Elizabeth Crego/123RF

BTC-e and Vinnik Alexandra Fined For Laundering More Than $3 Billion Overall

  • 14 September 2017
  • Cas Proffitt

BTC-e was a well-known bitcoin exchange, one of the largest in the world, to be exact. The U.S. Government has taken over their domain.

Having allegedly been involved in laundering large sums of cryptocurrency, BTC-e was fined $110 million alongside Vinnik who was charged with two counts of engaging in unlawful monetary transactions and 17 counts of money laundering.

Why was Vinnik arrested?

The U.S. Department of Justice indicted and arrested Vinnyk Alexandra for laundering funds estimated to be in excess of $3 billion. Among the funds laundered were proceeds from CryptoWall and Mt. Gox. Due to the nature of the funds processed, Vinnik Was charged with more than 10 counts of money laundering among the other charges raised.

Why has the BTC-e domain been seized?

The BTC-e domain was seized because of an alleged connection between Vinnik and BTC-e, leading the authorities to look further into the funds processed by BCT-e. Funds turned out to be proceeds of many large black hat projects. Such projects may lead to illegal profits. Examples of such activities are ransomware deployment, computer hacking, and the list goes on from there.

It is also worth noting that both BTC-e (allegedly via a holding company named Canton Business Corporation) and Vinnik were also charged with one count of operating an unlawful money services business and one count of conspiracy to commit money laundering.

How will BTC-e handle the situation?

BTC-e released a series of statements on Twitter and other social media channels that they were undergoing server maintenance before the arrest was made, and then the FBI reportedly confiscated a significant portion of their equipment, including servers and computers.

Source: btc-e.com

BTC-e faces significant penalties in response to the allegations they face. The DoJ claims that BTC-e intentionally avoided compliance with AML and KYC regulations in order to maintain regular business from potentially shady customers.

How will Vinnik be sentenced if convicted?

Vinnik is currently faced with more than 20 charges in total. He faces up to 50 years in prison and as much as $12 million in fines personally for his actions. Vinnik remains innocent until proven guilty, and many steps have been taken to ensure he is truly guilty. One such step is tracing the flow of funds over the last several years.

While there seems to be a limited amount of evidence directly correlating Vinnik to the Mt. Gox and other thefts, this diagram from WizSec illustrates the flow of funds between several of the wallets and exchanges involved.

The full documentation regarding BTC-e and Vinnik can be seen on Scribd, courtesy of CoinDesk.com.

Are you excited about the results of the Bitcoin Cash fork? Let us know in the comments below!

About Cas Proffitt

Cas is a B2B Content Marketer and Brand Consultant who specializes in disruptive technology. She covers topics like artificial intelligence, augmented and virtual reality, blockchain, and big data, to name a few. Cas is also co-owner of an esports organization and spends much of her time teaching gamers how to make a living doing what they love while bringing positivity to the gaming community.