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The US Department of Justice has continued to hunt those who have been involved in the criminal use of crypto. In a recent development, it announced that it had held a Russian national for his involvement with BTC-e. The mentioned person had been found involved in the use of crypto exchange for money laundering and has pleaded guilty.
BTC-e and its operations
BTC-e was a cryptocurrency trading platform that had been in operation from 2011 to 2017. Its servers were based in the US while it served Russian nationals. The US government found out about the servers and other details in 2017 and seized its funds as well as the website. It was founded by Alexander Vinnik and Aleksandr Bilyuchenko.
The website held a considerable amount of Bitcoin exchange volume, amounting to about 3%. Later it was taken over by someone else and it was used for the financing of war in Donbass. The mentioned website was charged with money laundering in 2017 and the significant event was alleged involvement in the money laundering of the funds of Mt. Gox.
In order to repay its customers, BTC-e created WEX tokens which were later presented as proof at court. These tokens presented a value of $1 and were issued to customer accounts to present the value of customers’ investments.
Money laundering and BTC-e involvement
One of the leading persons behind the BTC-e was Alexander Vinnik who operated the mentioned cryptocurrency exchange. As the allegations of money laundering and other activities surrounding the mentioned website grew, Vinnik was arrested.
Vinnik had worked as an operator of BTC-e from 2011 to 2017 and had processed a considerably big chunk of transactions. The number of processed transactions was about 1 million while the amount processed using these transactions in crypto amounted to $9 billion.
The mentioned person was arrested in Greece in 2017 and it took a long process to extradite him to the US. Vinnik had initially denied that he was an operator at BTC-e, rather he claimed to have been only an employee.
BTC-e hadn’t been registered as a money business service in the US. In addition to that, it hadn’t any KYC policy nor had it any rules to collect customer data to prevent money laundering. According to the press release from the US DoJ, the mentioned website received funds from different criminal activities. These activities included hacks, ransomware attacks, and other scams.
Though France, Russia, and the US tried to ensure that Vinnik was extradited to their respective states, the US was able to make it. The US DoJ has said that this case shows their commitment to prevention and combating crypto crime. Furthermore, the guilty plea shows that DoJ has used all available resources and tools to fight money laundering.
Transactions and losses caused by BTC-e
As said above, BTC-e processed transactions worth more than $9 billion from 2011 to 2017, which has caused huge losses. The number of transactions shows the huge number of crime perpetrators who have been involved in money laundering. According to the press statement, Vinik had direct involvement in losses of more than $121 million.
Alexander Vinnik had been proven guilty of willfully violating US AML laws while a $12 million civil penalty was pending. The affected might get restitution of their funds with the resolution of this case.
Conclusion
US DoJ has said in a statement that Alexander Vinnik, a Russian national, has pleaded guilty to charges of money laundering. The mentioned person had been involved in money laundering through the virtual cryptocurrency exchange BTC-e. The mentioned exchange was seized in 2017 by US authorities.
