‘Razzlekhan’ court document riddled with accounting blunders

How much crypto will the government seize from Razzlekhan? The US doesn’t seem to know

article-image

Krakenimages.com/Shutterstock modified by Blockworks

share

US government officials may be miscounting how much crypto it intends to seize from a notorious pair of alleged criminals by as much as $1 million, a new court filing reveals. 

In a document filed Friday, the Department of Justice detailed a planned plea deal and seizure of assets for married co-conspirators Heather Morgan and Ilya Lichtenstein. The pair were arrested in February 2022 and released on bail six years after the hack of crypto exchange Bitfinex that resulted in the theft of $72 million. 

Since then, the value of the assets Morgan and Lichtenstein allegedly stole has ballooned to well over $3 billion. The pair garnered a degree of media notoriety when the charges were first unveiled, with Morgan in particular receiving attention for her flamboyant personality and rap alter-ego, Razzlekhan. 

The seizures laid out in the document will be significant, totaling billions of dollars across a half dozen blockchains. 

However, a blockchain analysis conducted by Blockworks shows that between the omissions of funds in listed addresses, recent transfers between addresses, and interest earned from DeFi protocols, US officials may have undercounted how much crypto they could be seizing by upwards of $1 million on the Ethereum blockchain alone. 

One address listed in the document refers to roughly $1,997,000 in USDT deposited in Yearn Finance. The value of the deposits is now $2,053,000, after interest. Yet the same address also contains USDC and CRV deposits on the lending marketplace Aave worth an additional $717,000 that is not mentioned elsewhere in the document. 

Another address contains $3.6 million USDT deposited in Yearn. However, this address transferred the deposit tokens in December 2022, along with $6.5 million in aUSDC, to a second address containing assets worth a cumulative $37 million in USD, some of which is mentioned elsewhere in the document and does not take into account the interest from Aave or Yearn.

A final address referring to Yearn Finance deposits of $1.7 million still holds the assets listed and does not contain additional assets, but has earned $54,000 since the initial deposit. 

The document also makes reference to addresses “seized from wallets recovered from Defendants’ online storage account and an external hard drive recovered from the Defendants’ residence” without listing specific Ethereum addresses. 

However, a blockchain analysis conducted by Blockworks identified an address containing appropriate amounts of aUSDC, USDC, USDT, WETH, yvUSDT, and other assets. This address also appears to have served as a gathering point for other sums, particularly of native ETH, mentioned elsewhere in the document. 

In one particularly puzzling example, the document refers to an address containing a fraction of a single Curve CRV token. However, the 0x hexadecimal string does not refer to an Ethereum account, but instead a transaction hash where the CRV was transferred between wallets.  

Between the other blockchain addresses listed, there may well be additional funds derived from forks and airdrops not listed in the document as well.

One possibility is that some of the funds in these addresses were legitimately earned by Lichtenstein and Morgan — and they may well emerge from the proceedings with significant wealth. 

More likely, however, is that the government agencies tracking the assets erred in their blockchain accounting and have understated the holdings they intend to seize.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

recent research

LTIPPanalysis.png

Research

This report is a retroactive analysis of Arbitrum's Long Term Incentives Pilot Program (LTIPP). We collect relevant data at a protocol level and review bi-weekly updates to analyze recipients, their strategies, and the impact of the incentives on high level growth metrics. In particular, we want to highlight outperformers and underperformers, and glean any best practices or lessons learned for protocols distributing ARB incentives in the future. The overarching goal is to synthesize lessons learned that the DAO can reference as it begins thinking about future incentives programs–namely, the working group for incentives that is being actively discussed–especially as Timeboost introduces new conditions for trading and economic activity.

article-image

Sponsored

AI project Zerebro intersects the spheres of artificial intelligence, finance, art, music, and culture

article-image

Allmight is focused on furthering the United States’ leadership in crypto

article-image

The conditions Charles Schwab is waiting for before jumping headfirst into crypto could take shape soon

article-image

The FCA’s director of payments and digital assets shared some takeaways from chats with crypto companies and law firms

article-image

Let’s take a look at how US equities typically perform this time of year and what we might see in the coming days

article-image

Lumina introduces transparency and permissionless integration via an OP stack-based optimium, challenging traditional oracle designs