On July 25, the Northern District Court of California issued a document according to which the stock exchange, which ceased to exist, will cease to be a BTC-e cryptocurrency exchange and will be charged with criminal organization, money laundering, servicing illegal money transactions and exchange operations without a license. The Financial Crimes Enforcement Network (FinCEN) has demanded that BTC-e and Vinnick reimburse $88.6 million and $12 million, respectively, CoinDesk writes.
Vinnick is charged with 17 counts of money laundering and two counts of involvement in illegal money transactions. BTC-e and Vinnik are also jointly charged with one episode of money laundering and one episode of money laundering.
According to the U.S. Department of Justice, the defendants were eager to take up money laundering and store funds from some of the most immoral organizations in the cryptocurrency industry while it was making a profit. This includes, for example, funds diverted from the Mt. Gox exchange after an alleged hacker attack.
The prosecution argues that positioning BTC-e as a platform that does not request "even the most basic identification information" has attracted clients "willing to accept unfavorable exchange rates compared to other full-fledged" exchanges.
In its six-year history, BTC-e has served approximately 700,000 users who have traded more than $296 million in over 21,000 Bitcoin transactions, excluding other cryptocurrencies. Although not all BTC-e clients were criminals, the investigation insists: "Much of BTC-e's business was based on potentially criminal activity.
In addition to money laundering, the firm is accused of being a breeding ground for crime. For example, her chat room often publicly discussed the purchase of prohibited items and materials.
"In some cases, clients contacted BTC-e directly, asking questions about the transfer of funds received from drug trafficking and transactions carried out in illegal markets in darkness, including Silk Road," says the prosecution.
BTC-e is also linked to firms such as Liberty Reserve and Coin.MX, both of which were closed down on money laundering charges. It is noted that BTC-e has had many criminal connections, including organizers of malicious botnets, fraudulent schemes, data dealers and officials with a history of embezzlement. "Despite excessive evidence of illegal activity, BTC-e has not filed a single suspicious transaction report.
Instead, BTC-e allegedly recommended that customers involved in such transactions should be able to withdraw money by bank transfer to front company accounts that are not nominally associated with it. The bitcoins received were passed through mixer services to protect both parties to the transaction.
The final reason for closing BTC-e was the absence of the exchange's license of a money transfer operator. In May 2016, a jury in the Northern District of California upheld the charges in two episodes, and six months later, a new charge in 21 episodes against Vinnik and his company. According to the decision, they did not use anti-money laundering policies, "let alone an effective programme to detect and prevent suspicious transactions. These include withdrawals from client accounts and Vinnick's use of the platform as a personal bank.
Vinnick denies the charges against him and the fact that he is in charge of the company, while the prosecutor's office is trying to prove that he "managed several administrative, financial, operational and support accounts at BTC-e".
Alexander Vinnik was detained in July 2017 in Greece. Since then, the Russian and American sides have been seeking his extradition. He faces up to 55 years in prison in the United States and 600,000 rubles in Russia for fraud.