6 months ago
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Alexander Vinnik, co-founder of the now-defunct crypto exchange BTC-e, admitted to conspiring to launder money, marking a significant development in a long-standing legal saga.
Vinnik’s guilty plea comes in the wake of a broader investigation that unearthed extensive illegal activities on the exchange from 2011 to 2017.
BTC-e: Conduit for laundering funds
In a May 3 press release, the U.S. Department of Justice (DoJ) revealed that at the time Vinnik was at the helm of BTC-e, the exchange processed no less than $9 billion in transactions and amassed a global user base exceeding one million, with many of them located in the U.S.
According to the DoJ, BTC-e served as a conduit for laundering funds acquired from a variety of criminal activities.
Moreover, the DoJ’s investigation revealed that BTC-e operated without having compliance measures such as registration with the Financial Crimes Enforcement Network (FinCEN) in place.
Furthermore, the exchange did not put its customers through anti-money laundering (AML) or know-your-customer (KYC) protocols in the period it operated.
Additionally, investigators found Vinnik to have established numerous shell companies and financial accounts worldwide, facilitating the illicit transfer of funds through BTC-e, resulting in criminal losses totaling at least $121 million.
The case gained traction following a 2017 report by WizSecurity, which revealed BTC-e’s involvement in the Mt. Gox hack.
The report detailed how hackers, in collaboration with BTC-e and Vinnik, laundered stolen Bitcoins through the exchange, implicating Vinnik in the illicit activity.
In February, the DoJ indicted Belarusian Aliaksandr Klimenka as the main defendant in the BTC-e case, alongside Vinnik.
Klimenka faces charges of conspiracy to launder money and running an unlicensed financial services business, with an estimated $4 billion in laundered funds.
At the time of Klimenka’s indictment, the DoJ stated that BTC-e servers in the U.S. were crucial tools for criminal operations, purportedly supported by Klimenka and his company Soft-FX.
Following BTC-e’s closure by American law enforcement in 2017, Vinnik was arrested near Thessaloniki, Greece. After extradition to the U.S. in 2022, the Russian-born crypto entrepreneur faced accusations of money laundering and other offenses.
Despite attempts to revive and rebrand BTC-e as WEX, the venture eventually shuttered, leaving many users unable to withdraw funds.
In 2023, Alexey Bilyuchenko, a Vinnik associate and the former technology administrator of BTC-e, was fined and sentenced to three years and six months in prison for misappropriating the exchange’s funds.
