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According to a court document filed on July 25 in the Northern District of California, BTC-e and its executive, Alexander Vinnik, have been indicted for conspiracy, money laundering, illicit monetary transactions and money laundering. unlicensed trading operation. The stock market now vanished and Vinnik are subject to civil penalties of $ 88.6 million and $ 12 million, plus interest and costs, respectively, amounts initially determined by the Network to fight against crime FinCEN in July 2017.
In total, Vinnik was charged with 17 counts of money laundering and two counts of illicit monetary transactions. Although BTC-e and Vinnik have also been charged with a chief operating officer of an illicit money services business and a conspiracy leader to commit money laundering. ;money.
Integrated in the name of the US Department of the Treasury, this action tells the flagrant disregard of a company for the law. The government claims that BTC-e and Vinnik were more than willing to launder and hold funds for some of the most harmful organizations involved in the cryptocurrency sector, provided that their owners benefit from it.
This includes funds received from the "hacking" that caused the exchange of important trade, Mt. Gox.
Unlike many legitimate cryptographic exchanges, BTC-e, based in Cyprus and Seychelles, is an anonymous way to buy, sell and trade in bitcoin and other digital currencies. No matter who, no matter where, was allowed to operate on its platform without "even the most basic identification information."
Attorneys David Anderson, Sara Winslow and Kirsten Ault say deliberately substandard record keeping "has contributed to his clients' willingness to accept BTC-e's unfavorable exchange rates over other legitimate exchanges" ".
In its six-year history, BTC-e has served approximately 700,000 users, who traded more than $ 296 million in more than 21,000 bitcoin transactions, not to mention other parts. Although not all BTC-e clients were criminals, the investigators write:
"A significant part of BTC-e's business is related to alleged criminal activity."
Indeed, the company's lax approach to collecting user information, the organization of unmonitored open forums during which users discussed ways to acquire illicit goods and the refusal to involve known criminals on his platform had attracted some of the worst players in the industry and eventually caught the government's attention.
Crime cultivated
The company would have cultivated its identity as a refuge for the criminal element.
In his discussion forum, people "under pseudonyms suggesting criminal acts, including user names such as" ISIS "," Cocaine Cowboys "," blackhathackers "," dzkillerhacker "and" hacker4hire "" would discuss publicly from the purchase or the consultation of illicit documents in the dark. -web.
In addition, the lawyers allege:
"On some occasions, clients have contacted BTCe's administration directly to ask them how to treat and access proceeds from the sale of illicit drugs and transactions in known illicit markets, including Silk Road."
BTC-e did not ring at any time and the money did not stop flowing.
The lawyers discussed the trade relations forged between BTC-e and Liberty Reserve, based in Costa Rica. According to the allegations, the companies shared the customers and even had a program where the "BTC-e code" was exchangeable for Liberty digital currency.
After Liberty Reserve closed for laundering $ 6 billion of illicit funds – in a lawsuit in which US authorities seized the company's website and arrested its six main operators – BTC-e n did not reveal the alliance and the smuggling fund concealed on his platform.
This case was not a special case. According to lawyers, another unregistered and now closed cryptographic exchange, Coin.MX, has completed nearly 1,000 transactions on the BTC-e platform. Coin.MX has also been closed for charge of money laundering and conspiracy as a result of a federal investigation. Again, BTC-e failed to disclose this relationship in a suspicious activity report under the Bank Secrecy Act.
Although all possible criminal relationships can not be listed here, according to the lawyers, the company was harboring funds earned by malicious botnets, scams and computer hijackings. They took money from identity thieves and officials who embezzled funds. And yet, "despite the numerous evidence of illegal activity on its platform, BTC-e has not filed a single SAR."
SAR Silence
Instead of expressing itself, BTC-e would have concealed this type of illegal activity by asking their clients to transfer money to companies "front", nominally separate from the stock market. In addition, it is said that BTC-e never registered or requested identification when receiving wires.
BTC-e would further obscure and anonymize the funds by processing transactions through a temporary address layer called "bitcoin mixer", a way to protect both sides of the transaction.
In the end, the company was not registered as a money issuer.
In May 2016, a grand jury from Northern California (California) "charged two accused accusing BTC-e and Vinnik of having exploited a drug company. unlicensed monetary services ".
Six months later, a grand jury presented twenty – one counts against Vinnik and his company. They stated at no time that anti-money laundering policies had been put in place, "apart from an effective program for the detection and prevention of suspicious transactions".
Among the suspicious transactions were those of operator Vinnik, who allegedly scourged the customers' money and reportedly used the platform as a personal bank.
While Vinnik denied the charges against him, even though he denied being a cabinet officer, the prosecutor's office is trying to prove that he "had several administrative, financial, operational and support accounts at BTC -e ".
Vinnik, a Russian national arrested on his Greek holiday in July 2017, had previously asked for his extradition to Russia. He faces a maximum of 55 years in prison.
Lady Justice via Shutterstock
US vs BTC-e / Vinnik from CoinDesk on Scribd
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