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- [00:01]
Sarah Haig
Wondery subscribers can listen to Scamfluencers early.
- [00:03]
Saatchi Cole
And ad free right now.
- [00:05]
Sarah Haig
Join Wondery plus in the Wondery app or Apple Podcasts.
- [00:08]
Heather Morgan
Sachi, have you figured out what bitcoin is yet? I know you had a very life changing conversation with the OC's Ben McKenzie about it, but I still refuse to learn what it actually is. And every time I do, I forget it like two hours later. It's out of my mind, you know?
- [00:22]
Ilya Lichtenstein
Yeah, I don't know.
- [00:24]
Saatchi Cole
Someone has to tell me what it is every time it comes up. It's like eternal sunshine of the Spotless Mind for Bitcoin.
- [00:30]
Heather Morgan
Well, we do have some updates on probably the cringiest scammers we've ever covered. The couple who got their hands on billions of dollars in stolen bitcoin and made cheesy rap videos along the way. They've pleaded guilty and they've also admitted to hacking the cryptocurrency exchange Bitfinex. Ilya Lichtenstein faces up to 20 years in prison and Heather Morgan, aka Razzle Khan faces up to five years. But they're not going quietly. Ilya has turned into a government witness, he's spilling the beans on how he was able to conceal the assets he stole and testifying in cases against other cryptocon artists. And Heather just can't get away from crypto and has been spotted at bitcoin events recently. Maybe she's just trying to bring back her rap alter ego, Razzlecon. Maybe it's the moment you should have.
- [01:17]
Saatchi Cole
To give me money every time you remind me about Razzlecon.
- [01:20]
Heather Morgan
We should both be getting money every time we remember Razzlecon.
- [01:23]
Saatchi Cole
I think technically we are upon further True, true.
- [01:27]
Heather Morgan
And also the best or maybe worst update I have for you is that this crypto couple's story could be heading to the big screen. Amazon MGM Studios has launched development on a new film and of course they're calling it Razzlecon. While we wait for that one, here's our encore of the Bitcoin Bamboozle. And don't worry, new episodes of scamfluencers are starting October 7th on Wondery plus and October 14th. Wherever you get your podcasts, Wonder.
- [01:59]
Sarah Haig
Saatchi if you suddenly came into a bunch of stolen money and I'm talking like billions of dollars worth, would you act natural and play it cool or would you like immediately go wild?
- [02:12]
Ilya Lichtenstein
I would not tell anybody that I came into possession of an amount of money that immediately renders somebody evil. I wouldn't say a word.
- [02:20]
Sarah Haig
Exact same Well, I ask because the story I'm about to tell you is about someone who allegedly comes into a bunch of stolen money and truly does not know how to play it cool when she should be laying low. She's posting all over Instagram, Twitter, and YouTube, and her face is all over billboards in Times Square. It's a real cautionary tale, and I can't wait to tell you all about it because it will get you so mad. Let's go.
- [02:47]
Ilya Lichtenstein
Let's get mad.
- [02:51]
Sarah Haig
It's a cold, gray morning in New York in January 2020. Two agents from the FBI, IRS, and Homeland Security are gathered by the back entrance of a massive condo building on Wall Street. They use the freight elevator to get to the 33rd floor, and they rush down the hall and burst into the unit of a married couple. What they find inside doesn't look like the headquarters of a crime syndicate. It doesn't even look like the home of functioning adults. The apartment's stuffed with crap furniture with loud, vaguely Islamic patterns, bedazzled animal skulls, LED strip lighting, and plenty of customized swag. A purple neon sign on the wall reads razzle fucking dazzle. I actually have some photos of their apartment. Sachi and I need you to take a look.
- [03:44]
Ilya Lichtenstein
This is a weird apartment. It's like a weird fusion of, like, a very average looking, like, empty, antiseptic condo and then, like, the ugliest shit I've ever seen in my life.
- [03:56]
Sarah Haig
Well, the condo belongs to Heather Morgan and Ilya Lichtenstein. They're both in their early 30s. Heather's a marketing entrepreneur slash tech investor slash rapper with long, light brown hair. And Ilya's a crypto guru magician who looks like, what if Elijah Wood was less confident? The agents have a search warrant, and Heather and Ilya agree to leave. While they raid the place, Heather asks if she can grab her Bengal cat, Clarissa first. But when she leans down to get Clarissa out from under the bed, she grabs her phone off the nightstand and starts frantically trying to lock it. One of the agents rushes over and pries it out of her hands. After the agents start their search, it becomes pretty obvious why Heather was trying to cover her tracks. The agents find $40,000 in cash and 50 different tablets, phones, and computers. And, okay, that's fishy. But not unimaginable for two successful tech entrepreneurs. But then they find several books with the pages cut out to hide money and other contraband, and a bag literally labeled burner phone.
- [05:06]
Ilya Lichtenstein
Well, this sounds like real amateur hour. I do like that the cat's name.
- [05:11]
Sarah Haig
Is Clarissa, and the most damning evidence isn't even physically in the apartment. The agents also have a search warrant for Ilya's cloud storage account. Using the information in that account, the agents retrieve 94,000 bitcoins worth over $3.6 billion. The raid on the couple's apartment is the Justice Department's biggest asset seizure ever, and the brilliant masterminds behind it are two of the wackiest and tackiest international criminals the world has ever known.
- [05:52]
Saatchi Cole
All right, Audible's best of 2024 picks are here, so discover the year's top audiobooks, podcasts and originals in all your favorite genres.
- [06:00]
Heather Morgan
That's right. From memoirs and sci fi to mysteries and thrillers, Audible's curated list in every category is the best way to hear 2024 best in audio Entertainment.
- [06:10]
Saatchi Cole
Exactly like a stunning new full cast production of George Orwell's 1984 or heartfelt memoirs like Supreme Court Justice Ketanji Brown Jackson's lovely one.
- [06:20]
Heather Morgan
There's also the year's best fiction, like the Women by Kristin Hannah and Percival Everett's brilliantly subversive James. I would love to listen to Sally Rooney's Intermezzo. It just came out this year and I think it was one of my favorite 24 releases.
- [06:35]
Saatchi Cole
Go to audible.comscampod and discover all the years best waiting for you. Ever wondered how industry giants like Aloe and Skims dominate the online retail space? The answer is simpler than you think. It's Shopify.
- [06:48]
Heather Morgan
Shopify is the number one checkout tool with cutting edge features. It streamlines your operations to elevate the customer experience.
- [06:55]
Ilya Lichtenstein
At the heart of Shopify's power is shop Pay.
- [06:58]
Saatchi Cole
It can boost conversions by up to 50%, meaning less abandoned carts and more cash flowing in.
- [07:03]
Heather Morgan
With Shopify, your commerce platform will be ready to sell wherever your customers are scrolling or strolling on the web, in your store, in their feed, and everywhere in between.
- [07:14]
Saatchi Cole
So upgrade your business and get the same checkout that companies like Aloe uses.
- [07:18]
Heather Morgan
Sign up for your $1 per month trial period at shopify.comscampod all lowercase go to shopify.comscampod to upgrade your selling today.
- [07:30]
Saatchi Cole
Shopify.comscampod.
- [07:36]
Sarah Haig
From wondery I'm Sarah Hagie. And I'm Saatchi Cole and this is Scamfluencers.
- [07:42]
Razzle Khan
Come and give me your attention. I won't ever learn my lesson. Turn my speakers to 11. I feel like a legend.
- [07:50]
Sarah Haig
Sachi There is truly something for everyone to feel secondhand embarrassed by in this Story. There are cheesy rap videos, a cringey Times Square proposal, a whole lot of crypto, and so, so many questionable startup. This is a story about a couple who would do anything to make it in Silicon Valley and somehow wound up with billions in stolen bitcoin. It took the feds years to track them down, even though they were posting about their fabulous lives and freaky alter egos the whole time. This is the bitcoin bamboozle. Okay, Saatchi, before we get into this wild crypto story, we have to go back to a time before crypto even existed. This is a time I like to call the George W. Bush administration. Great.
- [08:44]
Ilya Lichtenstein
I'm really excited to go back there.
- [08:46]
Sarah Haig
It's the early 2000s, and Heather is in middle school. She's petite, with braces and a high pitched voice. She lives in Tehama, a tiny Northern California town of just 400 people. About 80 of them are Heather's classmates, and many of them have the same bullying her. Heather uses a rolling suitcase for her books, and she's in speech therapy for her lisp. She has braces. And she's also obsessed with rap music and dreams of one day traveling the world and becoming a rapper or a big time tech entrepreneur. But for now, she's just trying to get the hell out of Tehama. One afternoon, Heather arranges a meeting with her school principal. She wants to transfer to a larger school in Chico, about 30 miles away. But he's not exactly encouraging. That really sticks with Heather. She talks about it years later in a YouTube video.
- [09:44]
Clarissa
He told me, listen, you're a big fish in a small pond, but if you go to the ocean, you might drown. And I remember thinking, number one, this is not a pond, this is a mud puddle. And number two, okay, the ocean. Yeah, it's big, but I'm a shark.
- [10:07]
Ilya Lichtenstein
Okay, well, you know, muddled ocean metaphor aside, it just sounds like she kind of needs to get out of Dodge and wants to try something new.
- [10:15]
Sarah Haig
Yeah, and she does. After she transfers to the bigger school, Heather's motivated to prove her old principal wrong. To swim in the ocean and see the world. So while she's still in high school, she goes to Japan as an exchange student. And in college at UC Davis, she double majors in economics and international relations and studies abroad in South Korea and Turkey. She graduates in just three years and in 2011, moves to Hong Kong and then to Turkey. The following year, she gets into a master's program studying economic development at the American University of Cairo and Egypt. Heather is far from the mud puddle of Tahama now. And she sets out to become an exciting, worldly professional, or at least to seem like one. In blog posts, she describes herself as an economist and writer, though she's only got an undergrad degree in economics and doesn't have any published work outside of her blog. She wants to find a community that will welcome her, quirks and all. She gets involved in Cairo's queer scene, organizing parties during a time when it's definitely not safe to be openly LGBTQ in Egypt. She even buys a URL comeout Cairo.com but doesn't do anything with it. Heather also tells people that she's writing a book about Cairo's LGBT community. Spoiler alert Sachi. It never happens. But maybe most bizarre is the fact that Heather also tells her grad school friends that she's Turkish. She introduces herself as Heather Rehan. Her actual full name is Heather Rhiannon Morgan.
- [11:56]
Ilya Lichtenstein
There it is, right on schedule.
- [11:59]
Sarah Haig
You know what, Saatchi? I will say we all know a Heather Rayhan.
- [12:02]
Ilya Lichtenstein
I've met her, I know her. And this does not bode well.
- [12:05]
Sarah Haig
Well, ultimately, Heather decides grad school is just too small a pond for her. After just one semester in Cairo, she bails. She's headed to San Francisco to make her childhood dream of being a tech entrepreneur come true. She wants to make a boatload of money in a city flooded with venture capital and to prove once and for all that she really can swim with the sharks. In early 2013, when Heather arrives in San Francisco, Twitter has just gone public and Uber is in its heyday. It's the perfect time for Heather to break in. After a few weeks of couch surfing, Heather meets Hussam Hamo. Hussam's a young, clean cut entrepreneur from Jordan, and he's just been accepted into 500 Startups, a prestigious accelerator program. It's basically where a group of aspiring founders get mentored by tech industry leaders and then pitch their companies to potential investors. Hussam is in the process of founding Tamatem Games, a startup that publishes mobile games in Arabic. Heather just so happens to speak Arabic from her time living in Cairo. Oh, and according to Forbes, she tells Hussam that she's a practicing Muslim who observes Ramadan. But it's unclear if she actually is okay.
- [13:28]
Ilya Lichtenstein
I mean, I don't totally understand what her plan is. It seems like such a needlessly complicated and unnecessary lie.
- [13:36]
Sarah Haig
I think it's a way for her to get in with the people she wants to be in with. Right. So Hussam makes Heather an unpaid spokesperson for Tamatem Games. She pitches the company in meetings with potential investors, and in return, she gets to network with some of the biggest names in Silicon Valley. Heather makes an immediate impact on the team, and I'm sure she did a lot of things, but I mostly care about her role in a video for 500 Startups. It's a very timely parody of Thrift Shop by Macklemore.
- [14:10]
Ilya Lichtenstein
No.
- [14:10]
Sarah Haig
And because I live to torture you, Saatchi.
- [14:13]
Saatchi Cole
No.
- [14:14]
Sarah Haig
Let's give it a listen.
- [14:15]
Zayn Tackett
I'm gonna raise the fund. Only got $20 in my pocket. I'm raising, looking for some millions. This is fucking on zone.
- [14:25]
Ilya Lichtenstein
You know, I have thought about this a lot in the last 10 years, and I do think Macklemore should have to answer for his crimes. Like at the Hague.
- [14:34]
Sarah Haig
Ugh, it's a lot. All right, well, Heather's ready to leverage all her new connections to secure her place in the tech scene. And she's about to meet a man who can take her budding career to the next level. Ilya Lichtenstein's made a name for himself as a co founder of a digital marketing startup called MixRank. He's got dark, curly hair and light eyes, and he's so successful, he's been asked to mentor up and coming founders at the 500 Startups accelerator. During an event in New York. He gets on Heather's radar. She even live tweets his talk. Sachi, could you please read it for us?
- [15:13]
Ilya Lichtenstein
Oh, I'd love nothing more. The first tweet says, listening to Iliabot explain how to go from being world's worst SEO to 10 times your traction at 500 startups 500 strong. There's another one that says, learn to be an Excel ninja for growth hacking. And then a third that says, don't build things from scratch. Glue existing tools together to be cost effective for automation.
- [15:39]
Saatchi Cole
Jesus.
- [15:40]
Ilya Lichtenstein
It's truly like a robot wrote all of these.
- [15:42]
Sarah Haig
I know. Well, about a month later, Ilya goes to a bar packed with 500 startup participants. Even though he's one of the mentors in the program, it's giving me college professor going to an undergrad party vibes and he starts chatting with Heather. They have a connection. They've both found a sense of belonging in the tech industry. It's where they want to make their mark and their fortune. Ilya was born in Russia, but grew up in a suburb outside Chicago. He was an intense, nerdy kid, and after getting a psychology degree from the University of Madison, Wisconsin In 2010, Ilya moved to San Francisco. He's fascinated with hacking and seems to see himself as a kind of techno libertarian. He's hell bent on becoming a founder in Silicon Valley. And like so many aspiring entrepreneurs, Ilya doesn't seem to care what the business is. He just wants to be founding it.
- [16:41]
Ilya Lichtenstein
Okay, well that seems like a really terrible way to do business. Like, shouldn't you want to care about what the business is? I feel like we're seeing this with like, Elon. Like, Elon bought a business that he didn't understand and didn't really respect and now he's just tanking it.
- [16:56]
Sarah Haig
Yes, exactly. And Ilya worked his way up in the world of affiliate marketing. Essentially, he made ads for all sorts of weird businesses, including dating websites. In an interview with a website called Mixergy, he says that dating ads are his favorite.
- [17:12]
Zayn Tackett
My job every day was to wake up and look for more creatives, more pictures of hot girls, or even not so hot girls to put in my creatives, to refresh them, to get attention, to get clicks.
- [17:25]
Sarah Haig
I mean, imagine this guy being in charge of like, hot girl, not so hot girl.
- [17:31]
Ilya Lichtenstein
It's always like men with the ugliest insides who think that they're the arbiters of who's hot and who isn't.
- [17:36]
Sarah Haig
Ugliest insides and, let's face it, ugliest outsides.
- [17:39]
Ilya Lichtenstein
I was trying to be kind, but sure, yeah, that too.
- [17:43]
Sarah Haig
Well, according to Forbes, he also at one point ran a Ron Paul fan site and set up a brain optimization supplements business. Now he's a co founder at MixRank, which helps businesses find and target potential customers. Ilya's ambitious and driven and he goes after what he wants in business and in his love life. And Heather's into it. One of her oldest friends later tells Forbes that Heather tended to be attracted to guys who were one step ahead of her professionally. Guys who could give her a leg up. But Ilya's not Heather's only love interest and it will take more than a one time connection for this star crossed couple to come together. By the end of the 500 Startups accelerator program, Heather's taken up with another 500 Startups founder, Bruno Souza. Bruno's a dressed down guy with a soft smile and black hair and he's working on his own startup, Pin My Pet, which is supposed to help people find their lost pets. Heather's connection with him is immediate and intense. So she moves to Brazil with Bruno and marries him and leaves Ilya and Hussam behind.
- [18:57]
Ilya Lichtenstein
Wow, that came out of nowhere, it feels like.
- [19:00]
Sarah Haig
Isn't that just something else? Yeah, I guess I'll marry this guy.
- [19:03]
Ilya Lichtenstein
I guess. I don't know man. I knew my ex husband for 11 years and then I married him. So I didn't get it right either.
- [19:11]
Sarah Haig
Well, Saatchi, just a few months later, the shine starts to fade on this impulsive relationship.
- [19:18]
Ilya Lichtenstein
I bet.
- [19:19]
Sarah Haig
By the fall of 2013, Heather's back in the Bay Area and she seems ready to jump into a new relationship and another chance to advance her career. Even before she finalizes her divorce from Bruno, Heather moves into Ilya's skyscraper apartment. He agrees to come on as an advisor to her new startup, an email marketing company called Salesfolk. He even publicly vouches for her on LinkedIn where he writes some pretty unique compliments. In an endorsement of Heather's marketing skills. Ilya writes that she, quote, crafts precisely targeted messaging that sticks in customers brains like a finely sharpened meat hook.
- [20:01]
Ilya Lichtenstein
Meathook.
- [20:02]
Sarah Haig
Yeah, it's a very positive image. To be honest, if I think Meathook, I think I want to hire this person.
- [20:08]
Ilya Lichtenstein
Yeah, well, I want to meathook in charge. Sure.
- [20:12]
Sarah Haig
Well, Heather and Ilya waste no time trying to establish themselves as a Silicon Valley power couple. They flaunt their wealth and success online, posting about first class trips to Hong Kong, Panama and Mexico. They've got their hooks in each other and they're ready to take on the rest of the world.
- [20:37]
Saatchi Cole
What's your favorite way to embrace the cozy autumn vibes? Curling up with a good book, sipping hot apple cider, or maybe wrapping yourself in a luxuriously soft sweater?
- [20:47]
Heather Morgan
Probably all of the above for me. Speaking of cozy sweaters, have you heard about Quince's Mongolian cashmere sweaters that start at just $50? It's like wrapping yourself in a warm hug on a chilly fall day. All their Items are priced 50 to 80% less than comparable luxury brands because they partner directly with top factories to eliminate the cost of the middleman.
- [21:07]
Saatchi Cole
I just bought a bunch of things from Quince as I do every season. Basically I am very excited about the sweaters. But Sarah, I can't stop wearing the bodysuits. They are so comfortable. They make me look very hot.
- [21:20]
Heather Morgan
Get cozy in Quince's high quality wardrobe essentials. Go to quince.comscampod for free shipping on your order and 365 day returns.
- [21:29]
Saatchi Cole
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- [21:40]
Heather Morgan
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- [21:48]
Saatchi Cole
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- [21:57]
Heather Morgan
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- [22:04]
Saatchi Cole
Their library actually has more than 75,000 movies and shows which you can save and rewatch anytime for a whole year. You'll never miss a minute of binge worthy shows like Yellowstone.
- [22:14]
Heather Morgan
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- [22:23]
Saatchi Cole
So go to Philo TV and check it out for a free seven day trial. That's P H I L O TV to start watching.
- [22:34]
Razzle Khan
I feel like I.
- [22:39]
Sarah Haig
Hailey Hidalgo is petite with long blonde hair and like Heather, Hailey's always marched to the beat of her own drum. She was homeschooled and by the time she enrolled in college in North Texas, she'd already traveled to Tunisia, Morocco, Hungary and Japan. She eventually enrolled in a master's program in Cairo, which is where she met Heather. Even after Heather left the program, she and Hailey stayed close. And now Hailey's watching as Heather becomes a rising star in the tech world. In September 2014, Heather offers Hailey a job as sales folks first employee working remotely from Cairo. Hailey's excited and she says yes. And for a while, things seem to be going pretty well. She's helping with email campaigns and organizing client meetings. But after about a year, Haylei says Heather calls her up and tells her business is slow and that after consulting with Ilya, she's decided to fire Hailey, one of her closest friends.
- [23:40]
Ilya Lichtenstein
This seems like a bad idea. I mean, I think the thing about scam artists is like you should keep your friends as close as possible because like when things go to hell, those are the people who then testify or like go to the FBI.
- [23:53]
Sarah Haig
Well, it's a little hard for Hailey to swallow, especially since Heather presents herself as a rising star entrepreneur. She's writing columns for Inc. Magazine and Forbes claiming to be a marketing and startup guru. She writes pieces like three ways being an introvert enhances your sales career and how the favorite DJ of top celebrities became a startup investor.
- [24:17]
Ilya Lichtenstein
Did he become a startup investor by hanging out with famous people who just told him where to put some money?
- [24:22]
Sarah Haig
Uh, I don't know. You're Gonna have to go through the paywall to find out. All right, so a little more than a year and a half later, Ilya abruptly quits Mixrank, the company he co founded. It's a bizarre move because mixrank's doing really well, but Ilya's just donezo. Around this time, Hailey tells Forbes that she and many other friends cut off contact with Heather. Both Ilya and Heather are becoming more and more isolated. Their former friends and colleagues can't fig out what's going on with them. And in the end, the truth is something no one could have guessed. Zayn Tackett wakes up in Amsterdam on August 2, 2016, with a raging hangover. Zayn's in his 20s, and he's lanky, with dark hair and boyish features. Honestly, he looks like an extra in a 90s hacker movie. Which is fitting because he's the director of community and product development for Bitfinex, a major cryptocurrency exchange. So let's just lay out some crypto. Basic Saatchi. Yes. I had to learn about crypto for this episode. You are welcome. I've been avoiding it for years, and it's finally freaking happened.
- [25:40]
Ilya Lichtenstein
How truly embarrassing for you.
- [25:42]
Sarah Haig
Embarrassing. Okay, so cryptocurrency is digital money. Units of cryptocurrency are created by computers solving extremely complicated math problems.
- [25:55]
Ilya Lichtenstein
Yikes.
- [25:56]
Sarah Haig
There's all kinds of different cryptocurrencies, but one of the biggest is, as you know, bitcoin. Okay. Zane is a bitcoin evangelist. When he first heard about crypto, he dropped out of college and moved to China to work in the industry. And business has been pretty good. But this morning, Zane has a rude awakening. He discovers that Bitfinex, the company where he works, has been hacked. At first, he's not worried, and I'll tell you why. But I have to explain a little more. First, cryptocurrencies like bitcoin are stored in digital wallets, which are basically bank accounts that only exist online. And there's a degree of transparency because all transactions are public record stored on a digital ledger called the blockchain. Think of it as like making everyone's Venmo transactions public.
- [26:51]
Ilya Lichtenstein
I can't think of a worse thing. It's too intimate.
- [26:54]
Sarah Haig
Well, the company Zane works for, Bitfinex, is kind of like a bank for crypto. And like any bank, Bitfinex has taken security measures in case of a hack. For example, they've put a global limit on the amount of coins that can be withdrawn on any given day. 2,500 coins at the time, that's worth about $1.5 million. So Zain assumes the hack can't be any worse than that and that his company will be able to trace it back to the blockchain. Problem solved. But that's not what happens. Somehow the hackers managed to steal nearly 120,000 bitcoins. That's almost 50 times Bitfinex's daily global trading limit. At the time, that's worth about 60 to 70 million dollars. The crypto world panics, and the value of bitcoin craters by around 20%.
- [27:51]
Ilya Lichtenstein
I mean, all of this just reads like an argument that perhaps money shouldn't be organized through, like, a computer figuring out math.
- [27:59]
Sarah Haig
Also, nothing's real.
- [28:00]
Ilya Lichtenstein
Yeah, like this is all made up.
- [28:02]
Sarah Haig
Well, real or not, Zane goes into hyperdrive. He says he spends the next 42 hours calling clients who lost money, communicating to the public about what happened, and not sleeping a wink. He feels so bad for all of Bitfinex's clients, especially the average people who decided to invest in crypto and have now lost everything. In an interview he later gives to the podcast the Breakdown, he describes the magnitude of the fallout.
- [28:32]
Zayn Tackett
I got a lot of death threats, but, you know, whatever people are. If you want to say you're going to kill me, be my guest. But the suicide notes were much harder to take because I did. You know, you could see that their money was gone, and, you know, it did really affect people.
- [28:48]
Sarah Haig
That is depressing, Incredibly depressing. Well, Zayn and everyone at Bitfinex are trying to figure out who could have pulled this off. They think maybe it was hackers with ties to North Korea, Russia. So they watch the blockchain to see if the hackers spend the stolen bitcoin, which would give them a chance to trace the transaction. But they don't. The stolen bitcoin just sits there, unspent for months. Zain eventually gives up hope that they'll ever find the hacker. But a surprisingly savvy branch of the IRS has a big lead, and they're preparing for a digital takedown. Chris Donczewski and Tigran Gambarian work for the irs, and they're a part of its new crypto tracking unit. They also look like actors playing mismatched partners on a CBS cop show. Chris has a Midwestern Boy Scout look with short, spiky hair, while Tigrin has a beard, boxy glasses, and an intense analytic stare. Chris and Tigrin have been following the Bitfinex hack closely, and they noticed that some of the stolen bitcoin has been traded through AlphaBay, the Internet's biggest black market. They realize the stolen bitcoins have been mixed with legitimately traded coins, then deposited in a new wallet. With all traces of the theft erased, Chris and Tigran tracked down AlphaBay's server in Lithuania. Using that information, they were able to track down AlphaBay's founder, a 25 year old Canadian hacker named Alexandre Kazes, who looks like a before photo of Elon Musk. Saatchi, please check this out.
- [30:30]
Ilya Lichtenstein
Oh, God, look at this nerd. He's wearing a very shiny suit and very stupid sunglasses and standing in front of a Lambo looking just terrifically smug.
- [30:44]
Sarah Haig
Yeah, you know, it just kind of goes to show there's no way anyone can pose with a car and look normal.
- [30:50]
Ilya Lichtenstein
No.
- [30:50]
Sarah Haig
Especially when you truly look like a nerd who suddenly got money. Yeah, well, Saatchi, Chris and Tigran's work is pivotal in bringing down AlphaBay. In July 2017, about a year after the hack, the FBI, the DEA, and the Royal Thai Police ambushed Alexandre's house. They literally ram a car into the front gate of his compound before rushing in to catch him. A week later, Alexandre apparently dies by suicide in a Thai prison. That means Chris and Tigrin have lost their biggest potential source of intel. So they doubled down on their work to uncover AlphaBay's clients. Using the data from the raid, Chris and Tigrin track the laundered bitcoins to various accounts at different crypto exchanges. A bunch of the accounts are linked to email addresses that have the same Internet service provider. And as he keeps digging, Chris is about to trace some of the coins to some very high profile suspects. Around the time of this massive crypto hack, Heather's email marketing company, Salesfolk, is doing amazingly great. Or at least that's what she's telling people. In one presentation, she claims that Salesfolk generated nearly $65 million in revenue in 2016. It was the same year that someone hacked Bitfinex and made off with a bundle of bitcoin worth about $66 million. Do you see where I'm going with this?
- [32:24]
Ilya Lichtenstein
I'm stressed and concerned.
- [32:27]
Sarah Haig
Okay, so there's no evidence that Ilya and Heather hacked Bitfinex or stole all that bitcoin. But according to the Department of Justice, they gained control of the stolen crypto sometime after the hack. We don't know how or exactly when. What we do know is that after the crypto was stolen, Ilya and Heather start traveling all over the world. To Malaysia, Hong Kong, Egypt, Vietnam. And staying in five star hotels. They move to New York where they live in a luxury high rise building on Wall Street. It's got a 24 hour doorman and a rooftop terrace with 360 degree views of downtown Manhattan. They live there with their Bengal cats. Clarissa. Remember her? We love her.
- [33:15]
Ilya Lichtenstein
Clarissa is the only person I care about in this story. Where's Clarissa?
- [33:21]
Sarah Haig
We'll get there. Okay, so despite Ilya's track record of success, he doesn't seem eager to found another company. His LinkedIn from this time is full of somewhat vague titles like advisor, mentor, investor. And when Ilya does help found a new startup in early 2018, it's a firm called EndPass, which is a crypto startup.
- [33:46]
Ilya Lichtenstein
No one in this story is learning any lessons. No, no one's like absorbing past mistakes and thinking about how to adjust in the future.
- [33:53]
Sarah Haig
Yeah, and Saatchi, it's not just any crypto startup. You have to read this medium post. Ilya wrote it explaining why he's starting the company. Okay.
- [34:03]
Ilya Lichtenstein
It says the biggest threat to mass adoption is, without a doubt, security. We cannot expect mainstream users to be security experts in a world where the most common password is still 123456. Security needs to be built into the product by design, not left up to the user. I guess that's true.
- [34:21]
Sarah Haig
Yeah. Why not? Soon after, Ilya and Heather rebrand themselves as hotshot investors. They start taking meetings with all kinds of crypto startups, and they act as if they're deciding which ones to pump money into. But one of the CEOs they meet with later tells Vanity Fair that he notices something strange about Heather and Ilya during their meeting. Specifically, it's the questions they're asking. And Saatchi. We don't know what Heather and Ilya's questions were, but can't you imagine these two walking into a boardroom and asking, could someone use your company's technology to, I don't know, launder a shit ton of stolen bitcoins?
- [35:00]
Ilya Lichtenstein
I mean, it truly feels perfectly believable.
- [35:03]
Sarah Haig
Yeah, well, Heather and Ilya are gaining quite the reputation in the crypto scene, and they're about to become even more well known all across the globe. And not in a good way.
- [35:19]
Heather Morgan
Unexpected expenses that pop up, especially during the holidays are truly the worst. Life doesn't wait for payday.
- [35:27]
Ilya Lichtenstein
You got that right.
- [35:28]
Saatchi Cole
But luckily, there's Chime, the financial app that's changing the game. With Chime's my pay feature, you can get up to $500 of your paycheck early, no Credit check, no interest and no mandatory fees.
- [35:39]
Ilya Lichtenstein
Plus, you'll get access to over 50,000 fee free ATMs.
- [35:43]
Saatchi Cole
That's incredibly convenient, especially if you're traveling.
- [35:46]
Heather Morgan
Don't wait for payday to make this holiday season merry and bright. Open your Chime checking account in minutes@chime.com scampod that's chime.com scampod Chime feels like progress.
- [35:59]
Saatchi Cole
Banking services and debit card provided by the Bancorp Bank N A or Stride Bank N A. MyPay line of credit provided by the Bancorp Bank N A or Stride Bank N A. MyPay eligibility requirements apply. Not available in all states. MyPay credit limits range $20 to $500. A $2 fee to get funds instantly. SpotMe eligibility requirements and overdraft limits apply. Fees apply at out of network ATMs and for OTC withdrawals.
- [36:26]
Razzle Khan
I feel like a.
- [36:31]
Sarah Haig
By early 2019, Heather has evolved into her final form, surrealist rapper Razzle Khan. Razzle Khan is. You know what, Saatchi? I'll let her introduce herself.
- [36:44]
Clarissa
I'm many things. A rapper, an economist, a journalist, a writer, a CEO, and a dirty, dirty, dirty, dirty ho.
- [36:54]
Sarah Haig
Yeah. Safe to say this girl's got bars.
- [37:00]
Ilya Lichtenstein
That's the music I want to play anytime I enter a room.
- [37:03]
Sarah Haig
Yeah. This is absolutely sickening. It feels like a hate crime.
- [37:07]
Ilya Lichtenstein
Okay, all right, so this sucks.
- [37:09]
Sarah Haig
Well, you know what, Saatchi? You know what's even worse?
- [37:12]
Ilya Lichtenstein
Ugh.
- [37:12]
Sarah Haig
Razzlecon is only one of several alter egos Heather is promoting online. She has multiple accounts on Twitter, T TikTok, YouTube, and Facebook. And she runs a whole Instagram for their cat, Clarissa, and for Ilya's alter ego, the cat Monkey Wizard. But the couple has more reason than ever to keep a low public profile, because by the middle of 2019, the stolen Bitcoin they're holding has spiked in value. It is now worth around $1.3 billion. But at this point, Ilya has decided he's ready to commit to Heather. In June 2019, he proposes by pulling off a huge stunt. He puts posters of Heather all over Manhattan, leading her to Times Square. There, she finds a billboard that reads Razzle Khan and has a blurb promoting her album. Could you read it for us, Sachi?
- [38:08]
Ilya Lichtenstein
It's a big billboard with her, like, pulling a face on the side, like, to look intentionally grotesque. And then there's a quote. I don't know whose quote it is. It just appears to be words in quotation marks that says the most brutally honest rap album of the Year. I don't know what that could possibly mean.
- [38:32]
Sarah Haig
It's sick. Yeah, well, Saatchi. Heather says yes. And as you can tell, Ilya's a big planner. So when he and Heather make a trip to Ukraine later that summer, he prepares by making dedicated folders on his cloud storage account. One's labeled Personas, and it includes documents and potential ID cards for several new identities. And there's another folder called Vendors that lists dark web sellers that could provide everything from fake passports to untraceable cash. While they're in Ukraine, Heather and Ilya order from some of these vendors. They have their packages shipped to hotels to protect their identities. It looks a lot like Ilya's preparing to launder the rest of the stolen Bitcoin. He takes detailed notes about money laundering and everything they need to start a new life in Ukraine. But with the feds hot on their trail, that new life will never materialize. Chris and Tigran start watching Heather and Ilya and building their case. Thanks to their work, the FBI starts monitoring Heather and Ilya's condo building. And I can only imagine their reaction when they dive into the social media presence of their key suspects. Imagine realizing this suspected international cyber criminal is also razzlecon.
- [39:49]
Ilya Lichtenstein
Honestly, in the world of, like, crypto crime, that the super villain is somebody called razzle Khan feels apt. Yeah, in any other crime, I'd be like, that's ridiculous. But here, it's like, you know what sounds about right?
- [40:03]
Sarah Haig
Because it's the least cool kind of criminal.
- [40:06]
Ilya Lichtenstein
It's loser shit for sure.
- [40:09]
Sarah Haig
Well, they also watch as Ilya and Heather get married in California in November 2021. And this ceremony is anything but quiet. Heather is literally carried in on a palanquin surrounded by objects that have been spray painted gold. And later, she performs a song.
- [40:28]
Ilya Lichtenstein
You know, if I am ever at a wedding where the bride forces me to listen to her perform, I think it is legal for me to hit the bride.
- [40:36]
Sarah Haig
I fully agree. After the reception, they have a secret, smaller afterparty at a mansion where, shockingly, the guests are told not to post on social media. This is out of character for Heather and Ilya, but maybe they're at least trying to hide some of their newfound wealth. Which would make sense because the month of their wedding, an Internet service provider notifies them that the FBI has subpoenaed their data as a part of an ongoing investigation. So there's a chance they know they're about to get arrested and this wedding is a sort of last hurrah. Two months later, in January 2022, the FBI raids Heather and Ilya's condo. This is when Heather asks if she can grab Clarissa, but tries to lock her phone instead. After the raid, the couple continues working on plans to flee the country, but time isn't on their side. In early February 2022, the Department of Justice announces that they've seized more than $3.6 billion worth of stolen cryptocurrency, and they have arrested the two people they believe conspired to launder it. In a video statement released on Twitter, United States Deputy Attorney General Lisa O Monaco called it the largest seizure of.
- [41:54]
Ilya Lichtenstein
Cryptocurrency ever by US Law enforcement. It is also the department's largest single financial seizure in its history.
- [42:03]
Sarah Haig
When the world learns who's been charged for the hack, the news blows up. Vice runs an article with a headline, Woman who allegedly laundered $1 billion in Bitcoin was cringe. YouTube rapper and the Daily Beast goes with hipster couple charge in $4.5 billion. Crypto Heist is even weirder than you think. Twitter has a field Day with Razzlecon's YouTube videos, and her old TikToks reach a level of viral that Heather could have never imagined or honestly hoped for. Do you remember any of this, Saatchi, when this was happening online?
- [42:38]
Ilya Lichtenstein
No, I honestly don't. I have no recollection of this at all. I feel like I took the day off the Internet.
- [42:44]
Sarah Haig
Yeah, I do remember seeing it and kind of being like, I don't want to pay attention to these people. And, well, here we are. Meanwhile, Heather and Ilya are facing up to 25 years behind bars. At first, the couple shares a legal strategy. Their lawyer claims that they need to stay in New York because they're trying to have a family. They have frozen embryos at a local hospital. The judge decides to cut Heather a break. He releases her on a $3 million bail and puts her on house arrest in New York. That's partly because her parents put up their house to secure bonds. She spent her whole life running from Tahama, but now the Tahama house is the only thing keeping her out of prison. Ilya doesn't get so lucky. He's deemed a flight risk, and he's sent to a prison in Virginia to wait for the trial. And as of this recording, his and Heather's trial date is still not set. Then, in March 2022, Heather decides to get her own lawyer. And about six months later, she breaks her silence, posting to Twitter for the first time since the arrest. Saatchi, could you read it for me?
- [43:53]
Ilya Lichtenstein
It says, looking for remote B2B growth slash marketing Sales slash copywriting demand. Gen work can be contract or potentially full time. Have 10 years experience, including remotely managing distributed teams. DM me to discuss serious opportunities with B2B tech companies only. Thanks.
- [44:14]
Sarah Haig
Talk about a choosing beggar. Serious opportunities with B2B companies only.
- [44:20]
Clarissa
Thanks.
- [44:21]
Sarah Haig
Like, I'm sorry, girl. You do not get the right to be picky right now.
- [44:26]
Ilya Lichtenstein
Yeah, well, there's that delusion. That famous delusion.
- [44:29]
Sarah Haig
I mean, as we've learned, you can't keep Heather down for long. She is always looking for the next rung of the ladder. Well, Saatchi, we learned a lot about crypto in this episode. Stuff we didn't really want to know. And there is something so gross about this from top to bottom of, like, these two opportunistic people who don't have any real skills other than being leeches. And it really makes you think about the tech industry at large and how so much of it is, like, fake it till you make it and know the right words, you know? Yeah.
- [45:09]
Ilya Lichtenstein
I mean, as ever, it seems like a story where these scam artists are benefiting off of the fact that they're working in a currency that people don't understand. I don't get it.
- [45:17]
Sarah Haig
Yeah, I mean, you could just start any sort of business and, like, have two words, put them together and be like, yeah, we're gonna be analyzing how passwords affect our psyche. Give us $500 million or something.
- [45:36]
Ilya Lichtenstein
Well, by that token, everything's fake. Money isn't real, and nothing matters.
- [45:40]
Sarah Haig
Nothing matters. And I guess I'm wondering also, do you think that these two were always kind of setting out to steal Bitcoin? Like, they wanted to get into crypto because it was hot, and then they realized, like, ugh, we should just steal some.
- [45:53]
Ilya Lichtenstein
I don't know. I feel like these are untrustworthy people who are not great at covering their tracks. And the way they also talk is, like, not rooted in reality. So I feel like they could probably justify anything to themselves. I feel like they would have found something else if it wasn't this. But it had to be something that was complex enough that most people don't understand it. And crypto is, like, very much that thing right now.
- [46:17]
Sarah Haig
Yeah. And also, even having learned about it for the purpose of this episode, I'm like, oh, it's not that I was too dumb to understand it. It's that the rules just keep changing. Nothing is real when it comes to this. Stuff.
- [46:28]
Ilya Lichtenstein
Yeah. All of this is completely arbitrary. And these are people who want to live in their own arbitrary rules.
- [46:35]
Sarah Haig
You know, for a lot of our episodes, I feel like there's a turning point where people become scammers.
- [46:41]
Ilya Lichtenstein
Yeah.
- [46:41]
Sarah Haig
But this was one of those episodes where these people were kind of destined to scam because of their industry. Do you agree?
- [46:47]
Razzle Khan
Yeah.
- [46:48]
Ilya Lichtenstein
And this woman is giving me real, like, Anna Delvey energy, you know?
- [46:51]
Sarah Haig
Yeah.
- [46:52]
Ilya Lichtenstein
She's like, judgmental and like, she's not living in reality. And she was probably going to do this to somebody and now, you know, she's on Instagram gluing prosthetic eyeballs on brooches she bought on ebay. You know, what are you going to say?
- [47:06]
Sarah Haig
You know, I think the lesson here is don't be cringe. You know, like, if you're cringe the way they are, that is the most guilty you can be, you know?
- [47:15]
Saatchi Cole
Yeah.
- [47:15]
Sarah Haig
Everyone wants to see you crash and burn if you're Rasul Khan.
- [47:19]
Ilya Lichtenstein
Yeah. The loudest lesson I absorbed from this is don't be a loser on Instagram. I know that wasn't really the main lesson, but it is the thing that I am taking away the most. Don't be a loser on Instagram. Just post your photos of your cat and go. If you like scamfluencers, you can listen.
- [47:43]
Saatchi Cole
To every episode early and ad free right now by joining Wondry plus in the Wondry app or on Apple Podcasts. Prime members can listen ad free on Amazon Music. Before you go, tell us about yourself by filling out a short survey@wondry.com survey.
- [48:02]
Sarah Haig
This is the Bitcoin Bamboozle. I'm Sarah Haige.
- [48:06]
Ilya Lichtenstein
And I'm Saatchi Cole. If you have a tip for us on a story that you think we should cover, please email us@scamfluencerswondery.com we use many sources in our research. A few that were particularly helpful were the ballad of Heather Morgan and Ilya Lichtenstein. Bitcoin's Bonnie and Clyde, written by Nick Bilton in Vanity, Razzle Khan, the untold story of How a YouTube Rapper Became a Suspect in a $4B Bitcoin Fraud, written by Cyrus Farivar, David Jeans and Thomas Brewster in Forbes. And did Razzle Khan and Dutch pull off history's greatest crypto heist? Written by Zeke Fo in Bloomberg.
- [48:43]
Sarah Haig
Eric Thurm wrote this episode. Additional writing by us, Saatchi Cole and Sarah Haggie. Jen Swan is our senior producer. John Reed is our producer. Our associate producers are Charlotte Miller and Lexi Puri. Sarah Enney is our story editor and producer. Our story editor is Alison Weintraub. Our senior story editor is Rachel B. Doyle. Back checking by Gabrielle Drollet. Our music supervisor is Scott Velasquez for freeson Sync. Adrian Tapia provided audio assistants. Our sound design is by James Morgan. Our executive producers are Janine Cornelo, Stephanie Jens and Marshall Louie for Wondery.
- [49:35]
Lisa O Monaco
Now streaming on Prime Video. You can call me Detective Alex Cross. Based on characters created by James Patterson. Detective Cross, you've been doing this long time. And you're the best. And created by Ben Watkins. Multiple victims I connected to this comes a thrilling new series. He's a serial killer. I don't kill for fun. This thinks he's the smartest guy in the room. There's a lot of sickos out there. He actually believes he's an artist. You're going to be part of a masterpiece. This is the product of an unbelievable obsession. Aldous Hodge is DC's finest. Alex Cross. If we we don't find him soon, we may never have another chance again. 30 years. Knowing Cross, I learned to trust his gut. I get inside his head.
- [50:17]
Ilya Lichtenstein
The clock's ticking.
- [50:18]
Lisa O Monaco
He was hitting my house. He messed with my kids. He's got to be getting close. You think you can stop him? I know I can. Cuz I know him better than he knows himself. Cross. A new original series only on Prime Video. Watch now.