The US Justice Department unsealed charges against two Russian nationals, Alexey Bilyuchenko, and Aleksandr Verner, for their alleged roles in a cryptocurrency hacking and money laundering scheme.
Bilyuchenko and Verner are accused of hacking the cryptocurrency exchange Mt. Gox in 2011 and laundering the stolen bitcoins through a number of different methods, including using BTC-e, an illicit cryptocurrency exchange that Verner operated from 2011 to 2017.
The charges against Bilyuchenko and Verner carry a maximum sentence of 20 years in prison. The Justice Department is seeking the forfeiture of approximately $191 million in cryptocurrency that is alleged to be the proceeds of the crime.
Mt. Gox bankruptcy
Mt. Gox was a popular Bitcoin exchange that was launched in 2010. However, in 2014, Mt. Gox suffered a major hacking incident, which led to its eventual bankruptcy.
In February 2014, Mt. Gox suddenly suspended all Bitcoin withdrawals, citing technical issues and vulnerabilities in their system. It was later revealed that Mt. Gox had been the victim of a prolonged hacking attack, resulting in the loss of approximately 850,000 Bitcoins, both belonging to the exchange and its customers.
At that time, this represented about 7% of all Bitcoins in existence. The hack had devastating consequences for Mt. Gox and its users. The company filed for bankruptcy protection in Japan in February 2014, and subsequent investigations revealed serious mismanagement and security flaws in the exchange’s operations.
Efforts have been made to compensate the affected users of Mt. Gox. In 2019, a rehabilitation process began in which the remaining assets of Mt. Gox were liquidated to reimburse creditors. The process is ongoing, and some users have received partial refunds, while others are still awaiting resolution.
The charges against Bilyuchenko and Verner are the latest in a series of law enforcement actions against cryptocurrency hackers and money launderers.