Date: May 3, 2024
Contact: [email protected]
SAN FRANCISCO ¡ª 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 court documents, Alexander Vinnik was one of the operators of BTC-e, which was one of the world¡¯s largest virtual currency exchanges. From its inception in or around 2011 until it was shut down by law enforcement in or around July 2017 contemporaneous with Vinnik¡¯s arrest, BTC-e processed over $9 billion-worth of transactions and served over one million users worldwide, including numerous customers in the United States.
¡°Today¡¯s result shows how the Justice Department, working with international partners, reaches across the globe to combat cryptocrime,¡± said Deputy Attorney General Lisa Monaco. ¡°This guilty plea reflects the Department¡¯s ongoing commitment to use all tools to fight money laundering, police crypto markets, and recover restitution for victims.¡±
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 received criminal proceeds of numerous computer intrusions and hacking incidents, ransomware attacks, identity theft schemes, corrupt public officials, and narcotics distribution rings. Vinnik operated BTC-e with the intent to promote these unlawful activities and enabled the laundering of at least $121 million in proceeds of criminal activity.
Despite doing substantial business in the United States, BTC-e was not registered as a money services business with the U.S. Department of the Treasury¡¯s Financial Crimes Enforcement Network (FinCEN), as federal law requires. BTC-e had no anti-money laundering (AML) and/or ¡°know-your-customer¡± (KYC) processes and policies in place, as federal law also requires. BTC-e collected virtually no customer data at all, which made the exchange attractive to those who desired to conceal criminal proceeds from law enforcement.
BTC-e relied on shell companies and affiliate entities that were similarly unregistered with FinCEN and lacked basic anti-money laundering and KYC policies to electronically transfer fiat currency in and out of BTC-e. Vinnik set up numerous such shell companies and financial accounts across the globe to allow BTC-e to conduct its business.
Vinnik faces a maximum penalty of 20 years in prison. A sentencing date has not yet been set. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
In 2017, FinCEN announced that it assessed an approximately $110 million civil money penalty against BTC-e for willfully violating U.S. AML laws, and a $12 million civil penalty against Vinnik for his role in the violations.
U.S. Attorney Ismail J. Ramsey; Principal Deputy Assistant Attorney General Nicole M. Argentieri of the Justice Department¡¯s Criminal Division; Chief Guy Ficco of IRS Criminal Investigation (IRS CI); Assistant Director Michael D. Nordwall of the FBI¡¯s Criminal Investigative Division; Special Agent in Charge William Mancino of the U.S. Secret Service (USSS) Criminal Investigative Division; and Special Agent in Charge Tatum King of Homeland Security Investigations (HSI) San Francisco made the announcement.
The FBI; IRS CI Cyber Crime Unit and Oakland Field Office; USSS Criminal Investigative Division; and HSI are investigating the case. The lengthy investigation was supported by numerous former prosecutors and investigators from multiple agencies, including IRS Special Agent James Hade (1980-2019) and former Special Agent Tigran Gambaryan.
Assistant U.S. Attorneys Claudia Quiroz and Katie Lloyd-Lovett for the Northern District of California and Trial Attorney C. Alden Pelker of the Justice Department¡¯s Computer Crime and Intellectual Property Section and are prosecuting the case. Pelker and Quiroz are members of the Justice Department¡¯s National Cryptocurrency Enforcement Team (NCET).
The Justice Department¡¯s Office of International Affairs provided valuable assistance in securing the extradition of Vinnik. The Justice Department thanks the Greek government for its cooperation in securing Vinnik¡¯s transfer to the United States.
CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attach¨¦ posts abroad.