Alexander Vinnik, one of the co-founders of the cryptocurrency exchange BTC-e, has admitted to participating in a conspiracy to launder money. This admission comes after a comprehensive investigation that uncovered extensive illegal activities on the exchange between 2011 and 2017.
According to a press release from the United States Department of Justice (DOJ) on May 3, under Vinnik’s leadership, BTC-e facilitated over $9 billion in transactions and had a user base of over one million globally, with a significant number of users in the United States.
The DOJ emphasized that the platform was used to launder funds obtained through various criminal activities, such as computer hacking, ransomware attacks, and drug trafficking.
Investigations revealed that BTC-e operated without essential legal compliance measures, such as registration with the Financial Crimes Enforcement Network (FinCEN) and Anti-Money Laundering (AML) or Know Your Customer (KYC) protocols. These deficiencies made BTC-e attractive to individuals seeking to conceal their money transactions from law enforcement.
Furthermore, Vinnik was found to have established numerous shell companies and financial accounts worldwide, enabling the illicit transfer of funds through BTC-e. These activities resulted in criminal losses of at least $121 million.
Vinnik has been involved in legal battles for the past five years, as he has been accused of being the mastermind behind BTC-e. The cryptocurrency exchange allegedly profited from various illicit activities, using the platform to launder around $4 billion worth of Bitcoin (BTC).
In 2017, Vinnik was arrested in Greece on money laundering charges and was later extradited to France in 2020. In France, he was cleared of ransomware allegations but was convicted of money laundering charges and received a five-year prison sentence.
Despite an unsuccessful appeal by his lawyers, who claimed that Vinnik was merely an employee of the exchange and had no involvement in illicit activities at BTC-e, he was extradited to the United States on August 5, 2022, after serving two years in a French prison.
Vinnik, a Russian citizen, had previously attempted to negotiate a prisoner swap deal as part of a trade agreement between Russia and the United States.
U.S. authorities have also brought similar criminal charges against other cryptocurrency exchanges and executives. For example, former FTX CEO Sam Bankman-Fried was recently sentenced to 25 years in prison for seven felony charges.
As law enforcement agencies in the United States continue to crack down on crypto-related crimes, the pressure on individuals involved in illegal activities within the cryptocurrency industry is intensifying.