Weekend Wrap: Razzlekhan’s Rap, FDIC’s Hill Slams "Choke Point" Tactics, and More Crypto News

The weekend has brought a mix of bizarre and significant developments within the cryptocurrency world, ranging from Heather Morgan’s unexpected rap video to regulatory shifts in the banking and enforcement sectors. Here’s a roundup of the key stories:

Razzlekhan Drops Bars Before Heading to Prison

Heather Morgan, the convicted money launderer better known by her alter ego “Razzlekhan,” has dropped a strange rap video just days before starting her 18-month prison sentence. Morgan, who played a pivotal role in laundering nearly 120,000 Bitcoin stolen from the Bitfinex hack, posted a video titled Razzlekhan vs The United States on January 10.

In the video, Morgan raps in front of a government building, wearing fishnet tights and bondage gear while referencing her legal troubles. She critiques the financial system, mentions her ankle monitor, and even pleads for Elon Musk to “save” her.

"Old money, gold dusty; save me Elon Musky," Morgan raps in one part of the track. The video, which Morgan herself described as “sexy” but “cringe,” has raised eyebrows given her impending incarceration.

Morgan and her husband, Ilya Lichtenstein, were arrested in February 2022 for laundering nearly 120,000 Bitcoin, which was originally worth $70 million but has since ballooned to $11.2 billion. The couple was involved in one of the largest financial seizures in U.S. history when authorities recovered the stolen funds. While Morgan is slated to report to prison on January 24, the Bureau of Prisons will make the final determination regarding her arrival.

FDIC’s Travis Hill Criticizes "Choke Point" Tactics in Crypto

In a speech on January 10, Travis Hill, the vice chair of the Federal Deposit Insurance Corporation (FDIC), voiced strong criticism against the “debanking” of crypto firms, calling it a dangerous and unacceptable tactic. Hill, who is a candidate to replace Martin J. Gruenberg as FDIC Chair later this month, expressed concern over how digital asset businesses have been systematically cut off from banking services.

Hill likened the current situation to "Operation Choke Point," a controversial initiative from 2013 that aimed to prevent high-risk businesses, like firearms dealers, from accessing banking services. He urged the FDIC to adopt a more inclusive approach that would not discriminate against law-abiding customers and businesses, particularly within the crypto space.

The FDIC’s vice chair made it clear that debanking, particularly without clear justification, runs contrary to the agency’s long-standing mission of ensuring fair access to financial services. He further emphasized the need to end any tactics that could undermine the integrity of the banking system by excluding certain sectors, such as cryptocurrency.

The crypto industry has long accused U.S. regulators of trying to sever ties between digital assets and the traditional banking system. This ongoing controversy has been dubbed “Operation Choke Point 2.0” by many crypto advocates.

CFTC Enforcement Chief McGinley to Depart

In another significant regulatory development, the Commodity Futures Trading Commission (CFTC) announced on January 10 that its Division of Enforcement Director, Ian McGinley, will be leaving the agency on January 17. McGinley’s tenure at the CFTC was marked by aggressive actions against the cryptocurrency industry, including the high-profile lawsuits against Binance and FTX.

McGinley joined the CFTC in early 2023, shortly before the agency sued Binance and its founder Changpeng Zhao for violating commodities laws. He was also instrumental in overseeing the CFTC’s $12.7 billion case against FTX and Alameda Research. McGinley’s leadership helped establish the CFTC as a key player in digital asset enforcement.

With McGinley’s exit coinciding with Donald Trump’s upcoming presidential inauguration, many are speculating about the future direction of crypto regulation under the new administration. Trump has promised to ease regulations affecting the crypto space, and there are reports that Trump may appoint pro-crypto Commissioner Summer Mersinger to chair the CFTC.

Mango Markets Shuts Down After SEC Settlement

In other news, decentralized exchange Mango Markets is winding down its operations after reaching a $700,000 settlement with the U.S. Securities and Exchange Commission (SEC) in September. The exchange, which operates as a decentralized autonomous organization (DAO), called on its users to close their positions by January 11, following a unanimous vote by the Mango DAO to cease operations.

Mango Markets had previously faced scrutiny over its involvement in a flash loan attack, which resulted in significant losses. Despite this closure, the SEC's settlement aims to resolve issues tied to the platform’s operations, marking another example of the growing regulatory attention on decentralized finance (DeFi) projects.

NY Attorney General Files Lawsuit to Recover $2 Million in Stolen Crypto

New York Attorney General Letitia James has filed a lawsuit in an effort to recover more than $2 million in cryptocurrency stolen from victims of a job scam. The victims were tricked into purchasing crypto under the false pretense of securing remote job opportunities.

The scammers convinced the victims to set up crypto accounts, deposit funds, and review products on fake websites that appeared legitimate. The victims were promised their funds would be refunded along with a commission, but they never received any compensation. With the assistance of the U.S. Secret Service, the stolen cryptocurrency has been frozen, and the Attorney General is taking legal action to reclaim the funds.

As the crypto industry continues to face significant challenges and regulatory scrutiny, these stories highlight the tensions between innovation, enforcement, and the evolving regulatory landscape. From bizarre rap videos to high-stakes legal battles, the crypto world remains as unpredictable as ever.