The US government has unsealed an indictment against BTC-e and one of its alleged operators, levying a $110m fine for violations allegedly committed by the long-running bitcoin exchange.
In the 21-count indictment released earlier this evening, the Department of Justice alleged that BTC-e and Alexander Vinnik, the Russian national who was arrested earlier today in Greece and later linked to the long-running exchange, committed a laundry list of crimes throughout the exchange’s six-year history.
Federal prosecutors allege that BTC-e functioned as a clearing house for illicit funds sourced from “computer intrusions and hacking incidents, ransomware scams, identity theft schemes, corrupt public officials, and narcotics distribution rings.”
Vinnik was charged with 17 counts of money laundering and two counts of engaging in unlawful monetary transactions. Both BTC-e (by way of an alleged holding company named Canton Business Corporation) and Vinnik were also charged with one count of operating an unlawful money services business and one count of conspiracy to commit money laundering.
Prosecutors further alleged that Vinnik “received funds from the infamous computer intrusion or “hack” of Mt. Gox” – echoing claims released earlier today by the independent research group WizSec, which has investigated the theft of funds from the now-defunct Japan-based bitcoin exchange.
According to the Department of Justice, the Financial Crimes Enforcement Network (FinCEN) assessed a $110m civil penalty against BTC-e, as well as a $12m penalty against Vinnik.
If convicted, Vinnik faces as many as 55 years in prison.
But, in announcing the unsealed indictment, government officials issued stark warnings to digital currency exchanges.
Acting FinCEN director Jamal El-Hindi said in a statement:
“We will hold accountable foreign-located money transmitters, including virtual currency exchangers, that do business in the United States when they willfully violate U.S. AML laws.”
Notably absent from the statements were indications as to whether the US government would move to permanently shutter the exchange, which just hours ago said that it would return to service.
More details on the story, its impact, its connection to the Mt Gox case and its open questions can be found in our most recent feature.
The full unsealed superseding indictment can be found below:
Written by: Stan Higgins