Russian based cryptocurrency exchange BTC-e was brought down earlier this week by law enforcement agents and says its downtime was due to “FBI agents entering its data center. So what was it all about and what do we know so far?
On Thursday, the Department of Justice unsealed an indictment against Alexander Vinnik, thought to be the operator or, one of the operators of the notorious Bitcoin exchange BTC-e, however, in a post published on BitcoinTalk Monday it was strangely stated that Alexander Vinnik, charged with 21 counts of money laundering and other related financial crimes had “never been in charge of” the service. and “Future updates will include information about what options we have for restoring the service and how to regain control of our reserves,” it continued, adding the FBI had gained control of domains where its wallets are located.
“If we cannot restart our service by the end of August, we’ll begin returning funds from Sep. 1.”
The charges include operating an unlicensed money transmittal business to a flurry of money laundering charges including a theft from the now-defunct Mt Gox exchange. Overall, the indictment portrays BTC-e as a hub of criminal activity, laundering the proceeds of everything from drug trafficking to ransomware attacks.
The US Securities and Exchange Commission announced last week it was seeking $110 mln from BTC-e for not obeying anti-money laundering rules. Previous updates on Twitter had suggested normal service would resume by Aug. 6, but this now appears to be considerably less likely.
“In the coming one to two weeks we’ll be assessing and publishing information about the amount of funds now in the hands of the FBI and the amount available for returning [to customers],” the post confirmed.
As some have speculated, Vinnik’s alleged criminal activity may also be linked to other infamous crypto heists as Feds believe he played a role in the theft of more than 800,000 bitcoin — about $400USD at the time — from Mt. Gox, a massive loss that ultimately shattered the exchange. According to the indictment, 530,000 of those Bitcoin ended up being circulated through wallets controlled by or linked to Vinnik, although his role in the larger scheme at this point is purely speculation.
With the current indictment, speculation over Mt. Gox, and reports that it was a favorite for ransomware peddlers looking to cash out their ill-gotten earnings, it appears BTC-e exchange has built a handsome portfolio of seedy criminal activity that will cement it in the dark history of cryptos but eventually locked away in a block of its own.
Categories: Tales From The Crypt