Russian Head of $4B Bitcoin Exchange Charged in Massive Money Laundering Scheme
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A grand jury in the Northern District of California indicted a Russian man for running a massive money laundering operation through the BTC-e bitcoin exchange, a group of federal officials announced Wednesday.
The exchange allegedly received up to US$4 billion in proceeds from various criminal activities, including the 2014 hack of the Mt. Gox bitcoin exchange.
The suspect, 37-year-old Alexander Vinnik, was arrested Tuesday by Greek authorities, and charges in an unsealed indictment were released the following day.
Vinnik was visiting Greece, and U.S. officials were working with Greek authorities on the case, a source familiar with the case told the E-Commerce Times.
Vinnik was charged with operating an unlicensed money service business, conspiracy to commit money laundering, 17 counts of money laundering, and two counts of unlawful monetary transactions.
He faces 20 years in prison and $500,000 in fines on each of the money laundering and conspiracy to commit money laundering charges; 10 years in prison and $500,000 in fines on the monetary transactions charges; and five years on the money service charges.
The company, BTC-e, was assessed a $110 million fine, and Vinnik personally was fined $12 million by the Financial Crimes Enforcement Network, a Treasury Department branch that investigates money laundering and other financial crimes.
“Cryptocurrencies such as bitcoin provide people around the world with new and innovative ways of engaging in legitimate commerce,” said U.S. Attorney for the Northern District of California Bryan Stretch. “As this case demonstrates, however, just as new computer technologies continue to change the way we engage each other and experience the world, so too will criminals subvert these new technologies for their own nefarious purposes.”
Birth of an Empire
BTC-e, founded in 2011, grew into one of the world’s largest digital currency exchanges, with more than 700,000 users worldwide. It relied heavily on criminal money laundering for much of its business, according to the indictment.
Vinnik owned and operated various bitcoin accounts and was the owner of Canton Business Corp., the shell company that…
