Someone Bought NFTs From Accused Bitcoin Launderer, and They’re Pissed

The NFTs previously owned by accused Bitcoin launderer Heather Morgan are no longer visible on OpenSea.

Feb 10 2022, 3:38pm

The world was shocked this week by the allegations against a terminally online husband and wife for successfully laundering stolen bitcoins worth $1 billion and conspiracy to launder nearly $4 billion more from one of the most infamous hacks in crypto history. 

Heather Morgan and her husband, Ilya "Dutch" Lichtenstein, tried numerous methods to cash out funds originating in the 2016 hack on the Bitfinex exchange undetected, investigators allege, including dark web markets, gift cards, and NFT collectibles. 

Advertisement

Now, it appears someone has actually purchased some NFTs from Morgan, according to blockchain records. 

Blockchain records show that two NFT tokens owned by Morgan's known Ethereum address ("rzk.eth") and minted using OpenSea's tools were purchased by a user with the recently-registered vanity address "cancelopensea.eth" on Tuesday, the same day that the allegations against Morgan and Lichtenstein came to light. According to blockchain data, both of the NFTs were purchased for .10 ETH, or $314.10. 

While both of the tokens remain on the blockchain, neither of them appeared on the buyer's profile on OpenSea on Thursday, where both profiles associated with Morgan and Lichtenstein also now 404, as BuzzFeed News previously reported. They were visible on LooksRare, another NFT marketplace, but there was no image file and they appeared blank.

Advertisement

But what were the NFTs? According to the pseudonymous buyer, who sent Motherboard a screenshot of their open MetaMask crypto wallet, they were album covers for Morgan's crypto-themed rap alter-ego Razzlekhan. One was for "Versace Bedouin," a track that got a lot of attention after the arrests due to its music video, and the other is for something called "Social Distance" and depicts Morgan making hand gestures and wearing PPE while photoshopped into a Los Angeles street scene. So, they weren't any of the more valuable NFTs that Morgan had purchased and are still owned by her rzk.eth address

"After the news first broke about them I was just looking through her OpenSea profile because of her rzk.eth she had registered and talked about in one of her tweets," Cancelopensea.eth said in a Twitter DM. "At first was just curious on her ETH transactions… but then saw the two 'album cover' NFTs she had minted about a month ago. Figured it was a piece of crypto history. So I bought them .1 ETH each… Then about ~10 hours later they were gone from my OS profile page. And then I saw OS had removed her profile. And all her collections."

"And now the two token IDs of the NFTs she minted with the OpenSea contract were effectively gone," they continued. "Just token IDs with no metadata or image (don’t know if they store the image on IPFS or AWS) but they removed the link to the metadata or the image itself."

Advertisement

This isn't the first time that a trader buying an apparently censored NFT has run into trouble. In one recent case, a Twitter user posted about unwittingly purchasing a stolen NFT that OpenSea then froze on its platform, complaining that it was now worthless and a lost investment. The NFT project reimbursed them 1 ETH. 

The buyer of Morgan's NFTs said they're similarly pissed.

"Without question there is cause of action for a tort. No way to determine future value of something created by someone now infamous in this way," they said. "But more is how scary it is they can delete an artists collection at whim based on the persons actions outside of anything to do with OpenSea, effectively making the NFT purchased by the buyer worthless."

Regardless, they claim that they've "even had people write me and ask if I would sell it to them even without the image attached."

By Friday morning, the NFTs began appearing on OpenSea again in the “Razzle Album Covers” collection minted by Morgan’s address. “Metadata and image from their centralized servers back. But flagged and can't be sold or traded or transferred,” the buyer said in a DM.

“OpenSea’s mission is to build the most trusted and inclusive NFT marketplace with the best selection,” an OpenSea spokesperson said in an emailed statement. “To that end, we believe that people on OpenSea should have the choice and ability to explore, be exposed to, and support projects of all kinds. While we don’t default endorse the creators or projects on OpenSea, our platform policies and Terms of Service explicitly prohibit people to use OpenSea to buy, sell, or transfer stolen items, fraudulently obtained items, items taken without authorization, and/or any other illegally obtained items, or launder money. We enforce our policy in various ways, including delisting and in some instances, banning accounts—as was the case in this instance, out of an abundance of caution.”

Update: This article was updated with OpenSea’s statement and the latest information that the NFTs are once again visible on the platform but trading is frozen.

Tagged:

Bitcoin, laundering, Bitfinex, NFT, opensea, heather morgan, ilya lichtenstein

More
like this
OpenSea Discord Hacked, NFTs Stolen Using Fake YouTube Site
DOJ Charges Former OpenSea Executive In First NFT Insider Trading Case
Neal Stephenson, Author Who Coined ‘Metaverse,’ Just Bought His First NFTs
Neal Stephenson, Author Who Coined ‘Metaverse,’ Just Bought His First NFTs
More Than 80% of NFTs Created for Free on OpenSea Are Fraud or Spam, Company Says
Ethereum Companies Suddenly Ban Users In Certain Countries
Insider Trading 'Common' In NFTs, Investors Say After First Arrest
Seth Green's Apes Gone, Begs Internet Not to Buy Them