Alexander Vinnik, co-founder of the now-defunct cryptocurrency exchange BTC-e, has admitted to conspiracy to launder money, marking a significant development in a long-running legal saga.
Vinik's guilty plea comes in the wake of a broader investigation that revealed widespread illegal activities at the stock exchange from 2011 to 2017.
BTC-e: A channel for money laundering
On May 3 press releaseThe US Department of Justice (DoJ) revealed that at the time Vinick was at the helm of BTC-e, the exchange processed at least $9 billion in transactions and amassed a global user base exceeding one million, with many of them based in the US.
According to the Department of Justice, BTC-e served as a conduit for laundering money gained from a variety of criminal activities.
Furthermore, a DOJ investigation revealed that BTC-e operated without compliance measures such as registration with the Financial Crimes Enforcement Network (FinCEN).
Furthermore, the exchange did not put its clients through Anti-Money Laundering (AML) or Know Your Customer (KYC) protocols in the period it was operating.
Additionally, investigators found that Vinick created numerous shell companies and financial accounts around the world, which facilitated the illicit transfer of funds through BTC-e, resulting in criminal losses totaling at least $121 million.
The issue gained momentum after a 2017 report by WizSecurity, which revealed BTC-e's involvement in the Mt.Gox hack.
The report detailed how hackers, in collaboration with BTC-e and Vinnik, laundered stolen bitcoins through the exchange, implicating Vinnik in the illicit activity.
In February, the Justice Department indicted Belarusian Aliaksandr Klimenka as the main defendant in the BTC-e case, along with Vinnik.
Klimenka faces charges of conspiracy to launder money and running an unlicensed financial services business, with laundered funds estimated at approximately $4 billion.
At the time of Klimenka's indictment, the Department of Justice stated that BTC-e servers in the United States were critical tools for criminal operations, which were allegedly supported by Klimenka and his company Soft-FX.
After BTC-e was shut down by US law enforcement in 2017, Vinnik was arrested near Thessaloniki, Greece. After being extradited to the United States in 2022, the Russian-born cryptocurrency entrepreneur faced charges of money laundering and other crimes.
Despite attempts to revive and rename BTC-e as WEX, the project was eventually shut down, leaving many users unable to withdraw funds.
In 2023, Alexey Bilyuchenko, one of Vinnik's partners and former CTO of BTC-e, was fined and sentenced to three years and six months in prison for embezzling exchange funds.
