US authorities have charged the bitcoin exchange BTC-e and Russian citizen Alexander Vinnik, who was behind BTC-e through Canton Business Administration, in a 21-count indictment for operating an alleged international money laundering scheme and allegedly laundering money from the hack of Mt. Gox.
Vinnik has been arrested in Greece, the US Department of Justice said.
BTC-e is currently not in operation; the initial announcement was for a planned maintenance. There are hundreds of millions of dollars in bitcoins blocked there.
According to the announcement of the US Department of Justice, Vinnik and BTC-e have been indicted for operating an unlicensed money service business, money laundering, and related crimes, while BTC-e is alleged to have received deposits valued at over USD 4 billion.
The indictment can be seen here. In addition to listing the criminal activities and the counts, it notes that BTC-e own website stated that it was located in Bulgaria, yet simultaneously stated that it was subject to the laws of Cyprus. The same information is found in the reputable Bloomberg Business Directory, referring to BTC-e’s website.
The case resembles the closure of other major bitcoin exchanges, such as Mt. Gox and Liberty Reserve. Part of the money stolen from Mt.Gox has been laundered through BTC-e, according to the US indictment. Mt. Gox was the victim of a hacker attack in 2014 when the record 850,000 bitcoins were stolen. According to the US authorities, 306,853 (about USD 790 million today) went into virtual portfolios that are linked to BTC-e. Vinnik also had administrative rights for the exchange.
For the time being, it is unclear whether the BTC-e exchange is closed for good after Vinnick’s arrest, or whether there are other administrators who can unlock access to the portfolios of unhappy customers of the exchange who have no access to their virtual money. There is a highly likely speculation that the US authorities will seek through the arrested Vinnik access to the site’s administration to secure the imposed fines of USD 110 million on BTC-e and another USD 12 million on Vinnik.
Available information shows no trace of BTC-e in Bulgaria
A check conducted by Bivol established that the site btc-e.com has not been registered at any time to a company or a person affiliated with Bulgaria, nor hosted on servers in the country. The site was originally registered in Simferopol in 2011 by a Ukrainian and administered by a Russian who may be only dummies (see here).
According to Wikipedia, the BTC-e exchange is owned by the British company Always Efficient LLP. It is controlled by the Russian Alexander Buyanov, and the previous owner (until July 2016) is the Ukrainian Andrii Shvets. Persons with such names can be found among property owners in Bulgaria, but not among owners or managers of companies doing business.In addition, no one named Alexander Vinnik owns a business or property in the country, and the Canton Business Administration, a company registered in the Seychelles, is not the owner or manager of any Bulgarian assets, a check by Bivol in the Commercial Register showed.
A more in-debt reading of the US indictment reveals that the accounts used to convert bitcoins in real currency were registered in Cyprus and Latvia, but not in Bulgaria.
The indictment, however, contains a number of blackened-out names of companies and individuals that also need to be checked for connections with Bulgaria. This can be done with a request from the Ministry of Interior or the Prosecutor’s Office for more detailed information from the US authorities.
Bivol sent an official question to the Ministry of Interior press office whether there is evidence that Alexander Vinnik or persons related to BTC-e have operated in Bulgaria or have used Bulgarian resources. The unofficial information from the authorities, for now, is that no such activity has been established.
However, the problem is that dissatisfied users from all over the world, with blocked funds in BTC-e, are discussing the “Bulgarian connection”, which, in the absence of reliable official information, fuels conspiracy theories and could tarnish the image of the country.
This post is also available in: Bulgarian