Today, the US Department of Justice announced that Russian citizen Alexander Vinnik was found guilty of money laundering charges related to his role in the operation of the BTC-e cryptocurrency exchange from 2011 to 2017. According to court documents, 44-year-old Vinnik was one of the operators of BTC-e, and the exchange conducted over $9 billion in transactions until it was shut down by law enforcement in July 2017, concurrent with Vinnik’s arrest. BTC-e served over a million users worldwide, including many customers in the US.
BTC-e Platform Found Guilty
Deputy Attorney General Lisa Monaco stated, “Today’s outcome shows how effective the Justice Department is in combating cryptocurrency crimes through international cooperation.” She continued, “These charges reflect the Department’s commitment to combating money laundering, regulating crypto markets, and providing restitution to victims. The Justice Department will continue to use all available tools to prevent such crimes and ensure justice.”
BTC-e was one of the main platforms used by cybercriminals worldwide to transfer, launder, and hide the proceeds of illegal activities. BTC-e accepted revenues from a variety of crimes including unauthorized computer access, ransomware attacks, identity theft schemes, corruption cases, and drug distribution. Alexander Vinnik was accused of operating BTC-e with the purpose of facilitating these illegal activities, causing at least $121 million in damages.
No FinCEN Registration
Despite conducting significant transactions in the United States, BTC-e was not registered as a money services business with the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN), as required by federal laws. Additionally, it failed to comply with federal legal requirements such as Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. BTC-e collected almost no customer data, making the platform attractive to those wanting to conceal criminal proceeds.
BTC-e relied on shell companies and affiliates that lacked FinCEN registration and were devoid of basic AML and KYC policies for electronic fiat currency transfers through BTC-e. Vinnik established numerous shell companies and financial accounts worldwide to sustain BTC-e’s operations.
A federal district court judge will determine any penalties considering the US Sentencing Guidelines and other legal factors. In 2017, FinCEN announced that it had imposed approximately $110 million in fines on BTC-e for deliberately violating US AML laws, and an additional $12 million on Vinnik for his role in the violations.
