It was just over three years ago when I wrote about Mt. Gox after learning the news that they disappeared overnight after being hacked and shutting down. You can see the archived link here from February 2014; you can read why it’s archived here (and not a live link).
Now in 2017, Gox is making headlines again, but this time with somewhat better news. It seems there was a break in the case when news yesterday said that the Bitcoin exchange administrator for BTC-e was arrested in Greece and as part of that report, it was discovered that this same person, Russian national Alexander Vinnik, was involved with the Mt. Gox hacking which led to it being shutdown three years ago. Vinnick is being extradited to the U.S. for money laundering among other charges.
Funny enough, things have changed a lot since 2014. When Mt. Gox was hacked and shut down, the markets reacted poorly with the price dropping. After the news yesterday of BTC-e being shut down, it seemed to have no impact on the market and the Bitcoin prices even went up since then.
Vinnick, along with other co-conspirators named in the report as “Vamnedam, Grmbit, and Petr,” were all accused of hacking, tax fraud, money laundering, and drug trafficking.
“BTC-e was an international money-laundering scheme that, by virtue of its business model, catered to criminals — and to cyber criminals in particular,” explains the DOJ’s charges. Through Vinnik’s efforts, BTC-e emerged as one of the principal means by which cyber criminals around the world laundered the proceeds of their illicit activity.”
The paperwork also stated that despite the fact that BTC-e was not registered as money service in the U.S. with FinCEN, it did a substantial amount of business in the country including having their servers hosted in the U.S. BTC-e relied on shell companies says the indictment and most of these affiliated businesses were also not registered entities. These companies clearly disregarded the “Know Your Customer” and anti-money laundering policies explained the DOJ.