BTC-e founder pleads guilty in $9 billion laundering conspiracy

Alexander Vinnik, the Russian co-founder of an allegedly illicit crypto exchange, BTC-e, has admitted guilt in a money laundering conspiracy involving cryptocurrency exchange. This admission follows a broader investigation revealing extensive illegal activities on the exchange from 2011 to 2017.

The United States Justice Department (DOJ) reported that during Vinnik’s leadership, BTC-e processed more than $9 billion in transactions and had a user base exceeding one million globally, with many users from the United States. A federal district court judge will determine his sentence in accordance with the U.S. Sentencing Guidelines and other statutory factors.

The U.S. Department of Justice highlighted that the platform was utilized to launder funds acquired from various criminal activities, including computer hacking, ransomware attacks, and drug trafficking.

Source: United States Department of Justice Crime Division

According to the DOJ, an investigation revealed that BTC-e operated without essential legal compliance measures, including registration with the Financial Crimes Enforcement Network (FinCEN) and the implementation of Anti-Money Laundering (AML) or Know Your Customer (KYC) protocols.

These deficiencies made BTC-e popular among individuals seeking to conceal money transactions from law enforcement. Additionally, Vinnik was discovered to have established numerous shell companies and financial accounts globally, enabling the illicit transfer of funds through BTC-e. This activity resulted in criminal losses totaling at least $121 million.

Vinnik has been embroiled in legal battles over the past five years for his alleged role as the mastermind of BTC-e. The cryptocurrency exchange is said to have profited from various illicit activities that used the platform to launder some $4 billion worth of Bitcoin.

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Vinnik was arrested on money laundering charges in Greece in 2017 through a U.S. warrant and was extradited to France in 2020. In France, Vinnik was cleared of ransomware allegations but convicted on money laundering charges and was sentenced to five years in prison.

Vinnik’s lawyers launched an unsuccessful appeal, maintaining that Vinnik was just an exchange employee and had no involvement in illicit activities at BTC-e. After serving two years in a French prison, he was extradited to the U.S. on Aug. 5, 2022.

The Justice Department recognized the Greek government’s cooperation in extraditing Vinnik to the United States. Vinnik had earlier tried to secure a prisoner swap deal for him to be considered as part of a prisoner trade deal between Russia and the United States.

U.S. authorities have brought similar criminal charges against crypto exchanges and their executives. On March 28, former FTX CEO Sam Bankman-Fried was sentenced to 25 years for seven felony charges.

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