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:
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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— BTC-E (@btcecom) July 26, 2017
However, some are already bracing for a Mt. Gox style collapse that will wipe out customer deposits.
— SirMeow UASF BIP148 (@OneSirMeow) July 27, 2017
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