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American authorities have indicted the owner of the crypto trading platform AurumXchange, alleging he funneled funds linked to the infamous Silk Road marketplace.
Maximiliano Pilipis, a 53-year-old Indiana resident, facilitated over $30 million between 2009 and 2013, a portion of which came from accounts held on Silk Road, according to the United States Department of Justice.
Background on Silk Road
Silk Road was the first modern darknet marketplace, launched in 2011 as an online black market. The FBI shut it down in 2013, arresting founder Ross Ulbricht, who is now serving a life sentence for money laundering, drug distribution, and other charges.
AurumXchange Operations
Over 100,000 transactions were conducted on AurumXchange, which the DOJ claims operated without a license. During its roughly four years of operation, Pilipis managed to accrue over 10,000 Bitcoin in fees, which would have netted him around $1.2 million based on Bitcoin prices at the time.
The exchange was registered in Dominica and operated under a money-transmitting business called Aurum Capital Holding. Funds acquired from the operation were split across multiple wallet addresses to launder and conceal the proceeds, with some transactions directed towards darknet marketplaces.
A portion of the funds was used for real estate investments in Arcadia and Noblesville, Indiana, and the profits generated from these investments were not reported on tax returns.
Seizure and Legal Actions
The criminal investigative branch of the Internal Revenue Service seized close to $10 million from Morgan Stanley accounts controlled by Pilipis in January 2024, claiming he knew that the property involved in the transactions represented the proceeds of some form of unlawful activity.
Later that month, a federal grand jury indicted Pilipis on one count of money laundering. Following an expanded DOJ investigation, the grand jury recently returned a superseding indictment, adding five more counts of money laundering and two counts of willfully failing to file a tax return.
Upon conviction, Pilipis could face a prison sentence of up to 10 years and fines up to $250,000.
Crackdown on Crypto Money Laundering
Cryptocurrency exchanges have drawn intense scrutiny worldwide due to their potential involvement in money laundering activities. Last month, Swedish authorities coined the term “professional money launderers” to label certain exchanges that facilitated such activities.
Meanwhile, regulatory authorities have ramped up enforcement efforts to curb illicit fund flows through these platforms. Several major crypto exchanges have faced accusations or investigations related to money laundering over the years, including Binance, KuCoin, OKEx, and BitMEX among others.
Recently, the Federal Criminal Police Office in Germany and the Central Office for Combating Internet Crime shut down 47 crypto exchanges for allowing transactions without implementing proper anti-money laundering measures.
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