the same way.

Lastly, many reputable investors believe that the primary crypto booms are over. Only the longstanding, widely used coins like Bitcoin and Ethereum will see substantial gains whereas meme tokens like Dogecoin and Shiba Inu will never see these highs again in the eyes of many reputable traders.

Despite it being a meme coin that is taken less seriously than other big players, many investors still hold Dogecoin in their portfolios.

Because you can buy a significant number of Dogecoins for incredibly low prices, even minor fluctuations can land quick profits.

However, the risk of another cryptocurrency crash and the volatile nature of crypto in general means that most investors will only hold a small percentage of the coin in their portfolio to mitigate against risks like the crypto crash of 2018.

Despite it being a well-known cryptocurrency, Dogecoin has its disadvantages both as a cryptocurrency and an investment.

Some of the disadvantages to consider when investing in Dogecoin include:

Unfortunately, without a significant shift in either how it functions as a cryptocurrency, market shifts or investor interest, its unlikely investors will see long-term gains on the asset.

Like all cryptocurrencies, it can act as a strong diversifier for short-term gains given the volatile nature of the crypto market. However, its potential for long-term gains compared to established coins and tokens like Ethereum, Bitcoin and Solana, is slim.

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Dogecoin vs Bitcoin: Key Differences and Similarities - NewsBTC

Institutional investors are more interested in the crypto world than ever beforeand now theyre putting their money where their mouth is. Some are wondering, however, whether Bitcoin may lose its raison dtre as a result.

BlackRock, the worlds biggest asset manager, couldnt be more mainstream. Managing $9 trillion, the well-connected Wall Street firm is the epitome of the establishment.

Yet last month it filed an SEC application for a spot Bitcoin exchange-traded fund (ETF)sending the price of the biggest cryptocurrency to a year high. Its billionaire CEO Larry Fink then praised crypto for digitizing gold.

Bitcoin was originally an anti-establishment initiative. Favored by cypherpunks suspicious of the government and initially bad-mouthed by every major institutionfrom the European Central Bank to JP Morganthe cryptocurrency seemed poised to break finance free from the shackles of centralization.

Bitcoin was created because the traditional system has huge problems, and making Bitcoin like it is defeating Bitcoins purpose, a long-time contributor to Bitcoin privacy wallet Wasabi who goes by the name Rafe told Decrypt. The difference between the priorities of cypherpunks and regulated institutions was expected, he added.

Cypherpunks are typically privacy advocates who want social change and who see Bitcoin as a tool to avoid an oppressive governments prying eyes. Institutional investors are focused on making moneyBitcoin is something in which they can put a part of their large fund to realize a return.

Privacy-focused Bitcoiners who spoke to Decrypt said the worry is that institutional interest could eventually provoke governments into strongarm crypto users into restriction, penalties, or taxes.

Major crypto exchanges such as Coinbase and Binance already have know-your customer (KYC) measures in place and broadly restrict access to their platforms based on political borders. Lawmakers are also increasingly focused on anti-money laundering (AML) procedures. But the emergence of such compliance measures in the crypto space has attracted criticism from long-time privacy advocates.

Get-rich-quick and mainstream-adoption-no-matter-what could force crypto users into totalitarian rules, Rafe said.

And because every transaction is publicly recorded on the blockchain, a combination of strict KYC rules and no prioritization of privacy could create the biggest global financial surveillance system the world has ever seen, he added.

Harry Halpin, CEO and co-founder of Nym Technologies, a startup working to end mass surveillance, said: The fundamental innovation of cryptocurrency comes from crypto-anarchist philosophy, and if you get rid of that ethos, then innovation in the crypto space will perish.

Bitcoiners have nonetheless continued to work on privacy solutions for Bitcoin because the asset isnt fundamentally private. Rafe told Decrypt that having private wallets can keep big government and institutions from barging in on users..

Some say that Wall Street is coming for crypto, meanwhile, whether people like it or not. David Schwed, COO of blockchain security firm Halborn, previously told Decrypt that the anti-establishment actors in crypto who hate intermediaries will eventually turn to privacy coins.

For others, though, when it comes to Wall Street making things more centralized, the problem isnt Wall Street its Silicon Valley.

Meta has proven again last week with their release of Threadslooking at the privacy disclaimer in the App Storethat they are ruthless about collecting personal data of all kinds, Bitcoin Design contributor Christoph Ono said.

Metas new social media platform Threads dropped this month as a Twitter competitor. It allows Instagram users to share text updates but is more aggressive with its data collection than Metas other appsnotably location-related information, even when location sharing is disabled on ones device.

Deleting a Threads account is also impossible without deleting ones Instagram account too.

Ono added that data is just too big a temptation for the tech industry and that there was no way around building good privacy tools that are impossible to penetrate.

So what solutions are available today? While Rafes entry, Wasabi, is probably too complex for the average Bitcoin user, Karo Zagorus, who leads community and reputation management at zkSNACKs, told Decrypt that self custody was enough of a solution.

Self-custody of Bitcoin or crypto is when a user has full control over their private keys, such as with a hardware wallet. Custodial wallets are more popular, however, because investors do not have to worry about seed phrases and keys. Instead, their cryptocurrency is put into the hands of a third party, like an exchange.

As long as individuals hold their Bitcoin non-custodially, we do not have to be afraid of alternative Bitcoin products like ETFs on Wall Street, he said, adding that the problem only starts happening when institutions start manipulating the books and start inflating the supplies with an on-chain audit.

Scott Norris, co-founder of independent Bitcoin miner LSJ Ops, added that KYC is becoming more of a priority for regulatorsso those who want privacy for their holdings may soon have few options.

Forcing KYC on all crypto users on a permissionless network would require totalitarian control over all our computing devices, said Craig Raw, developer of the Bitcoin Sparrow Walletsomething ultimately very difficult to achieve.

But despite some disagreement amongst Bitcoiners, one view they share is that Wall Streets entry into the space was inevitable.

More:
Will Wall Street Interest in Bitcoin Scare Cypherpunks Away? - Decrypt