Alexander Vinnik, co-founder of now-defunct cryptocurrency exchange BTC-e, has admitted to conspiracy to commit money laundering, marking a major breakthrough in a years-long legal battle.
Mr. Vinik's guilty plea comes in the wake of a wide-ranging investigation that uncovered extensive misconduct at the exchange between 2011 and 2017.
BTC-e: Money laundering pipeline
In a May 3 press release, the U.S. Department of Justice (DoJ) said that when Vinnik was at the helm of BTC-e, the exchange processed more than $9 billion in trades and had over 1 million users. It was revealed that the company had amassed a global user base.Many of them are in the US
According to the Department of Justice, BTC-e served as a conduit for laundering money obtained from various criminal activities.
Additionally, a Department of Justice investigation revealed that BTC-e operated without compliance measures such as registering with the Financial Crimes Enforcement Network (FinCEN).
Additionally, the exchange did not impose anti-money laundering (AML) or know-your-customer (KYC) protocols on its customers during its period of operation.
Additionally, investigators believe that Vinik set up numerous shell companies and financial accounts around the world to facilitate illegal fund transfers through BTC-e, resulting in criminal losses totaling at least $121 million. It turned out that it brought.
The incident gained attention following a 2017 report by WizSecurity that revealed BTC-e's involvement in the Mt.Gox hack.
The report details how the hackers worked with BTC-e and Vinnik to launder stolen Bitcoin through the exchange, implicating Vinnik in the illegal activity.
In February, the Justice Department indicted Vinnik and Belarusian Aliaksandr Klimenka as the main defendants in the BTC-e case.
Klimenka is charged with conspiracy to commit money laundering and operating an unauthorized financial services business, with an estimated $4 billion in laundered funds.
At the time of Klimenka's indictment, the Department of Justice said the U.S. BTC-e server was a key tool for criminal activities, allegedly supported by Klimenka and his company Soft-FX.
After BTC-e was shut down by American law enforcement in 2017, Vinik was arrested near Thessaloniki, Greece. After being extradited to the US in 2022, the Russian-born cryptocurrency entrepreneur faced charges of money laundering and other crimes.
Despite attempts to revive and rebrand BTC-e as WEX, the venture was eventually shut down, leaving many users unable to withdraw their funds.
In 2023, Alexey Vilyuchenko, an employee of Vinik and former technical manager of BTC-e, was fined and sentenced to three years and six months in prison for misappropriating exchange funds.
