Alexander Vinnik, a Russian national who operated the crypto exchange BTC-e, pled guilty to charges of money laundering conspiracy in the US on May 3, according to a Bloomberg report.
BTC-e was one of the world’s largest crypto exchanges between 2011 and 2017. According to the prosecutors, it processed transactions worth $9 billion and had a customer base of over 1 million worldwide.
The prosecutors added that BTC-e was used by cyber criminals to transfer, launder, and store criminal proceeds from illegal activities. This included proceeds from hacking, ransomware, and narcotics distribution.
According to a statement by the US Attorney’s office in San Francisco, Vinnik operated the exchange until he was arrested and BTC-e was shut down by law enforcement. Vinnik, sentenced to five years imprisonment for money laundering in France in 2020, faces a maximum of 20 years in prison in the U.S.
The statement noted:
“Vinnik operated BTC-e with the intent to promote these unlawful activities and was responsible for a loss amount of at least $121 million.”
Prosecutors claim that BTC-e did not have a vetting system and allowed criminals to convert illicit cash into cryptocurrencies like Bitcoin anonymously. The prosecutors stated that the exchange was found to have handled Bitcoin traced to a Russian military intelligence hacking unit that was responsible for releasing Democrats’ emails during the 2016 U.S. elections in an attempt to sway votes.
In recent months, there has been increasing scrutiny and regulatory action against cryptocurrency-related fraud in the U.S. Sam Bankman-Fried, the co-founder of now-defunct crypto exchange FTX, was sentenced to 24 years in prison in March for orchestrating a multi-billion dollar fraud scheme.
Additionally, Do Kwon, the founder of Terraform Labs, was found liable for fraud in a civil case in April 2024. Terraform Labs collapsed in 2022, triggering a chain of bankruptcies and wiping out $40 billion from the market.
More recently, Changpeng Zhao (CZ), the founder of Binance, one of the world’s largest crypto exchanges, was sentenced to four months in prison this week for failures that allowed illicit activities, including criminal and terrorist financing, to occur on the platform. CZ had previously pled guilty while Binance paid the biggest fine in history and agreed to being monitored.
Furthermore, Former SEC Division of Enforcement Assistant Director Jennifer Lee said this week that if Donald Trump is elected President for a second term this year, the U.S. Securities and Exchange Commission (SEC) will continue to “define its space and reach over crypto.”
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Author: Monika Ghosh
