A Russian man has been arrested in Greece this week and indicted for allegedly laundering over $4bn in funds via a Bitcoin exchange, including money stolen from Mt. Gox in a cyber-raid.
Alexander Vinnik, 37, is described in the 21-count indictment as the owner of multiple BTC-e accounts including admin accounts, with proceeds “from well-known hacks and thefts from Bitcoin exchanges” funnelled through the company straight to his personal accounts.
It claims BTC-e granted users a large degree of anonymity and became heavily reliant on criminal customers, receiving the proceeds from numerous cyber-attacks, ransomware scams, identity theft campaigns, corrupt public officials and even narcotics rings.
Perhaps the most famous cyber-attack Vinnik is accused of profiting from is the raid on Mt. Gox, then the world’s biggest Bitcoin exchange, which collapsed in 2014 after huge sums of crypto-currency were stolen from its customers.
BTC-e itself has also been indicted for failing to have in place anti-money laundering measures as required by federal law, despite doing a significant amount of business in the US.
If convicted of operating an unlicensed money service, conspiracy to commit money laundering, money laundering and engaging in unlawful monetary transactions, Vinnik faces a maximum 55 years in jail.
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has also decided on a $110m civil monetary penalty against BTC-e and $12m against Vinnik.
“We will hold accountable foreign-located money transmitters, including virtual currency exchangers, that do business in the United States when they wilfully violate U.S. AML laws,” said Acting FinCEN director Jamal El-Hindi.
“Today’s action should be a strong deterrent to anyone who thinks that they can facilitate ransomware, dark net drug sales, or conduct other illicit activity using encrypted virtual currency.”
FBI special agent in charge, Amy Hess, said Vinnik’s arrest was another example of law enforcement co-operation across the globe.
“This was a highly complex investigation that has only reached this stage due to the persistent and dedicated efforts of all the parties involved,” she added in a statement. “We must continue to impose real costs on criminals, no matter who they are or where they attempt to hide."