DOJ indicts Russian in alleged $4B bitcoin laundering operation

[Note:  This item comes from friend Gary Rimar.  DLH]

DOJ indicts Russian in alleged $4B bitcoin laundering operation
Jul 27 2017

The Department of Justice (DOJ) announced that a Russian national was indicted for allegedly using the digital currency exchange he ran to launder billions of dollars for others and facilitate drug trafficking, identity theft and hacking.

According to the DOJ, Alexander Vinnik operated BTC-e, one of the largest digital exchanges where users could trade bitcoins for other cryptocurrencies or legal tender. 

The DOJ alleged that Vinnik, who was arrested in Greece on Tuesday, used BTC-e to facilitate crimes by not requiring users to validate their identity, anonymizing transactions and not instituting any processes against money laundering.
The exchange has received $4 billion in deposits since its founding in 2011.

The DOJ also said Vinnik received funds from the hacking of Mt. Gox, a popular bitcoin exchange that failed in 2014. Mt. Gox users lost $450 million in bitcoin after the Japanese exchange endured breaches and hacks.  

According to the DOJ, Vinnik used BTC-e to launder the money he received as result of the Mt. Gox hacks. 

Department of Justice officials stressed that they still see bitcoin as a legitimate means of digital commerce and not inextricably linked to crime. 

“Cryptocurrencies such as Bitcoin provide people around the world new and innovative ways of engaging in legitimate commerce,” U.S. Attorney Brian Stretch said in a statement.

“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 said.

U.S. regulators have shown an increasing interest in exploring potential protections and restrictions on the flow of cryptocurrencies in the U.S. 

Earlier in the week, the Securities and Exchange Commission said it was examiningcertain types of initial coin offerings — a cryptocurrency based means for raising capital — to potentially treat with the same scrutiny as securities.


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