A Russian national pleaded guilty today to conspiracy to commit money laundering related to his role in operating the cryptocurrency exchange BTC-e from 2011 to 2017.
According to court documents, Alexander Vinnik, 44, was one of the operators of BTC-e, which was one of the world’s largest virtual currency exchanges. From its inception in or around 2011 until it was shut down by law enforcement in or around July 2017 contemporaneous with Vinnik’s arrest, BTC-e processed over $9 billion-worth of transactions and served over one million users worldwide, including numerous customers in the United States.
“Today’s result shows how the Justice Department, working with international partners, reaches across the globe to combat cryptocrime,” said Deputy Attorney General Lisa Monaco. “This guilty plea reflects the Department’s ongoing commitment to use all tools to fight money laundering, police crypto markets, and recover restitution for victims.”
BTC-e was one of the primary ways by which cyber criminals around the world transferred, laundered, and stored the criminal proceeds of their illegal activities. BTC-e received criminal proceeds of numerous computer intrusions and hacking incidents, ransomware attacks, identity theft schemes, corrupt public officials, and narcotics distribution rings. Vinnik operated BTC-e with the intent to promote these unlawful activities and was responsible for a loss amount of at least $121 million.
Despite doing substantial business in the United States, BTC-e was not registered as a money services business with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), as federal law requires. BTC-e had no anti-money laundering (AML) and/or “know-your-customer” (KYC) processes and policies in place, as federal law also requires. BTC-e collected virtually no customer data at all, which made the exchange attractive to those who desired to conceal criminal proceeds from law enforcement.
BTC-e relied on shell companies and affiliate entities that were similarly unregistered with FinCEN and lacked basic anti-money laundering and KYC policies to electronically transfer fiat currency in and out of BTC-e. Vinnik set up numerous such shell companies and financial accounts across the globe to allow BTC-e to conduct its business.
A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
In 2017, FinCEN announced that it assessed an approximately $110 million civil money penalty against BTC-e for willfully violating U.S. AML laws, and a $12 million civil penalty against Vinnik for his role in the violations.
The FBI; IRS Criminal Investigation’s Cyber Crime Unit and Oakland Field Office; U.S. Secret Service Criminal Investigative Division; and Homeland Security Investigations (HSI) are investigating the case. The lengthy investigation was supported by numerous former prosecutors and investigators from multiple agencies.
Trial Attorney C. Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Claudia Quiroz and Katie Lloyd-Lovett for the Northern District of California are prosecuting the case. Pelker and Quiroz are members of the Department’s National Cryptocurrency Enforcement Team (NCET).
The Justice Department’s Office of International Affairs provided valuable assistance in securing the extradition of Vinnik. The Justice Department thanks the Government of Greece for its cooperation in securing Vinnik’s transfer to the United States.
