Cryptocurrency exchange operator indicted over massive bitcoin laundering scam

Illustration by Alex Castro  The Verge

Illustration by Alex Castro The Verge

A Russian criminal mastermind, who had been involved in laundering bitcoins to the tune of $4 billion for criminals has finally been arrested in #Greece.

Police said Wednesday they arrested the 38-year-old, who has not been officially named, the previous morning in northern Greece in cooperation with U.S. authorities, and seized electronic equipment from his hotel room.

Part of Vinnik's illegal gains, estimated at $4 billion, came from the collapse in 2014 of the Bitcoin exchange Mt. Gox based in Tokyo, police said.

"We will hold accountable foreign-located money transmitters, including virtual currency exchanges, that do business in the United States when they willfully violate USA anti-money laundering laws".

Notably absent from the statements were indications as to whether the U.S. government would move to permanently shutter the exchange, which just hours ago said that it would return to service.

Greek police described Vinnik as a "an internationally sought "mastermind" of a crime organization". Vinnik's arrest is the latest in a series of USA operations against Russian cyber criminals in Europe.

BTC-e, the U.S. Justice Department, and the Russian Foreign Ministry have not yet provided any comments. The U.S. prosecutions coincide with intensified scrutiny of Russian hackers after U.S. intelligence officials determined that Russia interfered in the 2016 U.S. presidential election using cyber warfare methods to help Donald Trump, something Moscow denies.

Earlier another federal agent "Secret Service agent Shaun W. Bridges, 32, admitted this summer to stealing 20,000 bitcoins and liquidating it into $820,000 through a Japanese currency exchange before depositing it into his personal accounts".

Those payments have made BTC-e one of the largest bitcoin exchanges, regularly handling more than 3 percent of total Bitcoin transactions. He is likely to be extradited to the United States, as the United States government has indicted him of laundering about $4 Billion for criminals involved in drug trafficking and hacking.

BTC-e, which has been out of service for more than a day, attributed this to "unplanned maintenance".

The Treasury Department's Financial Crimes Enforcement Network (FinCEN) has also decided on a $110m civil monetary penalty against BTC-e and $12m against Vinnik.

Greek police have arrested one of the central figures in the Bitcoin exchange BTC-e on suspicion of money laundering.

Being outside the reach of United States and European law enforcement, the exchange has always been a target of hackers.

Moving coins back onto MtGox was what let us identify Vinnik, as the MtGox accounts he used could be linked to his online identity "WME".

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