Bitcoin
BTC-e Founder Pleads Guilty to Laundering Stolen Bitcoin
Alexander Vinnik, co-founder of now-defunct cryptocurrency exchange BTC-e, has admitted to conspiring to launder money, marking a significant development in a long-running legal saga.
Vinnik’s guilty plea follows a broader investigation that revealed extensive illegal activity at the exchange from 2011 to 2017.
BTC-e: channel for laundering funds
On May 3 Press releasethe US Department of Justice (DoJ) revealed that at the time Vinnik was in charge of BTC-e, the exchange processed no less than $9 billion in transactions and accumulated a global user base in excess of one million, with many of them located in the US
According to the DoJ, BTC-e served as a channel for laundering funds acquired in various criminal activities.
Furthermore, the DoJ investigation revealed that BTC-e operated without compliance measures, such as registration with the Financial Crimes Enforcement Network (FinCEN).
Furthermore, the exchange did not subject its customers to anti-money laundering (AML) or know your customer (KYC) protocols during the period in which it operated.
Additionally, investigators discovered that Vinnik established numerous shell companies and financial accounts around the world, facilitating the illicit transfer of funds through BTC-e, resulting in criminal losses totaling at least $121 million.
The case gained momentum after a 2017 report by WizSecurity, who revealed BTC-e’s involvement in the Mount 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 main defendant in the BTC-e case, alongside Vinnik.
Klimenka faces charges of money laundering conspiracy and running an unlicensed financial services company with about $4 billion in laundered funds.
At the time of Klimenka’s indictment, the DoJ stated that BTC-e servers in the US were crucial tools for criminal operations allegedly supported by Klimenka and his company Soft-FX.
Following the closure of BTC-e by US authorities in 2017, Vinnik was arrested near Thessaloniki, Greece. After extradition to the US in 2022, the Russian-born crypto entrepreneur faced charges of money laundering and other crimes.
Despite attempts to revive and rename BTC-e as WEX, the venture was eventually closed, leaving many users unable to withdraw funds.
In 2023, Alexey Bilyuchenko, an associate at Vinnik and former technology administrator of BTC-e, was fined and condemned to three years and six months in prison for misappropriation of scholarship funds.