Two bitcoin exchange operators charged in money laundering scheme

Belgian Police Arrest Two Unlicensed Bitcoin Exchange Operators

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The announcement was made by U. Lerner; and Acting Director of the U. HSI will continue to aggressively target those who deliberately seek to exploit financial systems for personal gain. Vinnik is alleged to have committed and two bitcoin exchange operators charged in money laundering scheme a wide range of crimes that go far beyond the lack of regulation of the bitcoin exchange he operated. When there is no regulation and criminals are left unchecked, this scenario is all too common.

The takedown of this large virtual currency exchange should two bitcoin exchange operators charged in money laundering scheme a strong message to cyber-criminals and other unregulated exchanges 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.

We must continue to impose real costs on criminals, no matter who they are or where they two bitcoin exchange operators charged in money laundering scheme to hide.

The indictment further alleges that proceeds from well-known hacks and thefts from bitcoin exchanges were funded through a BTC-e administrator account associated with Vinnik. Vinnik was arrested in Greece on July The indictment alleges that although Bitcoin has known legitimate uses, the virtual currency, like cash, can be used to facilitate illicit transactions and to launder criminal proceeds.

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 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.

Thus, the indictment alleges, BTC-e was used to facilitate crimes ranging from computer hacking, to fraud, identity theft, tax refund fraud schemes, public corruption, and drug trafficking. Gox — an earlier digital currency exchange that eventually failed, in part due to losses attributable to hacking. The indictment alleges that Vinnik obtained funds from the hack of Mt.

Gox and laundered those funds through various online exchanges, including his own BTC-e and a now defunct digital currency exchange, Tradehill, based in San Francisco, California. The indictment alleges that by moving funds through BTC-e, Vinnik sought to conceal and disguise his connection with the proceeds from the hacking of Mt.

Gox and the resulting investigation. As for defendant BTC-e, the indictment alleges that, despite doing substantial business in the United Two bitcoin exchange operators charged in money laundering scheme, BTC-e was not registered as a money services business with the U.

The exchange allegedly maintains a base of operations in the Seychelles Islands and its web domains are registered to shell companies in, among other places, Singapore, the British Virgin Islands, France, and New Zealand.

The indictment charges BTC-e and Vinnik with one count of operation of an unlicensed money service business, in violation of 18 U. In addition, the indictment charges Vinnik with seventeen counts of money laundering, in violation of 18 U. An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. Additional fines, restitution, and supervised release also may be ordered.

However, any sentence will be imposed by the court only after consideration of the U. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.

The case is being prosecuted by the U. You are here U. Wednesday, July 26, Violation Statute Maximum Penalty operation of an unlicensed money service business 18 U. Download Vinnik Superseding Indictment Redacted.

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A Russian man was indicted by a U. Alexander Vinnik, 38, and likely operator of popular Bitcoin exchange BTC-e, was arrested in northern Greece on Tuesday, according to the report.

Justice Department thinks he used the exchange to launder money for criminals, and ties him to the demise of another popular Bitcoin exchange, Mt. Why Bitcoin is surging again, in plain English. It is unclear from the report whether Vinnik actually stole from Mt.

Gox, whose founder Mark Karpeles is currently on trial in Japan for embezzlement and data manipulation, or whether he'd received those bitcoins from a third party and then used them in a money-laundering scheme.

Bitcoin has been very volatile in the past couple of years; for example, the , bitcoin stolen from Mt. The BTC-e exchange, which was one of the few major exchanges that required almost no personal info from its users, was shut down on Tuesday for "unplanned maintenance" and is still defunct at the time of this writing. Vinnik's exact role at BTC-e, as well as names of other possible co-conspirators, are unknown; the exchange's owners and operators were never publicly revealed.

Another exchange through which Vinnik allegedly laundered money, Tradehill, was shut down in The indictment against Vinnik describes BTC-e as a "criminal business venture" and claims the exchange was used to launder money tied to hacking, ransomware, fraud, drug trafficking, and identity theft, among other crimes.

Interestingly enough, BTC-e was apparently used by two corrupt U. CoinDesk points to a report by Bitcoin forensics company WizSec , released Thursday, that pinpointed Vinnik as the "chief suspect for involvement in the Mt. Gox theft," claiming he controlled the keys to Bitcoin wallets to which the stolen bitcoins were sent. The report claims some , of the bitcoins stolen from Mt.

Gox ended up on BTC-e, with the rest deposited to other exchanges—including Mt. Furthermore, the report ties Vinnik to thefts of bitcoin from other exchanges, including Bitcoinica and Bitfloor. While probably not definitive in the eyes of the law, WizSec's findings are fascinating, as they were assembled by following the trail of money on Bitcoin's blockchain. The blockchain is a public ledger which makes every single transaction transparent but does not necessarily tie any of them to a real-world identity.

You can follow the trail of stolen Bitcoins allegedly tied to Vinnik yourself on an interactive chart on WizSec's website.

WizSec claims it managed to identify Vinnik through an online identity with the moniker WME which is also mentioned in the U. Gox and the coins stolen from Bitcoinica. While many ends in this story are still loose—WizSec promised to post more of its findings soon—it's an interesting view in one of the largest Bitcoin thefts ever.

It's also a reminder that Bitcoin's blockchain never forgets. When there's an in and an out, you can follow the trail of money that will eventually lead you to an actual person. We're using cookies to improve your experience. Click Here to find out more.

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