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Suspected Cybercrime Figure awaiting Sentence

Author: Syedur Rahman  5 May 2024

Syed Rahman details the case of Alexander Vinnik.

Alexander Vinnik, one of the operators behind the former BTC-e crypto exchange, has pleaded guilty in the US to a charge of conspiring to commit money laundering.

The announcement was made by the US Department of Justice (DOJ). The DOJ stated that Vinnik was an operator of BTC-e between 2011 and 2017, during which time the exchange processed more than one million users and transactions totalling more than $9 billion.

BTC-e was linked to the hack of the now-defunct crypto exchange Mt. Gox. It was used to launder some 300,000 Bitcoin from Mt. Gox. Vinnik was first arrested and BTC-e was shut down in July 2017.

Vinnik’s arrest in Greece sparked extensive extradition activity, with US, Russian and French authorities all trying to persuade Greek authorities to send him to their country. He was extradited to France, where he was sentenced to five years in prison before being sent back to Greece and then extradited to the US. He initially denied he was an operator of BTC-e and claimed to only be an employee at the exchange.

The DOJ has said that BTC-e did not register as a money services business in the US, operate any know-your-customer or anti-money laundering rules or collect any customer data. It stated that Vinnik used shell companies to process fiat conversions for BTC-e.

The DOJ has accused the exchange of receiving funds from criminal activities including ransomware attacks, hacks and other schemes. It claims Vinnik was directly responsible for losses totalling $121 million.

Clear-Cut

This appears to be a clear-cut case of an entire operation being established with the aim of facilitating money laundering. 

That being said, there are some key takeaways which can be observed. The global, cross border nature of crypto has immense advantages when being used for legitimate purposes. However, this is a double-edged sword, as it also aids those seeking to take advantage of it for illegitimate purposes, as was the case in this instance. Law enforcement agencies globally are taking a united front and collaborating with one another in order to combat this. But the challenge is an evolving one.

With the recent conviction of Tornado Cash for similar offences, it is evident that jurisdictional constraints are not proving to be a barrier for law enforcement agencies. Those operating globally are now coming under scrutiny from a number of law enforcement agencies and the repercussions of committing money laundering do now appear to be being felt.

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Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, international arbitration, civil recovery, cryptocurrency and high-stakes commercial disputes.

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