Alexander Vinnik, a Russian who co-founded the purportedly illicit crypto exchange BTC-e, admitted his involvement in a conspiracy to launder money through the cryptocurrency exchange.
His confession followed a comprehensive investigation that uncovered widespread illicit activities on the exchange between 2011 and 2017.
The United States Justice Department (DOJ) reported that while Vinnik led BTC-e, the exchange handled over $9 billion in transactions and had a worldwide user base of more than one million, including a significant number of users from the United States.
A federal district court judge will determine his sentence using the U.S. Sentencing Guidelines and other relevant legal factors.
The U.S. Department of Justice revealed that criminals used the platform to launder money from a range of illegal activities, including computer hacking, ransomware attacks, and drug trafficking.
The DOJ indicated that BTC-e failed to implement key legal compliance measures, such as registration with the Financial Crimes Enforcement Network (FinCEN) and Anti-Money Laundering (AML) or Know Your Customer (KYC) protocols.
These deficiencies attracted people who wanted to keep their monetary transactions hidden from law enforcement to use BTC-e.
In other news, a new report from the United Kingdom (UK) shows crypto firms as high-risk for money laundering.
Additionally, investigators discovered that Vinnik set up multiple shell companies and financial accounts worldwide, facilitating the illegal movement of funds through BTC-e. This caused criminal losses totaling at least $121 million.
Vinnik spent the last five years engaged in legal battles due to his alleged role as the mastermind of BTC-e. The cryptocurrency exchange reportedly profited from various unlawful activities, with about $4 billion worth of Bitcoin laundered through the platform.
Greek authorities arrested Vinnik on money laundering charges in 2017 based on a U.S. warrant and extradited by French officials to France in 2020.
In France, the court cleared Vinnik of ransomware allegations but convicted him of money laundering, resulting in a five-year prison term.
Vinnik’s legal team filed an appeal claiming he was merely an employee of the exchange and had no role in BTC-e’s illegal activities, but the appeal was unsuccessful. After he served two years in a French prison, officials extradited him to the United States on August 5, 2022.
Vinnik previously attempted to be included in a prisoner exchange agreement between Russia and the United States.
U.S. authorities have pursued similar criminal cases against cryptocurrency exchanges and their executives. On March 28, the court sentenced former FTX CEO Sam Bankman-Fried to 25 years for seven felony charges.
