Greece Arrests Russian "Mastermind" Behind $4 Billion Bitcoin Laundering Scheme btc-e
Greek authorities have arrested a 38-year-old Russian man wanted in the United States on suspicion of masterminding a money laundering operation involving at least $4 billion through transactions in bitcoins. Reuters reports, a US jury indicted the man on Wednesday over the scheme which involved crimes ranging from computer hacking to drug trafficking.
KeepTalkingGreece reports that Alexander Vinnik was arrested in a small beachside village in northern Greece on Tuesday, according to local authorities, following an investigation led by the U.S. Justice Department along with several other federal agencies and task forces.
The following were found in his hotel room and seized by police:
- two laptops
- two tablets
- five mobile phones
- one router
- one camera
- four credit cards.
The arrest was conducted in cooperation with US authorities.
Reuters notes that U.S. officials described Vinnik in a Justice Department statement as the operator of BTC-e, an exchange used to trade the digital currency bitcoin since 2011.
They alleged Vinnik and his firm "received" more than $4 billion in bitcoin and did substantial business in the United States without following appropriate protocols to protect against money laundering and other crimes.
U.S. authorities also linked him to the failure of Mt. Gox, a Japan-based bitcoin exchange that collapsed in 2014 after being hacked. Vinnik "obtained" funds from the hack of Mt. Gox and laundered them through BTC-e and Tradehill, another San Francisco-based exchange he owned, they said in the statement.
US prosecutors working with the Financial Crimes Enforcement Network unsealed a 21-count indictment against Vinnik and BTC-e late Wednesday, alleging that he used the exchange to help launder money for some of the most notorious criminals in bitcoin history, including the Mt. Gox hackers.Vinnik is facing 17 counts of money laundering and two counts of engaging in unlawful monetary transactions, while he and BTC-e, through a holding company called Canton Business Corp., are each facing one count of operating an illegal money transfer service. The site is facing a $110 million fine from FinCEN, while Vinnik is being fined $12 million.
If convicted on all counts, the Russian-born Vinnik could serve up to 55 years in a US prison, according to CoinDesk.
Until now, little has been known about BTC-E, which CoinDesk described as the digital-currency market’s “murkiest exchange long suspected of enabling criminal activity.”
In the indictment, prosecutors for the Northern District of California claim that BTC-e “functioned as the exchange of choice to convert digital currencies like bitcoin to fiat money for the criminal world, especially by those who committed their crimes online.”
Founded in 2011, BTC-E was one of the most popular exchanges in the early days of bitcoin.
A FinCEN press release announcing the indictments described a criminal organization that knowingy and recklessly violated US anti-money laundering laws. For example, prosecutors claimed that BTC-e’s customer-service reps would knowingly advise users about how to launder money from illegal drug sales made on the dark web.
“Among other violations, BTC-e failed to obtain required information from customers beyond a username, a password, and an e-mail address. Instead of acting to prevent money laundering, BTC-e and its operators embraced the pervasive criminal activity conducted at the exchange. Users openly and explicitly discussed criminal activity on BTC-e’s user chat. BTC-e’s customer service representatives offered advice on how to process and access money obtained from illegal drug sales on dark net markets like Silk Road, Hansa Market, and AlphaBay.”
It's unclear whether US authorities will shut BTC-e down. In a tweet published last night, the exchanged said it's working to restore service, and apologized for the inconvenience.
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I don't think Bitcoin is going to go down because of this because it shows that MtGox stolen coins have been putting selling pressure on the market for a long time.
Why should anyone believe what the US govt is saying?
Sounds like they just made up the MtGox shit to excuse their giant overreach.
Hope people will get back their money.. thanks for sharing news!
I hope all the people get back their coins from that MtGox thing. Wow, with all those brains he could have done something good in the world but chose to be bad.
So true.
All of this is horseshit to cover for the fact that the US govt is shutting down an exchange that isn't even in its jurisdiction.
Doesn't make a lot of sense to think of cryptocurrency having a physical location to where a jurisdiction applies. Money was definitely being laundered internationally; it's in everyone's interest to legitimize exchanges.
"Money was definitely being laundered internationally"
You have zero proof of that.
It would be completely absurd to not think that a massive part of Bitcoin's popularity is its ability to purchase and sell drugs online. I am referring to the system, not Vinnik's case
Most drug dealers use cash. So should anyone who uses cash be arrested?
Arrested? I don't remember saying anything about arrests. Illicit fiat cash is more difficult to launder with large amounts. That's what's attractive about Bitcoin.
I personally don't care about drugs. I do care about fraud, ransoms and human trafficking though. Legitimizing cryptocurrency exchanges is a good thing.
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This has to be related to the recent sting that shut down the dark net market Alphabay. Surely this can't just be a coincidence?
BTC-e was a hotbed for laundering drug money. Everybody knew this.
Holy crap, I'm glad that I moved my money out of BTC-e and over to a different exchange. Never really put much thought into BTC-e but they were pretty lax when it came to account creation and trading.
Only reason I started using it again was due to using it previously to exchanging some Bitcoin into Litecoin and then forgetting about it until recently.
Would also explain the recent unscheduled maintenance going on right now over at BTC-e.
Good call. EffieNme are fairly new to cryptocurrency, and we've learned quite quickly these coins and platforms move at the speed of Lite, and we can get burned so fast! Everybody be careful out there!
Bad Russian... Bad !!!! (-:
Classic.
aaaand, here we go.
I actually used BTC-e for a short while, it's shame that it embraced criminal activity.
But what I don't understand is how they openly discussed these topics in a CleanNet (as opposed to Darknet)?