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Published: Sun, July 30, 2017
Economy | By Melissa Porter

Bitcoin Exchange Shuts Down after $110 Million Fine, Money Laundering Arrest

Bitcoin Exchange Shuts Down after $110 Million Fine, Money Laundering Arrest

The prosecutions also coincide with intensified scrutiny of Russian hackers after US intelligence officials determined that Russia interfered in the 2016 USA presidential election using cyber warfare methods to help Donald Trump, something Moscow denies.

Vinnik himself received money from the Mt. Gox hack, alleges the indictment, laundering it through BTC-e and another, now defunct, exchange called Tradehill.

BTC-e have always been known for their lax regulations user identity verification and their uncooperative nature when it comes to anti-money laundering organizations.

Just 24 hours later, the Russian national was indicted by a US jury as being the operator of BTC-e, a bitcoin exchange used to launder money for drug traffickers and cyber criminals.

Greek police arrested a Russian national, Alexander Vinnik, 38, for his role as owner of the BTC-e Bitcoin trading platform.

BTC-e is an internet-based, foreign-located money transmitter that exchanges fiat currency as well as the convertible digital currencies Bitcoin, Litecoin, Namecoin, Novacoin, Peercoin, Ethereum, and Dash. He is likely to be extradited to the USA, as the U.S. government has indicted him of laundering about $4 Billion for criminals involved in drug trafficking and hacking. It will be interesting to see what a more lengthy analysis yields, especially with so many question markets surrounding money-laundering episodes over the past few years. In addition, according to the US Department of Justice (DoJ), the BTC-e exchange is likely to face a civil penalty of $110m.

FinCEN has also identified at least $3 million of facilitated transactions tied to ransomware attacks such as "Cryptolocker" and "Locky".

Another local outlet, Capital, says the Russian embassy in Greece has confirmed the arrest.

"As this case demonstrates, however, just as new computer technologies continue to change the way we engage each other and experience the world, so too will criminals subvert these new technologies to serve their own nefarious purposes", Stretch added.

Further reports claimed that apart from receiving billion dollar worth of Bitcoin, Vinnik and his firm also conducted business in the United States without following appropriate protection protocols against money laundering and other crimes. Even if the assets are still intact, U.S. officials may choose to seize all assets if the site is proven to have been actively involved in money laundering. Last week, the U.S. Justice Department moved to shut down the dark web marketplace AlphaBay. Vinnick along with "others" controlled the Vamnedam account and funneled funds into Bitstamp.

After the alleged hack, Mt. Gox had filed for bankruptcy in Japan while its CEO Mark Karpeles had blamed the failure on a cyberattack.

But, in announcing the unsealed indictment, government officials issued stark warnings to digital currency exchanges.

Vinnick is facing over 55 years in prison for these crimes and could be extradited to the U.S.in the near future. In total some 300,000 BTC ended up on BTC-e, while other coins were deposited to other exchanges, including MtGox itself.

Meantime, computer security blog WizSecurity has unveiled that Alexander Vinnik has also been involved in the theft of the collapsed Japanese exchange Mt.Gox.

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