Russian charged over Bitcoin ‘money laundering’ exchange

Alexander Vinnik, a Russian national, allegedly owned and operated BTC-e, through which more than $3bn are said to have been funnelled.

Vinnik, 38, has been charged by a grand jury in the USA for allegedly operating an international black market cryptocurrency exchange through which billions of dollars in criminal proceeds are claimed to have been laundered.

He allegedly owned and operated BTC-e, which is said to have been founded in around 2011 and which has, according to the US authorities, served as one of the world’s largest and most widely used digital currency exchanges.

His arrest comes after the US Justice Department moved to shut down two of the biggest dark web marketplaces, AlphaBay and Hansa, last week.

A statement on the BTC-e website, written in both Russian and English, said the site was currently down as it was “under maintenance”.

An indictment issued yesterday by the US Attorney’s Office in the Northern District of California alleges that BTC-e allowed users to trade in digital currency Bitcoin with high levels of anonymity and without basic anti-money laundering controls.

More than three billion US dollars are said to have been funnelled through BTC-e since 2011.

A 27-page document issued by the attorney’s office states the service acted as “an exchange for cybercriminals worldwide” and was “one of the principal entities used to launder and liquidate criminal proceeds from digital currencies, including Bitcoin to fiat currencies, including US dollars, Euros and Rubles.”

It allegedly laundered money for the benefit of people involved in crimes ranging from drug trafficking to computer hacking.

Vinnik, who was arrested in northern Greece and now faces extradition to the US, is alleged to have operated BTC-e “together with individuals known and unknown”.

US authorities also linked Vinnik to the collapse of Mt. Gox, a digital currency exchange which was hacked in 2014 and had funds stolen from it.

Vinnik obtained funds from the hack of Mt. Gox and laundered them through BTC-e and Tradehill, another San Francisco-based exchange he owned, a statement from the US authorities alleged.

Local media and news agency Reuters reported it was not possible to reach Vinnik for comment last night.

In a statement, Bitcoin security specialists WizSec, which said it worked on the case, said its investigators were preparing material for disclosure in court.

Bitcoin is just one of several forms of decentralised and convertible digital currency. Other examples include litecoin, ethers, worldcoin and dogecoin.

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