The operator of a Bulgarian cryptocurrency exchange BTC-e has been extradited from Greece to the United States, where he is accused of operating an unlicensed money service company and money laundering.
Russian citizen Alexander Vinnik collaborated on the BTC-e exchange, which was responsible for laundering more than $4 billion in criminal funds. The Office for International Affairs of the US Department of Justice and the Greek government has facilitated the extradition from Greece.
Criminal activity and enforcement actions have shaken the crypto industry in recent weeks. Coinbase has been the subject of an investigation by the Securities and Exchange Commission for allegedly selling unregistered securities while a former employee has been charged with insider trading. Several investors have archived file a lawsuit against the stock exchange for the purpose of recovering damages from the stock exchange’s offering of unregistered securities.
On August 1, 2022, the Securities and Exchange Commission civilly charged 11 individuals with operating Forsage, a $300 million Ponzi and pyramid scheme.
BTC-e suffered from bad AML/KYC rules
Vinnik and co-conspirators owned and operated BTC-e, an exchange that offered a high degree of anonymity and made it fertile ground for criminal activity, including funneling proceeds from hacks, ransomware attacks, identity theft and drug syndicates. The exchange processed more than $4 billion during its operations. It was not registered with the US Treasury Department as a money service company. It had a poor anti-money laundering and know-your-customer policy.
Vinnik and BTC-e become charged with conspiracy to commit money laundering and one count of operating an unlicensed money market. Separately, Vinnik is charged with 17 cases of money laundering and two of illegal money transactions.
He appeared in a San Francisco court on Friday, August 6, 2022.
The case is under investigation by the Federal Bureau of Investigation, Internal Revenue Service Criminal Investigation, Homeland Security Investigations and the US Secret Service Criminal Investigation.
Vinnik has been in the sights of the authorities since 2017
Vinnik worked at Bulgarian BTC-e from 2011-2017 and was charged on 21 counts in 2017 and arrested by the Greek authorities in July of that year at the request of the United States. He denied all charges at the time.
In 2017, FinCEN launched an investigation into BRC-e for knowingly violating anti-money laundering laws and against Vinnik for his part in the violations. FinCEN leveled a $110 million charge against BTC and a $12 million fine against Vinnik.
A civil case to impose fines against BTC-e and Vinnik awaits ruling in California’s Northern District.
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