Greece Arrests Russian "Mastermind" Behind $4 Billion Bitcoin Laundering Scheme

Tyler Durden's picture

Greek authorities have arrested a 38-year-old Russian man wanted in the United States on suspicion of masterminding a money laundering operation involving at least $4 billion through transactions in bitcoins. Reuters reports, a US jury indicted the man on Wednesday over the scheme which involved crimes ranging from computer hacking to drug trafficking.

KeepTalkingGreece reports that Alexander Vinnik was arrested in a small beachside village in northern Greece on Tuesday, according to local authorities, following an investigation led by the U.S. Justice Department along with several other federal agencies and task forces.

The following were found in his hotel room and seized by police:

  • two laptops
  • two tablets
  • five mobile phones
  • one router
  • one camera
  • four credit cards.

The arrest was conducted in cooperation with US authorities.

Reuters notes that U.S. officials described Vinnik in a Justice Department statement as the operator of BTC-e, an exchange used to trade the digital currency bitcoin since 2011.

They alleged Vinnik and his firm "received" more than $4 billion in bitcoin and did substantial business in the United States without following appropriate protocols to protect against money laundering and other crimes.

U.S. authorities also linked him to the failure of Mt. Gox, a Japan-based bitcoin exchange that collapsed in 2014 after being hacked. Vinnik "obtained" funds from the hack of Mt. Gox and laundered them through BTC-e and Tradehill, another San Francisco-based exchange he owned, they said in the statement.

US prosecutors working with the Financial Crimes Enforcement Network unsealed a 21-count indictment against Vinnik and BTC-e late Wednesday, alleging that he used the exchange to help launder money for some of the most notorious criminals in bitcoin history, including the Mt. Gox hackers.

Vinnik is facing 17 counts of money laundering and two counts of engaging in unlawful monetary transactions, while he and BTC-e, through a holding company called Canton Business Corp., are each facing one count of operating an illegal money transfer service.  The site is facing a $110 million fine from FinCEN, while Vinnik is being fined $12 million.

If convicted on all counts, the Russian-born Vinnik could serve up to 55 years in a US prison, according to CoinDesk.

Until now, little has been known about BTC-E, which CoinDesk described as the digital-currency market’s “murkiest exchange long suspected of enabling criminal activity.”

In the indictment, prosecutors for the Northern District of California claim that BTC-e “functioned as the exchange of choice to convert digital currencies like bitcoin to fiat money for the criminal world, especially by those who committed their crimes online.”

Founded in 2011, BTC-E was one of the most popular exchanges in the early days of bitcoin.

A FinCEN press release announcing the indictments described a criminal organization that knowingy and recklessly violated US anti-money laundering laws. For example, prosecutors claimed that BTC-e’s customer-service reps would knowingly advise users about how to launder money from illegal drug sales made on the dark web.

“Among other violations, BTC-e failed to obtain required information from customers beyond a username, a password, and an e-mail address.  Instead of acting to prevent money laundering, BTC-e and its operators embraced the pervasive criminal activity conducted at the exchange.  Users openly and explicitly discussed criminal activity on BTC-e’s user chat.  BTC-e’s customer service representatives offered advice on how to process and access money obtained from illegal drug sales on dark net markets like Silk Road, Hansa Market, and AlphaBay.”

It's unclear whether US authorities will shut BTC-e down. In a tweet published last night, the exchanged said it's working to restore service, and apologized for the inconvenience.

However, some are already bracing for a Mt. Gox style collapse that will wipe out customer deposits.

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Don Pancho's picture

But with Bitcoin Volume Like it is, Probably Pretty easy to hide in the volume:

just sayin'

Countrybunkererd's picture

I thought these things couldn't be traced.  I guess the problem was turning them back into cash.

Chuck Norris's picture

Bullshit.  His only "crime" is not giving uncle Sam his fair share of the profits.  AKA "taxes". 

jcaz's picture


Wonder who served him up? 

BaBaBouy's picture

Theres That Bitcoinz Again ...

Gaius Frakkin' Baltar's picture

Still waiting for the Clinton machine to be prosecuted. Sessions is a chump.

BaBaBouy's picture

I guess now that they found the alleged MT.Gox Bitcoinz, they can return them to their rightful owners ???

FrozenGoodz's picture

Gox coins are long gone


A Russian, in Greece, operating US Servers in California ... what a gem [black eye] for BTC


On the bright side their server may not have contained the private keys to their cold storage, as that'd be too risky. So they probably still have their cryptocurrencies, or the vast majority of them, and can post bail - head to the caymans, like they should've done years ago. 

jcaz's picture

Freezie, that's so cute when you pretend like you know shit about anything.....

eforce's picture

BTC-E can afford the $110m fine if they can be bothered to pay it.

Vinnek looks like he's fucked though, $12m fine (not so bad), but then 55 years worth of prison time as well...

HenryKissingerBilderberg's picture

can someone please make cryptowallets or just ESCROWS that IF or AFTER any governments murders or cages me then the wallet or cryptocontracts self distributes away from government hands?

like to a list of pre selected freedom foundations wallets, freedom foundations and such?

something like that funny BipCot license?

King of Ruperts Land's picture

How about we leverage blockchain technology to kill the old unconstitutional illegal criminal "so called government" and replace it with G2.0 which is thinner with liberty and justice for all that let's you keep your money and doesn't hassle you.

That would Make America Great Again.

PS How about perp walks for a massive Bribe laundering scheme Clinton Foundation, Clinton Global Initiative.

You "so called Government" people are looking like bigger piece of shit criminals every move you make that isn't arresting and bringing down the old guard powers that be and unconstitutional deep state traitor criminals.

Why do you hide your face, when you are supposedly carrying out a lawful act. Are you ashamed of yourself? You don't want anyone to know you are a traitor operative of the illegal "so called government"


Well, there is that. 

55 years of asshole stretching in the pen, and he can hire himself out to Boeing as a wind tunnel when he gets out. 

Hernando98's picture

If the Forbes article is true about BTC-e being headquartered in Russia, then it's very unlikely any of the fine will ever be paid.



Bill of Rights's picture

Ha ha ha ha ha An asshole with all the answers...IE fake bastard.

cherry picker's picture

He'll need a computer to access his coin to pay for attorneys.  Not likely they will let him have one and if he does they will be tracking every key stroke and mouse click.

Hi BitCoin is dead forever unless he gave the info to someone else and there is nothing stopping that someone from grabbing the coin and disappearing.

FrozenGoodz's picture

Admin staff still in place, or at least seems to be around, if one's to believe the tweet 

SilverRhino's picture

A mercenary team could pass his attorney a note promising a breakout and extraction for 33%.   

cheka's picture

'mastermind' is code for skype

City_Of_Champyinz's picture

Nah, that shit was laundered therefore the government will simply seize them as evidence of a crime (the money laundering of the stolen bitcoins of course).  And the government will simply keep them.

MANvsMACHINE's picture

How is this money laundering?  Bitcoin isn't money.  Or is it?

Antifaschistische's picture

that is what laundering is....convert it to a bitcoin....cross a border....convert back to real fial.

the real value of bitcoin is that it allows internationals (chinese, columbians, etc) to move virtual coins from hostile to friendly territory.

someday, when I pack up I may do the same thing.

Crash Overide's picture

The French... SocGen's Jerome Kerviel has him beat in total dollars.

Got The Wrong No's picture

I wonder if it was an American, the headlines would have said American Mastermind? 

The Russia Boggy Man Narrative is always in play.

Lumberjack's picture

Poor fucker bought Hillary's old server on eBay really cheap.

syzygysus's picture

what are you talking about?  that is the core of bitcoin, a blockchain that tracks every transaction.  It's also the reason its slow for transactions and why there is/was a big fork looming.

Countrybunkererd's picture

 Yes, but when you advertise something as "crypto" and it isn't, that is beyond misleading.  It is no different than any other form of acceptable payment.  I usually don't use the /s but maybe I should have on this one.

swamp's picture

learn what crypto means in this context, not in your feeble commoner misunderstanding

Countrybunkererd's picture

The only thing crypto about it is that it is outside of the normal banking system, for now.  Anyone who thinks they can perform illegal activities and avoid the tax man is brain dead, twice.  You can do illegal activities and dodge taxes with a credit card, online baking, or with paper checks and go years and years before being caught, if ever.  Thanks for the compliment, I must have said something right to get it, because this feeble minded serf truly doesn't care beyond the discussion it creates and more importantly the understanding gained by all.

TheReplacement's picture

I suspect not.  I suspect the crypto part of it is that the data being hashed (blocks) to mine shares is actually encrypted data and on the backend is a NSA server feeding it all out. 

Need hashing power to decrypt all internet communications?  Get billions of dollars from Congress to build really impressive looking datacenters.  Outsource the actual work to the most massive dedicated network of raw hashing power ever assembled.  Get decrypted data back.  Keep the profits.

Damn, wish I had thought of that first.

Jballsquared's picture

The crypto is short for cryptography , which is what the blockchain protocol is based on. Unless you are ed Snowden level paranoid/educated on it security, you are going to leave all kinds of footprints every time you make a Bitcoin transaction. It's not a good medium for criminals. They should just cut a deal with a wall street investment bank like they've done since the opium wars and pay their protection fees and play it safe.

The Wizard's picture

With 7 transactions a second, bitcoin purchasers are not in it as a currency. They are in it as an investment. That is why there are wild fluctuations.

TPTB Big Brother are doing whatever is necessary to continue a war on cash.

ToSoft4Truth's picture

How far back does the transaction chain go - can authorities see the flow of all Bitcoins since the introduction? 

DjangoCat's picture

Not so, this is one of the issues with bitcoin.  All transparent.

CPL's picture

They can be traced as they are on a large network full of IP addresses and MAC address.  They are completely transpearent, that's why governments hate the idea.  Everyone can follow the money.  This idiot that got caught must have forgotten that a network as large as the internet hass about a trillion electronic eyes watching everything and there is no where to hide in a electric fishbowl.  What got him caught though was the fact he got greedy.  4 billion dollars of anything is pretty hard to hide and when stealing 4 billion dollars this idiot's next problem is not dying in a Russian prison cell.

Jballsquared's picture

You are assuming any of the allegations are true. What he is probably guilty of is ignoring AML laws. I am fairly sure he did because I looked into trading at btc-e years ago (opted not to) and there didn't seem to be much know your customer spiel to it.

In other words he was operating a free marketplace and not adhering to Yankee regulations, being a Russian, operating from the Balkans. That doesn't make him a mafioso mastermind. But with $17 billion in deposits it makes him a big enough fish to win a free trip to America, home of the free.

TheReplacement's picture

He's lucky we didn't drop 2,000 lbs of freedom on his ass.

Now meet Bubba, your freakishly huge black and gay cellmate.  Just don't call him gay.  He'll rape you again for that.  G'night.

Buck Johnson's picture

He also was lazy and I do mean lazy.  I wonder where his server was located or the output server for the tor?  I don't think it was in Greece.  If it was then that would explain how they where able to find the admin aka him.  Instead of moving to different servers and or have more links tothe tor he did probably what alot of done.  He thought since he hadn't been caught these past few years and capers, he thought he was doing everything right. 

Now everyone remembers the Japane's Bitcoin situation.  I wonder how much money he got as paymnent to help move alot of that bitcoin money to real money?  And who knows, he could have been rat out by a former associate or crime partner who didn't get what he was supposed to get.



Txpl9421's picture

If you really believe that, take five minutes and find out how Bitcoin works.  Look up "Bitcoin Public ledger".

It is ALL tracked.  Imagine if the government worked with Cryptos.  How many billions in "black" money would be discovered.


Oh, thats right.  Bitcoin is fake.

twh99's picture

Transactions can be traced, period.  The trick to remaining anonymous with Bitcoin is to not have a Bitcoin address tied to a phyiscal identity of any kind.

Most people are lazy and that is what gets them caught.

SmittyinLA's picture

Wiki leaks, every bitcoin can be tracked, you use bitcoin you are in the NSA loop

Try cash

junction's picture

Janet Yellen and the Bush Crime Cartel don't like competition from outsiders.

Justin Case's picture

The 911 job hid the sale of Philippines gold that Bush and Marcos engineered the theft of. Marcos unfortunately died, and the US exchanges were kept open during the attack, but transaction records were not being kept that day due to damage. Lucky for Bush that one of the planes hit the floor the FBI's offices were on and all the records of the investigation of Bush and theft of gold were destroyed. Case closed. $280 billion deposit to the Carlyle Group private bank.

SandiaMan's picture

And the Awans just keep going. Arrested Imran and then he gets bailed out.

1) 12 houses

2) at least 20 businesses

3)computer and blackberrys destroyed

4)caught wiring 380,000

5) they didn't name who the 2  participants of the wire were

6) Worked for Congress and "fixed the phones" so all could be followed and synced.


But hey look over here I caught a Russian.

doctor10's picture

Awan literally has been working FOR Congress-on their behalf-for DECADES-think about those implications!!!

And don't be surprised BTW they "CAN'T" seem to repeal O'Care