BTC-e crypto exchange operator pleaded guilty to laundering $120 million

What’s new? One of the operators of the crypto exchange BTC-e, 44-year-old Russian citizen Alexander Vinnik has pleaded guilty in a US court to conspiracy to launder money. The damage from his actions is estimated at $121 million. In total, the exchange processed over $9 billion worth of transactions through BTC-e from its launch in 2011 until law enforcers shut it down in July 2017, concurrent with Vinnik’s arrest, and served more than one million users worldwide, including the United States.

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What else is known? The DOJ alleges that BTC-e was a major money laundering platform and that Vinnik operated it with the intent to facilitate this illegal activity. Funds were transferred to the exchange by hackers, ransomware developers, drug dealers, and corrupt officials.

BTC-e operated in the US, among other places. However, it was not registered with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) as a money services business (MSB) and did not have customer identification and anti-money laundering (KYC/AML) systems, as required by federal law. “BTC-e collected virtually no customer data at all, which made the exchange attractive to those who desired to conceal criminal proceeds from law enforcement,” the Treasury Department emphasized.

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BTC-e operated through shell and affiliated companies that also lacked FinCEN registration and KYC/AML policies. Vinnik created numerous such shell companies and financial accounts around the world to allow BTC-e to conduct its business, the DOJ alleges.

In 2017, FinCEN imposed a $110 million civil penalty on BTC-e for willfully violating AML laws; for Vinnik, the fine was $12 million. He was detained in Greece and later extradited to the US. A sentencing date for him has not yet been set.

Earlier, the developers of the Wasabi Wallet bitcoin wallet announced the disabling of the mixing function amid increased attention of the US authorities to such services. In April, the US authorities accused the founders of Samourai Wallet with the mixing function of conspiracy to launder funds, both face 25 years in prison.