Russian “Mastermind” Named in $4 Billion Money Launder Scheme

A Russian accused of operating one of the world’s largest and most popular Bitcoin currency exchange has been indicted by a federal grand jury in San Francisco for allegedly using the exchange to launder $4 billion for computer hackers and drug traffickers.

Alexander Vinnik

A host of federal agents arrested Alexander Vinnik, 37, in a small beachside village in Greece last week. He has been described by U.S. officials as the owner and operator of multimale BTC-e accounts that allegedly benefited cyber criminals.

The federal indictment, released last week, accused Vinnik of money laundering, conspiracy, operation of an unlicensed money service business and engaging in illegal monetary transactions.

The federal task force working on the case also linked him to the infamous computer hack of Mt. Gox, a Japanese-based bitcoin exchange that collapsed after the 2014 hack.

The indictment alleges Vinnik got the funds from the Mt. Gox hack and laundered them through various online exchanges, including his own BTC-e, and a now defunct exchange, Tradehill, based in San Francisco.

The indictment alleges that since its inception in 2011, BTC-e operated to facilitate transactions for cybercriminals worldwide and received the criminal proceeds of numerous computer intrusions and hacking incidents, including ransomware scams, corrupt public officials, narcotics distribution rings and ID theft scams.

BTC-e Named in Indictment

BTC-e is also named in the indictment. It was not registered as a money service business with the U.S. Treasury and had no anti-money laundering process. The company website suggests it is located in Bulgaria but otherwise subject to the laws of Cyprus and maintains operations in the Seychelles Islands.

Its web domains are registered to shell companies in Singapore, France, New Zealand and the British Virgin Islands, the prosecutors contend.

Last week, the Treasury’s Financial Crimes Enforcement Network, FinCEN, assessed a $110 million civil penalty against BTC-e for violation of anti-money laundering laws. Vinnik was assessed $12 million for his alleged violations.

Case: US v. BTC-e, Vinnik, No. 16-227SI


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