Russian Faces Money Laundering Charges

Thursday, July 27, 2017 @ 08:07 PM gHale

A Russian man arrested Tuesday in Greece on charges of operating a digital currency exchange that acted as a money laundering mechanism.

Alexander Vinnik is facing charges for operating the digital currency exchange BTC-e, through which funds from the Mt. Gox bitcoin exchange hack have been laundered.

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Vinnik ended up indicted in the United States for the operation of an unlicensed money service business, money laundering, and engaging in unlawful monetary transactions.

Vinnik’s exchange received deposits valued at over $4 billion, according to the U.S. Department of Justice (DoJ).

Vinnik, officials said, is believed to be the owner and operator of multiple BTC-e accounts, including administrator accounts, and also a primary beneficial owner of BTC-e’s managing shell company, Canton Business Corporation. According to the indictment, numerous withdrawals from BTC-e administrator accounts went directly to his personal bank accounts, and proceeds from known hacks and thefts from bitcoin exchanges ended up funded through a BTC-e administrator account associated with Vinnik.

“According to the indictment, since its inception, Vinnik and others developed a customer base for BTC-e that was heavily reliant on criminals, including by not requiring users to validate their identity, obscuring and anonymizing transactions and source of funds, and by lacking any anti-money laundering processes,” the U.S. Attorney’s Office for the Northern District of California said.

“The indictment alleges BTC-e was operated to facilitate transactions for cybercriminals worldwide and received the criminal proceeds of numerous computer intrusions and hacking incidents, ransomware scams, identity theft schemes, corrupt public officials, and narcotics distribution rings.

The indictment also said BTC-e was used to facilitate crimes ranging from computer hacking, to fraud, identity theft, tax refund fraud schemes, public corruption, and drug trafficking. The investigation revealed BTC-e received more than $4 billion worth of bitcoin over the course of its operation.”

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