Former WEX Chief Arrested in Poland Amid $450M Crypto Fraud Allegations

Polish authorities have apprehended Dmitry V., the former head of Russia-based crypto exchange WEX, following a U.S. Department of Justice extradition request. Dmitry V., whose identity is partially concealed under Polish law, is accused of fraud and money laundering during his tenure at WEX.

WEX, once a prominent crypto platform and successor to BTC-e, collapsed in 2018 under allegations of illicit activity. The exchange, notorious for its lax identity verification practices, is alleged to have processed funds from high-profile hacks, including the infamous Mt. Gox breach. Reports estimate $450 million in customer funds went missing during its downfall.

“The individual is in custody awaiting completion of the extradition process,” a Polish police spokesperson confirmed. If extradited to the U.S., Dmitry V. could face charges carrying a maximum sentence of 20 years in prison.

A History of Controversies

This is not Dmitry V.’s first brush with international law enforcement. In August 2021, Polish authorities detained him, only to release him after 40 days due to a court ruling. In the summer of 2022, Interpol apprehended him at Zagreb Airport in Croatia following a separate extradition request from Kazakhstan. Earlier, in 2019, Italian authorities also arrested him, but he was released after procedural errors were found in the extradition documents.

WEX’s predecessor, BTC-e, has a similarly tainted legacy. Alexander Vinnik, known as “Mr. Bitcoin” and the former head of BTC-e, was extradited to the U.S. in 2022 after serving two years in a French prison. In May this year, Vinnik pleaded guilty to charges of conspiracy to commit money laundering involving transactions worth over $9 billion from 2011 to 2017.

WEX’s Shadowy Legacy Lingers

At its peak, WEX handled over $9 billion in transactions, boasting a user base of more than one million, including many in the United States. However, its reputation as a “dark” exchange, coupled with links to massive crypto hacks, has kept its legacy under scrutiny.

Dmitry V.’s arrest is another chapter in the ongoing saga of crypto’s early-era scandals. The global crackdown on crypto-related fraud signals an evolving regulatory landscape aimed at ensuring transparency and accountability in the sector.