BTC-e and Mt Gox Connection, Alexander Vinnik Arrested

btc-eBTC-e one of Bitcoin’s largest exchanges, is known since 2011 and is even part of the CoinDesk Bitcoin Price Index. Yesterday at 13:49 Moscow time the site went unplanned offline. A few minutes later, the official Twitter channel of the btc-e exchange said: “Work on an unforeseen problem.”

It was thought that ‘at least’ $4 billion in cash had been laundered through a bitcoin platform since 2011; the platform had 7 million bitcoins deposited, and 5.5 million bitcoins in withdrawals.

Greek police earlier said the alleged suspect Alexander Vinnik, one of BTC-e administrators who was picked up on a U.S. warrant, was thought to have used Bitcoin to launder ‘at least’ $4 billion earned through illicit activities.

“Since 2011 the 38-year-old has been running a criminal organization which administers one of the most important websites of electronic crime in the world,” police said in a statement, describing an alleged money laundering operation that “legalizes proceeds from illegal activities”.

Alexander Vinnik was charged with 17 counts of money laundering and 2 counts of engaging in unlawful monetary transactions. Both BTC-e (by way of an alleged holding company named Canton Business Corporation) and Vinnik were also charged with one count of operating an unlawful money services business and one count of conspiracy to commit money laundering.

Prosecutors further alleged that Alexander Vinnik “received funds from the infamous computer intrusion or “hack” of Mt. Gox” – echoing claims released earlier today by the independent research group WizSec, which has investigated the theft of funds from the now-defunct Japan-based bitcoin exchange.

According to the Department of Justice, the Financial Crimes Enforcement Network (FinCEN) assessed a $110m civil penalty against BTC-e, as well as a $12m penalty against Alexander Vinnik. If convicted, Alexander Vinnik faces as many as 55 years in prison.

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