BTC-e exec pleads guilty to +$9 billion money laundering charges

• Prominent figures like Vinnik, Bankman-Fried, and Zhao have faced DOJ charges for money laundering
• Popular crypto-exchange KuCoin was also slapped with similar charges

Cryptocurrencies have increasingly become associated with money laundering activities, with notable figures like Sam Bankman-Fried and Changpeng Zhao facing prison terms. A new player can be added to that list now, with Alexander Vinnik, co-founder of BTC-e, an illicit crypto-exchange, pleading guilty to similar charges.  

According to a press release from the U.S. Department of Justice (DoJ), 

“A Russian national pleaded guilty today to conspiracy to commit money laundering related to his role in operating the cryptocurrency exchange BTC-e from 2011 to 2017.” 

According to the same, Alexander Vinnik, aged 44, played a significant role as one of the operators of BTC-e, recognized as one of the largest virtual currency exchanges globally. 

BTC-e under DoJ’s radar  

BTC-e operated from around 2011 until its closure by law enforcement in July 2017. This period saw the exchange facilitating transactions exceeding $9 billion, while catering to over one million users worldwide. This included a notable customer base in the United States as well.

In its statement, the DoJ claimed,  

“BTC-e was one of the primary ways by which cyber criminals around the world transferred, laundered, and stored the criminal proceeds of their illegal activities.” 

BTC-e’s operations relied heavily on shell companies and affiliate entities that lacked proper registration with FinCEN. It also neglected basic anti-money laundering (AML) and Know Your Customer (KYC) policies.

Alexander Vinnik executed the setup of numerous such shell companies and financial accounts worldwide to facilitate BTC-e’s transactions.

Now, a federal district court judge will determine the sentence for Vinnik, considering various factors including U.S. Sentencing Guidelines.

Here, it’s worth noting that back in 2017, FinCEN imposed significant civil money penalties totaling around $122 million against BTC-e and Vinnik for wilfully violating U.S. AML laws.

KuCoin too?

In a recent development, the DoJ also charged KuCoin, a major cryptocurrency exchange, alongside its founders Chun Gan and Ke Tang. The charges brought against them include conspiring to violate the Bank Secrecy Act and conspiring to operate an unlicensed money-transmitting business. 

The DoJ claimed, 

“Since its founding in 2017, KuCoin has received over $5 billion and sent over $4 billion, of suspicious and criminal proceeds.” 

Taken together, these developments highlight the ongoing challenges faced by authorities in combating financial crimes within the cryptocurrency ecosystem. 

What do the figures say? 

A recent report by Chainanalysis, however, paints a more positive picture of the crypto-space. According to the blockchain data platform, there has been a sharp decline in money laundering activities in 2023, especially when compared to 2022.