oh you want to hear me drop gilfalicious what what. welcome back guys so up until now
this channel has mostly been a finance channel but the problem is that i've gotten a lot of
comments and even some complaints where people point out that finance is sort of boring so i've
decided to change the direction of the channel and make it all about rappers and rap music now
a few of you are probably thinking patrick doesn't know anything about rap music but i did one say
faschizzle in a video about a year ago and that video did awfully well and i kind of worry that
many of you possibly subscribed back then hoping for more of the same and then you found yourselves
forced to listen to me droning on about things like dividends and inflation and things like that
so yeah it's rap music going forward and i'll try and cover the goings-on in rap music and any beefs
that might happen yeah beefs that that's sort of the future of this channel so in this week's rap
news a rapper named heather morgan who's probably best known to you as razzle can has been detained
along with her husband ilya lichtenstein accused of conspiring to launder 119 754 bitcoin that were
stolen in a 2016 hack when someone breached the crypto exchange bitfinex systems yep that's right
razzle can you've probably seen her on the top of the pops where she raps some of you probably
know her as the crocodile of wall street which is one of her aliases and a lot of rappers do have
aliases and i know that because i have a youtube channel that covers rap and of course rapping
now in truth the crocodile of wall street is probably not a great alias as the weather in
downtown manhattan is particularly inhospitable to crocodiles at this time of the year
but that's what she's called and that's what she is i guess it's also fortunate that she's in
prison at the moment because they probably keep herself heated so that should be fine oh sorry
i've just been told the top of the pops is not on television anymore it's tick tock you probably
know her from tick tock can we just edit out the bit about top of the pops and put in tik tok i
don't want to look totally out of touch it is yom tv raps is that is that still a thing no it ended
in 1995. okay i'll do a bit more research but yeah just edit this and it will be fine yes so she is
a tick-tock rapper apparently she's also a forbes contributor she even wrote a forbes article in
2020 about how businesses can protect themselves from cyber criminals none of these articles none
of the forms articles rhyme at all so they're largely unrelated to her career as a rapper
i started my company when i was 23 and grew it into a multi-million dollar business
so the justice department complaints as to her husband ilya lichtenstein who went by
the nickname dutch allegedly did more of the money laundering but significantly less of the wrapping
and so i'm going to focus more on razzle con in today's piece because our focus here is on rap
and of course rapping it's not really on money laundering and other ancillary non-wrapping
activities that rappers may engage in like writing for forbes it makes sense for me to focus on the
rapping as in truth it doesn't look like they were actually very good at money laundering as you'll
see they managed to launder only a small portion of the ill-gotten gains for actual spending
and everything they did the feds were able to link directly from the hack all the way to their bank
accounts with their names on them the laundering efforts were small scale and the reason they got
caught now before i explain how they were caught let me quickly tell you about today's video
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in the description below okay so according to the court documents liechtenstein and morgan
or duchy and the croc as i prefer to call them allegedly conspired to launder the proceeds of 119
750 for bitcoin that were stolen from bitfinex's platform after a hacker breached bitfinex's
systems and initiated more than 2 000 unauthorized transactions those unauthorized transactions sent
the stolen bitcoin to a digital wallet under liechtenstein's control over the last five years
approximately 25 000 of those stolen bitcoins were transferred out of liechtenstein's wallet
via a complicated money laundering process that ended with some of the stolen funds being
deposited into financial accounts controlled by liechtenstein and morgan now the complaint
doesn't accuse this couple or any other rappers are forbes contributors of stealing the bitcoins
but when they were stolen in 2016 they were worth 71 million dollars and they're worth
5.3 billion dollars today money laundering is of course illegal and the goal of the process
is to make large amounts of money generated by a criminal activity appear to have come from a
legitimate source the money from the criminal activity is considered dirty and the process
launders it to make it look clean if you have stolen bitcoins they're not that easy to spend
you first have to convert them into dollars or some other currency which usually involves
dealing with a cryptocurrency exchange and your goal is to hide the source of the currency
get it into the legitimate financial system and eventually withdraw it from a respectable bank
account to spend on iced out watches and grills governments want to prevent money laundering and
so they require regulated financial institutions like banks and investment firms and in recent
years legitimate cryptocurrency exchanges to have know your customer anti-money laundering
compliance programs where you have to show who you are and what the source of your funds is
if the source of your funds is theft they frown upon this the criminal complaint alleges that
duchy and the croc employed numerous money laundering techniques such as using fictitious
identities to set up online accounts utilizing computer programs to automate transactions
depositing the stolen funds into accounts at a variety of virtual currency exchanges and dark
net markets and then withdrawing the funds which obfusticates the transaction history
by breaking up the fund flow converting bitcoin to other forms of virtual currency including
anonymity enhanced virtual currency in a practice known as chain hopping and using us-based business
accounts to legitimize their banking activity this sounds quite sophisticated and complicated but
when you read the details of the complaint it's surprising that over five years so little money
actually got laundered 80 of the stolen bitcoins the 3.6 billion dollars the government recovered
stayed in the same bitcoin wallet that was used in the hack the complaint says
that some of the stolen bitcoin moved out of the wallet in a series of small complex transactions
across multiple accounts and platforms this shuffling which created a voluminous number
of transactions appeared to be designed to conceal the path of the stolen bitcoin making it difficult
for law enforcement to trace the funds but most of the money stayed right where it was from
2016 until the government seized it last week they allegedly set up seven accounts at alpha bay
and six accounts at legit crypto exchanges to withdraw a hundred and eighty six thousand dollars
and that then got frozen some of the bitcoins that moved through alpha bay got out before the freeze
and ended up at another exchange unfortunately that account had been opened in liechtenstein's
name and was registered at his address at the time in san francisco this is not considered
good money laundering practice and it's looked down upon in the tick tock wrapping community
dutchy then used that account to purchase gold from a precious metals dealer providing his
home address for shipment and a photograph of his california driver's license so while he did a good
job in converting the stolen bitcoin into gold which is untraceable portable property he kind
of messed up by giving his driver's license and home address to a regulated financial institution
as part of their annie money laundering checks dutchie and the croc managed to use another
exchange to convert almost three million dollars worth of bitcoin into us dollars and into their
own bank accounts between 2017 and 2021 but that exchange was a regulated financial institution
so we'd ask them the standard kyc aml questions dutchy wrote back to the exchange saying hi i'm
a tech entrepreneur and bitcoin early adopter since acquiring my first bitcoin in 2011.
i'm looking to diversify a bid ahead of the etf decision and sell about 100 bitcoin please let
me know the next steps to move forward all trades i would execute are from my personal
funds the llc is simply there to manage my trading assets the croc told the exchange could have been
a fandom always had a harem the croc told the exchange that she would be using her account to
receive funds from her business clients and also to transact with her own virtual currency both of
these sound like decent excuses but the problem is that bitcoin transactions are permanently stored
on a public blockchain so the exchange can see that liechtenstein had not bought his coins in
2011 and that razzle con did not receive hers in a series of small transactions related to
tick-tock rapping nice try though on january 31st 2022 law enforcement gained access to one of their
corresponding private keys on the 4th of february 2022 a court issued a seizure warrant authorizing
the seizure of those funds those funds remain secured in the u.s government's possession
so as you can imagine one of the difficulties of laundering bitcoin is that you have lots of
private keys to remember as you move the currency around you probably don't want to memorize them
or write them down on a piece of paper so the couple saved them on a computer or phone
backed that up to the cloud so it would be safe and then the fbi was able to get a search warrant
and get the thousands of private keys from the cloud service provider duchy and the croc are
charged with money laundering conspiracy but the true tragedy of this tale is that most of
their efforts went into conspiring and not nearly enough went into actual laundering
they were bitcoin billionaires and they couldn't really spend it they were lucky to be able to get
by on the proceeds of tick tock rapping on spotify itunes and wherever you listen to music so be sure
to follow razzlecon around 1.1 billion dollars of bitcoin at today's market price
appears to have so far eluded the justice department from reading the complaint i
get the feeling that some of it is in accounts that the justice department still plans to see
there's no implication in the complaint that they successfully squirreled away a billion
dollars safe from the justice department but we can't really rule that out either the couple is
still believed to have access to 330 million dollars in bitcoin that the federal government
hasn't located and prosecutors said this at their bail hearing but they feel that this has
not been laundered yet it's just stored somewhere there's been a long debate about crypto and money
laundering where one side will say that bitcoin is only useful for money laundering the other side
argued that bitcoin is useless for money laundering because it creates a permanent
public record of all transactions and why would you want to launder money that way this indictment
shows that it's possibly easier to steal four and a half billion dollars worth of bitcoin than
it is to launder it dutchy and the croc managed to extract only a very small portion of the money for
actual spending and each time they got money out the feds were able to trace it this sort of thing
is not respected in the forbes wrapping community no matter how much people love the crocs rapping
in next week's video we'll be sticking to our rap music theme and looking into the rumors that
vanilla ice is the third winklevoss twin don't forget to sign up for the morning brew using the
link in the description below it's completely free so there's no reason not to try it out
if you like this video you should watch this one next have a great day and talk to you soon bye