Russian National Pleads Guilty in US Over Crypto Laundering

Peter Blumberg, Bloomberg News

(Bloomberg) -- A Russian national pleaded guilty to a money laundering conspiracy related to his role in operating one of the world’s largest virtual currency exchanges from 2011 to 2017, US prosecutors said.

Alexander Vinnik, 44, was one of the operators of BTC-e until it was shut down by law enforcement and he was arrested, according to a statement by the US Attorney’s office in San Francisco. BTC-e processed more than $9 billion of transactions and served more than 1 million users worldwide, prosecutors said.

The US has been cracking down on cryptocurrency fraud. FTX co-founder Sam Bankman-Fried was sentenced in March to 25 years in prison for orchestrating a multibillion-dollar scheme, while Terraform Labs Pte. and co-founder Do Kwon were found liable for fraud last month in a civil trial over the firm’s 2022 collapse, which wiped out $40 billion in investor assets. This week, Binance founder Changpeng Zhao was sentenced to four months for failures that allowed criminals and terrorists to trade on the world’s largest crypto exchange.

Prosecutors described BTC-e as one of the primary ways by which cyber criminals around the world transferred, laundered and stored the criminal proceeds of illegal activities including hacking, ransomeware attacks and narcotics distribution.

Read More: Russian Bitcoiner Sentenced to Five Years for Money Laundering

BTC-e allegedly allowed cyber criminals to move illicit proceeds between cash and cryptocurrencies like Bitcoin anonymously and without vetting. Prosecutors also said it handled some Bitcoin traced to a Russian military intelligence hacking unit that was accused of releasing Democrats’ emails to sway votes in the 2016 US elections.

“Vinnik operated BTC-e with the intent to promote these unlawful activities and was responsible for a loss amount of at least $121 million,” according to the statement, which said he faces a maximum of 20 years in prison when he’s sentenced in San Francisco.

In 2020, Vinnik was sentenced in France to five years in jail for money laundering.

(Updates with details from prosecutor statement.)