In a landmark case shaking the foundations of the cryptocurrency world, Russian national Alexander Vinnik has been charged with a money laundering conspiracy. Vinnik, one of the gears turning the once high-flying cryptocurrency exchange BTC-e, hammered out a guilty plea in a San Francisco courtroom, admitting to his role in directing an operation that handled over a staggering $9 billion in transactions.
The exchange began its operations in 2011 and continued until its closure by the feds in 2017. It was more than just an exchange. It was a hub where cyber underbellies conveniently washed their dirty funds, becoming a go-to for all shades of the cybercrime spectrum. "Today's result shows how the Justice Department, working with international partners, reaches across the globe to combat cryptocrime," Deputy Attorney General Lisa Monaco indicated, a statement obtained by the U.S. Attorney's Office for the Northern District of California revealed.
BTC-e was set up to make it harder for the good guys to follow the money. It had no anti-money laundering (AML) controls, nor did it bother with any "know-your-customer" (KYC) procedures, an irresistible draw for criminals looking to evade law enforcement's prying eyes. According to court documents, Vinnik aided in laundering at least $121 million in criminal proceeds, from dark web drug dealings to ransomware ransoms.
The severity of Vinnik's choices is returning to haunt him as he potentially stares down the barrel of a maximum 20-year stint in the slammer. Despite being a significant player in the criminal underworld, thus far, a date for his sentencing has not been etched in stone. Sentencing will be at the discretion of a federal judge, who's expected to factor in the U.S. Sentencing Guidelines and other statutory considerations when deciding. In 2017, FinCEN dropped the hammer, slamming BTC-e with around a $110 million fine and individually fining Vinnik $12 million for their willful flouting of U.S. AML laws.
The long arm of justice was not short of help in this investigation from the FBI, IRS-CI Cyber Crime Unit and Oakland Field Office, U.S. Secret Service Criminal Investigative Division, and Homeland Security Investigations San Francisco. It is also worth noting that this case was prosecuted by members of the Justice Department’s National Cryptocurrency Enforcement Team. Vinnik was extradited to the U.S. thanks to Greek authorities' assistance, a diplomatic exchange crowned with gratitude by the Justice Department.
