Sunday Newsletter

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05 May 2024

Alexander Vinnik, co-founder of cryptocurrency exchange BTC-e, has pleaded guilty to charges related to a $9 billion money laundering conspiracy. Vinnik’s plea follows a detailed investigation revealing illegal activities facilitated by the exchange from 2011 to 2017.

According to a May 3 press release from the United States Department of Justice (DOJ), Vinnik’s leadership at BTC-e oversaw transactions exceeding $9 billion, with a global user base of over one million people, including many in the U.S. BTC-e was used to launder funds from criminal activities such as computer hacking, ransomware attacks, and drug trafficking.

The DOJ found that BTC-e operated without proper regulatory measures, lacking registration with the Financial Crimes Enforcement Network (FinCEN) and not adhering to Anti-Money Laundering (AML) or Know Your Customer (KYC) standards. These oversights attracted users aiming to hide transactions from law enforcement.

Vinnik also established numerous shell companies and financial accounts worldwide, facilitating the illegal transfer of funds through BTC-e and resulting in criminal losses totaling at least $121 million.

Over the last five years, Vinnik has faced legal challenges for his alleged role as the mastermind behind BTC-e. The platform reportedly profited from facilitating money laundering activities worth approximately $4 billion in Bitcoin.

Vinnik was first arrested on money laundering charges in Greece in 2017 and was later extradited to France in 2020. Although he was acquitted of ransomware allegations in France, he was convicted of money laundering charges and sentenced to five years in prison.

Despite an appeal from his legal team claiming he was merely an exchange employee uninvolved in BTC-e’s illicit activities, Vinnik was transferred to the U.S. on August 5, 2022, after serving two years in a French prison.

U.S. authorities have previously brought similar charges against other crypto exchanges and their executives. On March 28, former FTX CEO Sam Bankman-Fried received a 25-year sentence for seven felony charges.