She’s the latest in a handful of crypto-related criminals to get less prison time after co-operating with authorities.

Larry Harmon, who pleaded guilty in 2021 to laundering more than $US300 million of bitcoin on behalf of drug dealers, was given three years in prison after he helped law enforcement. Roman Sterlingov, who didn’t co-operate, was sentenced to 12½ years after a jury convicted him of laundering tens of millions of dollars from darknet markets that sold illegal drugs. The sentence, however, was much less than the 30 years recommended by the government.

Loyalty to husband

Morgan’s attorney had argued that she gets no more time in prison after she’d spent 17 days locked up following her arrest. He said she didn’t plan or orchestrate the offence and had engaged in misconduct out of loyalty to her husband.

“She acted at her husband’s instruction in a limited capacity,” said Eugene Gorokhov, her attorney.

In between tears, Morgan apologised Monday for her actions. “I used my time and energy to do harm instead of good, and I’m ashamed of that,” she told the judge.

Before the Bitfinex hack, Morgan and Lichtenstein were entrepreneurs working in legitimate businesses, according to their lawyers. He helped expand a software company to 30 employees and she started her own business helping Silicon Valley startups with cold email campaigns meant to generate sales, the lawyers said. Morgan met Lichtenstein while participating in a venture capital tech accelerator called 500 Startups, her lawyer said. They began dating in 2014.

In 2016, Lichtenstein left his company after a bitter disagreement with the other co-founder, according to Morgan’s attorney. Lichtenstein started becoming isolated and spent a lot of time on his computer, her attorney wrote.

Alter ego ‘Razzlekhan’

Loading

Morgan also faced some professional setbacks that led to “burnout,” her attorney said. She tried to deal with the stress by creating rap videos under the name “Razzlekhan,” an alter ego that years later would “make Ms. Morgan a target for ridicule on social media and in the press,” her attorney wrote.

Morgan was living with Lichtenstein when he hacked Bitfinex in 2016. He gradually withdrew the stolen crypto over several years and sought help from Morgan to hide the source of the funds, the government said. During her plea hearing, Morgan said she initially thought the proceeds came from illicit activity such drugs or tax avoidance. It wasn’t until 2020 that Lichtenstein revealed to her that he was behind the hack, but she continued to help him launder the money, she said.

“She fully committed to laundering this money and laundering it well,” said C. Alden Pelker, a prosecutor on the case. “For years, she lived a lifestyle she knew was funded by money that didn’t belong to her,” Pelker said.

Bloomberg