BTC-e Founder Admits Guilt in $9B Money Laundering Conspiracy

Alexander Vinnik, the Russian co-founder of the now-defunct cryptocurrency exchange BTC-e, has pleaded guilty to charges of money laundering conspiracy involving the illicit exchange of cryptocurrencies. 

This admission comes after a comprehensive investigation revealed extensive illegal activities on the platform spanning from 2011 to 2017. It is important to note that US authorities have been cracking down on illicit operations involving cryptocurrencies since the collapse of FTX under the leadership of Sam Bankman-Fried.

BTC-e Founder Pleads Guilty

The United States Department of Justice (DOJ) reported that during Vinnik’s tenure at BTC-e, the exchange processed more than $9 billion in transactions, boasting a user base exceeding one million globally, with a significant portion of 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.

Notably, Avraham “Avi” Eisenberg, the individual behind a $110 million exploit of the Mango Markets decentralized exchange, was also found guilty, setting a precedent for the DeFi sector.

Laundering Funds

According to the DOJ, BTC-e was utilized to launder funds acquired from various criminal activities, including computer hacking, ransomware attacks, and drug trafficking. 

The investigation revealed that BTC-e operated without essential legal compliance measures, such as 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. 

BTC-e Founder Created Numerous Shell Firms

Vinnik was found to have established numerous shell companies and financial accounts globally, facilitating the illicit transfer of funds through BTC-e. This activity resulted in criminal losses totaling at least $121 million.

Vinnik has been entangled in legal battles for the past five years over his alleged role as the mastermind behind the scam. The exchange is accused of profiting from various illicit activities that utilized the platform to launder around $4 billion worth of Bitcoin.

Arrested on money laundering charges in Greece in 2017 through a U.S. warrant, Vinnik was extradited to France in 2020. In France, he was cleared of ransomware allegations but convicted on money laundering charges, receiving a five-year prison sentence.

Extradition to the U.S.

Despite launching an unsuccessful appeal, maintaining his innocence as merely an exchange employee with no involvement in illicit activities at BTC-e, Vinnik was extradited to the U.S. on August 5, 2022.

The Justice Department acknowledged the cooperation of the Greek government in extraditing Vinnik to the United States. Previously, Vinnik attempted to secure a prisoner swap deal, seeking to be part of a prisoner trade deal between Russia and the United States.