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

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.

Comments

FrozenGoodz (not verified) BaBaBouy Thu, 07/27/2017 - 10:56 Permalink

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. 

In reply to by BaBaBouy

HenryKissinger… (not verified) eforce Thu, 07/27/2017 - 11:37 Permalink

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?

In reply to by eforce

King of Ruperts Land HenryKissinger… (not verified) Thu, 07/27/2017 - 13:27 Permalink

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"

In reply to by HenryKissinger… (not verified)

Countrybunkererd swamp Thu, 07/27/2017 - 11:48 Permalink

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.

In reply to by swamp

TheReplacement Countrybunkererd Thu, 07/27/2017 - 18:35 Permalink

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.

In reply to by Countrybunkererd

Jballsquared Countrybunkererd Thu, 07/27/2017 - 15:14 Permalink

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.

In reply to by Countrybunkererd

CPL Countrybunkererd Thu, 07/27/2017 - 10:49 Permalink

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.

In reply to by Countrybunkererd

Jballsquared CPL Thu, 07/27/2017 - 15:21 Permalink

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.

In reply to by CPL

Buck Johnson Countrybunkererd Thu, 07/27/2017 - 11:14 Permalink

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.  

In reply to by Countrybunkererd

Justin Case junction Thu, 07/27/2017 - 11:15 Permalink

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.

In reply to by junction

SandiaMan Don Pancho Thu, 07/27/2017 - 10:47 Permalink

And the Awans just keep going. Arrested Imran and then he gets bailed out.1) 12 houses2) at least 20 businesses3)computer and blackberrys destroyed4)caught wiring 380,0005) they didn't name who the 2  participants of the wire were6) Worked for Congress and "fixed the phones" so all could be followed and synced. But hey look over here I caught a Russian.

In reply to by Don Pancho