Cyber Criminal Who Laundered £3bn in Cryptocurrency Arrested

A cyber criminal, a Russian national, who is suspected of being the mastermind behind a cryptocurrency exchange has been arrested and indicted by a grand jury in California, on money laundering charges. The man, Alexander Vinnik, faces charges of having laundered £3bn ($4 billion) in bitcoin, for many other criminals who did things like hacking, drug trafficking etc.

Alexander Vinnik was arrested in Greece, in a small beach side village in Northern Greece. The arrest happened following an investigation jointly held by the US Justice Department and several other federal agencies and task forces. Vinnik had reportedly been the operator of BTC-e, which is an exchange used to trade bitcoin, the digital currency, for many criminals. He is also said to be linked to the failure of the Japan-based exchange, Mt Gox.

The Guardian reports – “Vinnik was described by the justice department as the operator of BTC-e, an exchange used to trade the digital currency bitcoin since 2011, which was allegedly used to launder more than $4bn for people involved in crimes ranging from computer hacking to drug trafficking…US authorities also linked him to the failure of Mt Gox, the Japan-based bitcoin exchange that collapsed in 2014 after being hacked. Vinnik “obtained” funds from the hack of Mt Gox and laundered them through BTC-e and Tradehill, another San Francisco-based exchange he owned, they said in the statement.”

A release from the United States Attorney’s Office for the Northern District of California quotes U.S. Attorney Brian J. Stretch and says- “Cryptocurrencies such as Bitcoin provide people around the world new and innovative ways of engaging in legitimate commerce. As this case demonstrates, however, just as new computer technologies continue to change the way we engage each other and experience the world, so too will criminals subvert these new technologies to serve their own nefarious purposes”

The Greek police, who had apprehended Alexander Vinnik, describes him as an internationally sought mastermind of a cyber crime organization. In fact, the arrest of Vinnik is the latest development in a series of US operations made against Russian cyber criminals in Europe.

The release from the United States Attorney’s Office for the Northern District of California also quotes Chief Don Fort, IRS (Internal Revenue Service) Criminal Investigation- “Mr. Vinnik is alleged to have committed and facilitated a wide range of crimes that go far beyond the lack of regulation of the bitcoin exchange he operated. Through his actions, it is alleged that he stole identities, facilitated drug trafficking, and helped to launder criminal proceeds from syndicates around the world”.

The arrest of Alexander Vinnik is a result of a multi-national effort and it underlines the need for global cooperation in combating cyber crime.

Meanwhile, Alexander Vinnik’s BTC-e, which is one of the oldest digital currency exchanges, has gone offline following the announcement of a $110 million fine against it by the US Treasury’s Financial Crimes Enforcement Network (FinCEN), for facilitating crimes like ransomware attacks, drug sales etc. However BTC-e, through Twitter, states that it’s just an “unscheduled ongoing maintenance” that has led to their going offline. There is a separate $12 million fine against Vinnik, which is in addition to the filing of criminal charges against him.