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Frozen embryos will keep accused bitcoin money launderers from fleeing

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A Bitcoin ATM screen displays the Bitcoin logo on November 10, 2020 in Los Angeles, California.

Mario Tama | Getty Images

The New York lawyer accused of an “extraordinarily complex” scheme to launder $4.5 billionIn stolen bitcoinA court filing argues that they’re not flight-risks because they want to keep their embryos frozen.

Morgan, her husband Ilya Lichtenstein, had “previously frozen several of her embryos in a New York hospital in anticipation of starting family together, because she cannot conceive via in vitro fertilization due to her endometriosis,” Samson Enzer, a lawyer, wrote in the filing.

Enzer stated that the couple wouldn’t flee the country at any cost, even if they lost their access to having children. This was something they had been discussing for a while until their lives were interrupted by the arrests.

An attorney also stated that Morgan (an aspiring rapper who goes by the name Razzlekahn) and Lichtenstein, who hold dual U.S. citizenship and Russian citizenship respectively, were not at risk of flight due to their “both staying put in Lower Manhattan…even after the Government’s investigation targeting them” months ago.

They filed the paperwork ahead of their scheduled bail hearing in Washington, D.C. on Friday. Judge Beryl will then review the conditions that they have been held to bail since Tuesday’s arrest at their house.

Morgan, aged 31, and the 34 year-old Lichtenstein are accused of an alleged conspiracy to launder $4.5 billion worth of bitcoinThis was stolen during the hacking of Bitfinex’s virtual currency exchange Bitfinex in 2016. The hack did not result in them being charged.

On Tuesday, the Justice Department announced that they had seized bitcoin worth more than $3.6 trillion linked to this hack. The cryptocurrency was located in digital wallets controlled by the couple. It is the most significant financial seize ever conducted by the department.

According to the prosecutors, Lichtenstein was found to have had access to the crypto wallet in January this year, which the hacker used to transfer nearly 120,000 Bitcoins at the time of the attack.

Despite the fact that the bitcoin contained in the wallet was only $71 million, its value had grownTo more than $4.5 Billion by January

Enzer stated that Judge Beryl Shouldell maintain the bail conditions set by Manhattan federal judge Judge Debra Freeman on Tuesday. Morgan was released with a bond of $5 million and Lichtenstein at $3 million, respectively, along with conditions for home incarceration, location monitoring, and other conditions.

Howell blocked her bail order late Tuesday, after the prosecutors asked her to. The prosecutors claimed that she and Howell are flight risks.

In an emergency request, the prosecution stated that authorities had seized “the vast majority” of the funds stolen from hacking but there were “at least 24 virtual current addresses connected to hacking.” [and believed to be in the Defendants’ control]For which the law enforcement doesn’t have access to the private keys

These addresses are home to approximately 7.500 bitcoins.

Prosecutors wrote that the defendants were sophisticated cyber criminals as well as money-launderers and pose a risk of fleeing and should therefore be held in custody pending trial.

Enzer stated that in his file to Howell, Enzer said that Judge Freeman had correctly ruled that the Government failed to show there were bail conditions to reasonably ensure that Ms. Morgan (or Mr. Lichtenstein) will appear in court as requested in this case.

“This Court should support Judge Freeman’s rational bail decisions.”

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Enzer stated that Enzer informed the couple that an internet provider had notified them in November that grand jury records were sought by prosecutors against the provider.

The lawyer also noted that on January 5, “The Government had law enforcement officers execute a search warrant for their New York home.”

Enzer said that although federal agents took Mr. Morgan’s, Mr. Lichtenstein’s, travel documents, many electronic devices and other property, they left no evidence of a warrant. The warrant indicated that the order was given as part of an investigation into money launder conspiracy.

He said that the couple “continued being at home” throughout telephone and email talks between Enzer, federal authorities and Enzer. Federal officials “provided an written summary of Enzer’s alleged money laundering theory regarding our clients.”

Enzer stated that Ms. Morgan was not allowed to leave to escape the allegations of the Government. In fact, the complaint by the Government exposes serious flaws in the case made against them.

The lawyer stated that the money laundering allegations in the Government’s complaint were based on “a number of circumstantial assumptions and inferences drawn from a complicated web of blockchain and cryptocurrency trace assertions.”

Enzer claimed that if the couple are held without bail it would severely limit their cooperation with their lawyer in preparing their defense for trial and present “potentially serious health risks” to Morgan who was recovering from surgery to remove an abnormal lump from her breasts on January 31.

Morgan is also at greater risk from Covid-19, if she’s kept in prison. Morgan suffers from asthma and has “pre-existing lung damage” from Middle East Respiratory Syndrom (or ‘MERS), the lawyer said.

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