Alexander Vinnik, co-founder of the now-defunct cryptocurrency exchange BTC-e, has pleaded guilty to conspiracy to launder money, marking a significant development in his long-running legal case.
Vinnik’s guilty plea came as a result of an extensive investigation that uncovered widespread illegal activity on the exchange from 2011 to 2017.
BTC-e: A conduit for money laundering
In a May 3 press release, the U.S. Department of Justice (DoJ) said that when Vinnik led BTC-e, the exchange processed more than $9 billion in transactions and amassed a global user base of over 1 million. Many of them are located in the United States.
According to the DoJ, BTC-e served as a conduit for laundering funds obtained through various criminal activities.
Moreover, the Department of Justice’s investigation revealed that BTC-e operated without compliance measures, including registration with the Financial Crimes Enforcement Network (FinCEN).
Additionally, the exchange did not enforce anti-money laundering (AML) or know-your-customer (KYC) protocols for its customers during its period of operation.
Investigators also found that Vinnik established numerous shell companies and financial accounts around the world to facilitate illicit fund transfers via BTC-e, resulting in criminal losses totaling $121 million.
This incident occurred when BTC-e was transferred to Mt. It gained attention after a 2017 report by WizSecurity that revealed its involvement in the Gox hack.
The report detailed how hackers worked with BTC-e and Vinnik to launder stolen Bitcoin through exchanges, implicating Vinnik in illegal activities.
Last February, the DoJ indicted Belarusian Aliaksandr Klimenka as the main defendant in the BTC-e case, along with Vinnik.
Klimenka was charged with conspiracy to launder money and operating an unlicensed financial services business, with approximately $4 billion in laundered funds.
At the time of Klimenka’s indictment, the DoJ stated that BTC-e servers in the United States were a critical tool in criminal operations purportedly supported by Klimenka and his company Soft-FX.
After US law enforcement shut down BTC-e in 2017, Vinnik was arrested near Thessaloniki, Greece. The Russian-born cryptocurrency entrepreneur, who was extradited to the United States in 2022, faces money laundering and other criminal charges.
Despite attempts to revive and rebrand BTC-e as WEX, the venture eventually shut down, leaving many users unable to withdraw their funds.
In 2023, Alexey Bilyuchenko, a Vinnik employee and former technical manager of BTC-e, was sentenced to a fine and 3 years and 6 months in prison for misusing exchange funds.