BTC-e Founder Pleads Guilty in $9B Crypto Money Laundering Scheme

NAIROBI (CoinChapter.com) — Alexander Vinnik, a co-founder of the notorious cryptocurrency exchange BTC-e, has pleaded guilty to a money laundering conspiracy charge. The admission comes after extensive investigations uncovered widespread illicit activities on the exchange.

According to court documents, BTC-e functioned as a center for criminals to clean their money. The exchange, serving over a million users globally, processed more than $9 billion in transactions from 2011 to 2017. This allegedly occurred due to a lack of proper anti-money laundering and customer identification procedures.

The Illicit Underbelly of BTC-e

The Department of Justice (DOJ) uncovered that BTC-e operated without registering as a money services business with the Financial Crimes Enforcement Network (FinCEN), which was a violation of federal law. Moreover, the exchange maintained minimal AML and KYC protocols, collecting virtually no customer data. This lack of oversight attracted individuals seeking to conceal criminal proceeds, facilitating BTC-e’s criminal activities.

Vinnik and his co-conspirators further exploited regulatory loopholes by relying on shell companies and unregistered affiliates to transfer fiat currency in and out of BTC-e. These entities lacked essential AML and KYC policies, enabling the exchange to perpetuate its illicit operations unchecked.

The Fallout and Consequences

Vinnik, 44, operated BTC-e with the intent to promote unlawful activities and was responsible for a staggering loss amount of at least $121 million. In 2017, FinCEN assessed an approximately $110 million civil money penalty against BTC-e and a $12 million civil penalty against Vinnik for willfully violating US AML laws.

Vinnik faced a lengthy legal battle spanning over five years. Authorities arrested him on money laundering charges in Greece in 2017 through a U.S. warrant. Subsequently, he was extradited to France in 2020, where a court convicted him of money laundering and sentenced him to five years in prison. After serving two years of his sentence in a French prison, the U.S. government extradited him on Aug. 5, 2022. The Justice Department acknowledged the Greek government’s cooperation in facilitating Vinnik’s extradition to the United States.

The investigation, supported by numerous former prosecutors and investigators from multiple agencies, highlights the Justice Department’s commitment to combating cryptocrime and policing crypto markets. As Deputy Attorney General Lisa Monaco stated,

“Today’s result shows how the Justice Department, working with international partners, reaches across the globe to combat cryptocrime.”

Vinnik’s admission of guilt reflects the growing international effort to combat cryptocurrency-related crimes.

Law enforcement agencies increasingly focus on dismantling illicit exchanges and holding their operators accountable. Vinnik’s case highlights a pattern of authorities targeting criminal enterprises within the crypto space. Notably, former FTX CEO Sam Bankman-Fried was recently sentenced to 25 years on felony charges.

Similarly, other exchanges and executives have faced severe legal consequences for their roles in unlawful activities.

With Vinnik’s guilty plea, the crypto community must learn from this case and prioritize transparency, compliance, and robust AML/KYC measures. The industry’s credibility hinges on weeding out bad actors and fostering a secure, regulated environment for legitimate transactions.