The U.S. Department of Justice has charged the operator of cryptocurrency exchange AurumXchange with money laundering, claiming he processed millions of dollars for darknet marketplace Silk Road.
In an Oct. 28 statement, the DOJ alleged that when Maximiliano Pilipis, 53, ran AurumXchange, more than $30 million in funds passed through the exchange across 100,000 transactions, some of which came from accounts on Silk Road.
Under the pseudonym Dread Pirate Roberts, American Ross Ulbricht ran Silk Road as a marketplace on the Tor network from 2011 to 2013, allowing users to buy and sell products anonymously, which was used by thousands of drug dealers.
Philippis is said to have operated the exchange without a license from 2009 to 2013, the year the FBI shut down Silk Road.
The DOJ said Pilipis collected millions of dollars in fees to facilitate these transactions, including 10,000 bitcoins (BTC), worth about $1.2 million at the time.
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Authorities also accuse Philippis of failing to register with the U.S. Treasury, ignoring federal registration and reporting requirements for cryptocurrency exchanges, and failing to file reports on the exchange’s activities with the federal government.
He also said it had not implemented know-your-customer (KYC) rules, violating anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.
After AurumXchange was shut down, authorities said Pilipis transferred bitcoin and other assets he earned while operating AurumXchange in installments to “launder and conceal the proceeds of crime.”
He is accused of converting his cryptocurrency into US dollars, which he used to invest in real estate in Arcadia and Noblesville, Indiana.
One of Philips’ reported properties in Noblesville is now owned by the bank, according to a real estate listing. Source: Redfin
In the process, authorities said Philippis’ assets generated hundreds of thousands of dollars in income in 2019 and 2020, but he did not file tax returns.
A federal grand jury returned a superseding indictment charging Philippis with five counts of money laundering and two counts of willful failure to file tax returns.
If convicted, he could face up to 10 years in prison and a fine of up to $250,000.
But a federal district court judge will ultimately decide Philippis’ fate based on sentencing guidelines and other legal factors, so his sentence could be lighter.
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