BTC-e is said to have "embraced the pervasive criminal activity conducted at the exchange" by obtaining sparse accounts of customer identities, limited to email addresses, passwords, and usernames. According to official documents, Russian national Alexander Vinnik was indicted along with BTC-e "in the Northern District of California under 18 U.S.C. §§ 1956, 1957, and 1960 for money laundering, conspiracy to commit money laundering, engaging in unlawful monetary transactions, and the operation of an unlicensed money transmitting business". The attack on Tokyo-based Mt. Gox in 2014 resulted in the loss of an estimated $450m worth of bitcoin and $27m in cash. "We Apologize for the Inconvenience".
A Russian citizen and one of the main figures behind the bitcoin exchange BTC-e was detained on Wednesday at a small village in northern Greece. The US Justice Department has alleged that Vinnik and his firm have received over $4 Billion in Bitcoins.
Local media reports say that Greece will soon begin negotiations with the U.S. about Mr Vinnik's extradition. "We apologize for the inconvenience". What helped investigators to identify Vinnik is moving the funds back onto Mt.Gox, as all accounts he used on the exchange could lead to his WME wallet.
The arrest was carried out by Greek authorities working in partnership with U.S. agencies.
In all the noise about the BTC-e shutdown and the arrest of Vinnik, the Financial Crimes Enforcement Network (FinCEN) are further showcasing the heavy-handed stance the United States will take on all matters crypto.
An internationally sought "mastermind" of a crime organization has been arrested. Police stated that he administered "one of the most important websites of electronic crime in the world". According to the feds, BTC-e didn't comply with anti-money laundering laws that require financial businesses to collect information about their customers and report suspicious activity to the authorities. Crucially, their reports suggest that numerous stolen bitcoins were immediately moved from wallets owned by Vinnik to BTC-e internal storage, rather than customer deposit wallets.
To further complicate matters, additional coins stolen from Bitcoinica, Bitfloor, and others between 2011 and 2012 were all apparently laundered via the same wallets that the MtGox theft was tied to.
The charges against Vinnik are still sealed, and are likely to remain sealed as prosecutors attempt to extradite him to the US. Share your thoughts in the comments section below! WizSec traced Mt. Gox transactions to the online identity WME, which BTC-E publicly vouched for in the past.