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The founder of the defunct crypto exchange BTC-e Alexander Vinnik has just been served an indictment and is now facing $100 million in penalties. The charges include criminal conspiracy and money laundering, as well as unlawfully operating an exchange platform.
The indictment was filed with the Northern District of California court on July 25 and the court documents lay out the charges against Vinnik and BTC-e. Among them are those that include money laundering and even encouraging criminal activities on the platform.
“BTC-e accounts received criminal proceeds directly from various cybercrimes, including numerous hacking incidents, ransomware payments, identity theft schemes, embezzlement by corrupt public officials, and narcotics distribution. A significant portion of BTC-e’s business was derived from suspected criminal activity,” the court document reads.
“Messages on BTC-e’s own forum openly and explicitly reflected some of the criminal activity in which the users on the platform were engaged and how they used BTC-e to launder funds. BTC-e users established accounts under monikers suggestive of criminality, including user names such as ‘ISIS,’ ‘CocaineCowboys,’ ‘blackhathackers,’ ‘dzkillerhacker,’ and ‘hacker4hire’.”
As of now, Vinnik is still in the custody of Greek officials, where he was apprehended. The penalties that he and his exchange have incurred amount to $12 million and $88.6 million, respectively. Accounting for additional interests and costs, the figure goes way over $100 million.
These charges are not surprising considering that BTC-e had developed a reputation for being a criminal crypto haven, CoinDesk reports. The exchange allowed anyone anywhere to use its platform without “even the most basic identifying information," thereby aiding illicit entities to easily wash dirty money.
"BTC-e’s business model obscured and anonymized transactions and sources of funds," the document reads.
Customers based in the U.S. used BTC-e to conduct at least 21,000 bitcoin transactions (worth over $296 million) as well as tens of thousands of transactions in other cryptocurrencies. Attorneys David Anderson, Sara Winslow, and Kirsten Ault allege that a "significant portion of BTC-e’s business was derived from suspected criminal activity.”
It was pointed out that at no point during its whole duration of operation did BTC-e or Vinnik sound the alarm when it was receiving suspicious transactions. The attorneys allege that BTC-e did not even have policies or procedures for conducting due diligence or monitoring transactions for suspicious activity.
