The Department of Justice recently charged and arrested a couple, who was accused of stealing $3.6bn, in the largest cryptocurrency fraud to date. The DOJ accused Heather Morgan and Ilya Lichtenstein of employing a complicated a money laundering process. The couple used a small portion of their heist to buy Walmart gift cards.
Purchases of Gift Cards
Over the last few years, I’ve written why I stay away from manufactured spending. While many in our hobby love it, there’s a reason why you often end up with eyes on your account once you ramp it up. While one may not be necessarily doing something legal, a lot of the behavior is akin to fraudsters who are looking to ‘wash’ their ill gotten money.
In this case, the accused couple also bought gift cards from Uber, Hotels.com and Playstation.
The Money Trail
The DOJ filing against them details how they also used to buy gift cards, albeit in small amounts.
The government’s specific money laundering allegations involve relatively small sums, including the purchase of a $500 Walmart gift card. The couple also allegedly bought gift cards for Uber, Hotels.com and PlayStation.
On or about May 3, 2020, Cluster 36B6mu sent approximately 0.057 BTC directly to VCE 10. VCE 10 is a business that sells prepaid gift cards in exchange for BTC. Records from VCE 10 showed that this specific transaction was for the purchase of a $500 gift card to Walmart from an account registered with an email address hosted by a provider in Russia and conducted via an IP address resolving to a New York City-based cloud service provider (“Cloud Provider 1”). Records from Cloud Provider 1 showed that the IP address was leased by an account in the name of LICHTENSTEIN and tied to Lichtenstein Email 1.
The DOJ filing also outlines the amounts were redeemed.
Records showed that portions of the $500 gift card were then redeemed through three transactions for personal items via the Walmart iPhone application. Each of the three redemptions were conducted online under MORGAN’s name, using one of MORGAN’s email addresses, and providing MORGAN and LICHTENSTEIN’s home address for delivery.
The couple lived quite colorful and glamorous lives online. In fact, Heather Morgan also wrote a column for Forbes back in 2020. Ironically, the headline was – “Experts Share Tips To Protect Your Business From Cybercriminals”.
The Pundit’s Mantra
This incident only points out why credit card issuers also look at huge gift card purchases with suspicion. Moreover, banks are only getting more sophisticated at tracking such spend with more detailed data.
Has a card issuer flagged any of your gift card purchases? Tell us in the comments section.
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