The United States prosecutors have indicted now-defunct exchange BTC-e and its suspected operator Alexander Vinnik for civil penalties of more than $100 million.
According to the court documents filed at the Northern District of California, the exchange’s operator has been charged with 17 counts of money laundering and two counts of engaging in unlawful monetary transactions.
In addition, both the exchange and Vinnik were previously charged with an additional count of operating an unlawful money services business and one count conspiracy to commit money laundering.
Filed by the US Department of the Treasury, the suit claims $88.6 million in civil penalties, with an additional $12 million as interests and costs. The amounts were initially determined by the Financial Crimes Enforcement Network (FinCEN) in July 2017.
A hub for criminals
The filings detailed that the exchange did not register itself with FinCEN to implement anti-money laundering practices. It was also providing anonymous services involving cryptocurrencies, mostly to illegal entities and hackers. In exchange of trading services without disclosing the identity, the exchange was charging huge markups on crypto to fiat exchange.
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The exchange allegedly was even involved in converting funds from the infamous Mt. Gox hack.
“On some occasions, customers contacted BTCe’s administration directly with questions regarding how to process and access proceeds obtained from the sale of illegal drugs and from transactions on known “darknet” illegal markets, including Silk Road,” the filing noted.
In its six years of existence, the exchange served around 70,000 clients and handled over $296 million in crypto trades. The complaint also detailed that it executed more than 21,000 Bitcoin transactions.
“A significant portion of BTC-e’s business was derived from suspected criminal activity,” the court filing added.
The investigation against the exchange started in 2016, as it came onto the radar of authorities for not being registered as a money transmitter.
Vinnik, however, denied all claims against him and even refused his involvement with the crypto exchange. He is currently in custody in Greece and appealed for extradition to Russia.