It is a complicated international case! In January 2017, U.S. prosecutors indicted the Russian Alexander Vinnik charging him with money laundering, computer hacking, and drug trafficking. Vinnik was the operator of the illicit crypto exchange BTC-e and allegedly laundered more than $4 billion in bitcoin connected o cybercrime, drug trafficking, public corruption, and tax refund fraud schemes. In July 2017, Vinnik was arrested in Greece and was extradited to the United States on 4 August 2022.
The International Extradition Battle
In early July 2018, Russia submitted a new extradition request based on a confession to additional hacking offenses. Allegedly, Vinnik sent a letter of confession to Russian law enforcement agencies. In it, he admitted to cyber fraud for 750 million rubles. In June, the Russian Interior Ministry decided to open a criminal case, which resulted in the extradition request.
In June 2020, New Zealand Police announced the seizure of $90 million from a company in New Zealand registered to Alexander Vinnik.
In December 2020, Alexander Vinnik was sentenced to a 5-year prison term in Paris, France, for organized money laundering. On 4 Aug 2022, the Investigative Chamber of the Paris Court of Appeals ruled that Vinnik should be extradited to Greece. Consequently, he was immediately flown to Athens, from where he was transported to the United States, his French lawyer Frederic Belot told TASS.
Money-Laundering Charges
According to the U.S. indictment, Alexander Vinnik and his co-conspirators allegedly operated the crypto exchange BTC-e, a significant cybercrime and online money laundering entity that allowed its users to trade in bitcoin with high levels of anonymity and developed a customer base heavily reliant on criminal activity.
The indictment alleges BTC-e facilitated transactions for cybercriminals worldwide and received criminal proceeds from numerous computer intrusions and hacking incidents, ransomware scams, identity theft schemes, corrupt public officials, and narcotics distribution rings, and was used to facilitate crimes ranging from computer hacking, to fraud, identity theft, tax refund fraud schemes, public corruption, and drug trafficking. The U.S. investigation has revealed that BTC-e received more than $4 billion worth of bitcoin over the course of its operation.
The indictment charges BTC-e and Vinnik with one count of operation of an unlicensed money service business and one count of conspiracy to commit money laundering. In addition, the indictment charges Vinnik with 17 counts of money laundering and two counts of engaging in unlawful monetary transactions.
FinCEN Penalty
In 2017, FinCEN assessed a civil money penalty against BTC-e for willfully violating U.S. anti-money laundering (AML) laws and against Vinnik for his role in the violations. A civil matter to enforce civil monetary penalties, in the amount of $88,596,314 as to BTC-e and $12 million as to Alexander Vinnik, is pending in the Northern District of California.
