Crypto Exchange Operator Charged with Money Laundering Linked to Silk Road

The U.S. Department of Justice (DOJ) has filed charges against Maximiliano Pilipis, operator of the now-defunct crypto exchange AurumXchange, for allegedly laundering millions connected to the infamous Silk Road marketplace.

Millions Laundered for Silk Road, DOJ Alleges

The DOJ claims that Pilipis used his exchange to process over $30 million across roughly 100,000 transactions, a significant portion of which allegedly came from Silk Road accounts. Silk Road, operated by Ross Ulbricht (known by the alias “Dread Pirate Roberts”) from 2011 to 2013, enabled users to buy and sell contraband and illegal goods anonymously.

Pilipis, now 53, allegedly operated AurumXchange from 2009 to 2013 without proper licensing or registration with the U.S. Treasury Department. The DOJ’s charges also state that he collected millions in fees from these transactions, including approximately 10,000 Bitcoin — worth around $1.2 million at the time.

By avoiding federal registration, Pilipis bypassed the regulations requiring Know Your Customer (KYC) measures and anti-money laundering (AML) compliance, the DOJ claims, further facilitating the illicit transactions.

Unlicensed Operations

According to authorities, when AurumXchange shut down in 2013, Pilipis allegedly distributed Bitcoin and other assets acquired during his time operating the exchange. The DOJ accuses him of converting large amounts of crypto into U.S. dollars, later using these funds to purchase real estate in Arcadia and Noblesville, Indiana.

During 2019 and 2020, Pilipis allegedly generated hundreds of thousands in income through these assets, yet neglected to file tax returns, compounding the charges against him.

Pilipis faces a federal indictment of five counts of money laundering and two counts of willful failure to file tax returns. The DOJ’s statement suggests that the grand jury believes Pilipis intentionally evaded both registration and tax filing requirements. If convicted, he could face up to a decade in prison along with a $250,000 fine, though the final sentence will depend on statutory guidelines and judicial discretion.

Silk Road Legacy Continues in Courtrooms

The fallout from Silk Road, shuttered by the FBI in 2013, continues to ripple through the crypto landscape. The charges against Pilipis highlight the DOJ’s commitment to pursuing individuals connected to dark web activities and unregistered crypto operations. As the crypto sector faces heightened scrutiny, cases like Pilipis’ are a reminder of the legal risks associated with operating outside compliance regulations.

This latest DOJ action underscores the government’s stance on preventing notorious agents from becoming unregulated avenues for illicit finance. In May, former investment banker Rashawn Russell was sentenced in Brooklyn to 41 months in prison.