On July 25, prosecutors in the Northern District of California formally brought charges against BTC-e and its Chief Executive Officer, Alexander Vinnik. The charges included conspiracy, unlawful monetary transactions, money laundering, and operating an unlicensed exchange.
BTC-e and Vinnik were formally charged in 2016, initially charged with operating an unlicensed money service as well as conspiracy to commit money-laundering. In 2017, these charges were amended after a grand jury proceeding concluded that additional charges should be levied, including money-laundering and engaging in unlawful monetary transactions.
The more recent indictment focused on key elements of the charges. This included not properly checking the identity of users signed up to use the service, something that was required under the law.
In addition, it is alleged that BTC-e was used by criminal organizations to facilitate money-laundering and liquidation of assets anonymously from crypto to fiat currencies. The report found that the company not only helped to facilitate hacks but was involved in ransomware payments, identity theft, narcotics distribution, as well as embezzlement.
The firm became quite a legend on the Internet. In chat rooms, they were referred to by such names as “ISIS,’ ‘CocaineCowboys,’ ‘blackhathackers,’ ‘dzkillerhacker,’ and ‘hacker4hire,’” according to the indictment. Prosecutors added:
On some occasions, customers contacted BTCe’s administration directly with questions regarding how to process and access proceeds obtained from the sale of illegal drugs and from transactions on known “darknet” illegal markets, including Silk Road.
Vinnik was immediately indicted in several jurisdictions, including Cyprus. However, the charges against him there were dropped in November 2018. That cannot be said elsewhere, where the Russian that was apprehended in Greece in July 2017 on suspicion of money laundering as well as facilitating hacking, identity theft, fraud, public corruption, drug trafficking, and tax refund fraud.
Vinnik was turned over to French authorities in July 2018 after a court ruled that he should be extradited. This was the culmination of a lengthy court proceeding, which involved the United States who had also looking to have the former executive extradited to their country. He has been returned to Greece and is currently awaiting trial, however, he has appealed, requesting that he be sent back to his native Russia. This matter is currently pending before the United Nations High Commissioner for Human Rights, Michelle Bachelet.
Because of the lengthy court proceedings against Vinnik, it is expected that it could take years before he is finally extradited to the U.S., if that occurs at all. If convicted, he faces a maximum sentence of 55 years in prison.
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