The US authorities have indicted the owner of one of the oldest bitcoin exchanges BTC-e with charges including money laundering, hacking, ransomware attacks, corruption and the sale of narcotics.
Greek police arrested the owner of BTC-e, 38-year-old Russian national Alexander Vinnik on Wednesday for his role as owner of the bitcoin trading platform, describing him as "internationally sought ‘mastermind' of a crime organisation". They also seized electronic equipment in a search for further evidence.
Vinnik now faces extradition to the US on charges of money laundering and engaging in unlawful monetary transactions. The US authorities believe that BTC-e helped launder a total of more than $4bn in illegal funds.
In an indictment order dated 21 July, the Northern District of California states that BTC-e "was an exchange for cybercriminals worldwide and one of the principal entities used to launder and liquidate criminal proceeds from digital currencies including bitcoin to fiat currencies, including US dollars, Euros and Roubles".
The document continues: "Since its founding [in 2011] BTC-e received criminal proceeds of numerous computer intrusions and hacking incidents, ransomware scams, identity theft schemes, corrupt public officials and narcotics distribution rings".
In one of the named cases against BTC-e the Court says the exchange received "substantial proceeds from the hack of the now defunct Mt. Gox digital currency exchange". The attack on Tokyo-based Mt. Gox in 2014 resulted in the loss of an estimated $450m worth of bitcoin and $27m in cash.
In addition BTC-e is accused of receiving a "substantial proportion" of proceeds from the CryptoWall ransomware scheme.
The exchange is also said to have broken US financial regulations. Despite doing a lot of business in the US, BTC-e was "not registered as a money service business". It also used a number of shell companies to hide its dealings, including one named Canton Business Corporation, of which Vinnik was an owner.
If found guilty Vinnik could be face up to 55 years in prison plus a fine of $12m. In addition, according to the US Department of Justice (DoJ), the BTC-e exchange is likely to face a civil penalty of $110m.
While the document makes no mention of closing BTC-e, its website is currently down, displaying a "site under maintenance" holding page.
"‘Just as new computer technologies continue to change the way we engage each other and experience the world, so too will criminals subvert these new technologies to serve their own nefarious purposes," said Brian Stretch, US attorney for the Northern District of California in a statement.
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