Alexander Vinnik, one of the founders of the defunct crypto exchange BTC-e, has pleaded guilty to conspiring to launder money, a significant development in an ongoing legal battle. This admission follows a thorough investigation that uncovered a range of illegal activities on the exchange between 2011 and 2017.

BTC-e Operator’s Guilty Plea

In a recent press release by the U.S. Department of Justice (DoJ), it was revealed that during Vinnik’s tenure at BTC-e, the exchange processed over $9 billion in transactions and had a user base of more than one million worldwide, including many from the U.S. The DoJ found that BTC-e was a channel for laundering funds obtained from various criminal activities.

Compliance Failures

The DoJ’s investigation exposed that BTC-e did not have proper compliance measures in place, such as registration with the Financial Crimes Enforcement Network (FinCEN). The exchange also neglected to implement anti-money laundering (AML) and know-your-customer (KYC) protocols during its operation.

Illicit Activities

Vinnik was found to have set up multiple shell companies and financial accounts globally to facilitate the illegal transfer of funds through BTC-e, resulting in criminal losses of at least $121 million. The case garnered attention after a report in 2017 linked BTC-e to the Mt. Gox hack, where hackers collaborated with the exchange to launder stolen Bitcoins.

Legal Proceedings

In February, Belarusian Aliaksandr Klimenka was indicted alongside Vinnik in the BTC-e case, facing charges of money laundering conspiracy and running an unlicensed financial services business involving an estimated $4 billion in laundered funds. The DoJ highlighted the role of BTC-e servers in the U.S. as critical tools for criminal operations, allegedly supported by Klimenka and his company Soft-FX.

Following the closure of BTC-e in 2017, Vinnik was arrested in Greece and extradited to the U.S. in 2022 to face charges of money laundering and other crimes. Despite attempts to relaunch BTC-e as WEX, the venture ultimately closed down, leaving many users unable to withdraw their funds. In 2023, Alexey Bilyuchenko, a former technology administrator at BTC-e, was fined and sentenced to three years and six months in prison for misappropriating the exchange’s funds.

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