Bitcoin Forum

US Prosecutors Indict BTC-e Crypto Exchange, Seek Millions in Penalties

https://cointelegraph.com/news/us-prosecutors-indict-btc-e-crypto-exchange-seek-millions-in-penalties

Per the filing, the Financial Crimes Enforcement Network (FinCEN) determined civil penalties for BTC-e and Vinnik last year, who face fines of over $88 million and $12 million, respectively.

The filing states outright that BTC-e and Vinnik did not attempt to register with FinCEN, implement Anti-Money Laundering practices, or report suspicious activity generally

(Here are pictures of the accused)-  https://finance.yahoo.com/news/trump-doj-sues-infamous-bitcoin-120414570.html

No mention of wex.nz at all?

Considering that's where whatever money btc-e may have wound up and then went walkies you'd think that would be a factor somewhere. Then again it may be the exact same bunch of people.

I hope BTC-e give them zero.

Who do these people think they are? They have no authority outside their remit, and certainly no authority on the Bitcoin network (unless they have private keys to some BTC, to which they would of course have a legitimate right of ownership)

Only that u are able of running some tech doesn't make u live outside any law.

If u play with financial tech, u will always need to be aware of regulations and non- tech trust.

US still has strongest powers in terms of law enforcement, check what they have done to Liberty Reserve...

More shitty unregulated stuff will get their bills soon imo

name one instance where decentralized tech has been successfully disrupted by so-called "laws"


you can't. so be quiet

I did. Read again

Better: Everybody must do deep own due dilligence BEFORE try out things or get other ppl to do so in financial world.

Experimental uninformed approach might fire back shit hefty.

These fines are in regard with the stolen Mt Gox funds being washed in BTC-e and helping the criminals washing their money and since the money of US citizen are lost in the Mt Gox hack, US has the authority to come up with these verdicts and complying to these demands depends upon whether they are able to extradite Alexander Vinnik to the US.

Didn't they seize a part of BTC-Es hot wallets when they took the exchange down? I haven't seen much coverage of what would happen with these coins, so if they actually did seize coins, they should be sitting on dozens of millions.

The thing with the US is that they will chase you down regardless of where you are. They are referred to as the world police for a reason. It really sucks that they can bend rules like that, but it's not the first time that this has happened.

Overall, I highly doubt that any amount will be paid and I'm happy for that because this sort of behavior shouldn't be rewarded. It will only motivate them more to shut down exchanges left and right.

What you are pointing out is unfortunately the sad reality, but only concerns centralized services.

You and me at home have a choice not to use them, and thus not to be subjected to these shitty regulations. In my case that comes down to paying tax over the small percentage of coins that I use for speculative purposes and need a centralized exchange for, but I don't pay a single penny in tax over my cold wallet holdings. People might consider me being a tax evader based on that, but I consider it theft to be taxed over wealth that isn't being used in any shape or form.

I have that choice, businesses don't with how lawmakers know exactly who to target and take offline.

Good luck finding them. :)

More and more, the BTC-e case looks like a perfect application of OPSEC on the BTC-e admin's part. Vinnik and Vasilyev both appear to be patsies who don't know anything more than the US government does.


The US authorities mirrored their servers, but does that mean they were able to decrypt/compromise the hot wallets? BTC-e was never transparent about what the true losses were. Unlike the Silk Road and other busts, the government never announced seizure of any bitcoins -- or any money at all, actually.

Proper trust only comes into any money if there is no flaw no banning since u need many incl the mearchants any industry to adopt it. U cannot really do nichy , grey zone stuff (getting rather dark and illegal very soon) for longer time. Trust is not just inherited cause u tech does fine.

They have either managed to seize at least a portion of their fiat money in bank accounts and such, or it was freezed by payment processors and/or banks they used to accept and send fiat money with, but hot wallets were unlikely to have been seized. In the end users faced a haircut (losses) of 38%, and they got tokens in exchange which for most of the time traded for around half of their nominal value.

BTC-e did do some KYC near the end if you wanted to send them fiat money, but that was too little and too late to save them. They were the go-to exchange to use by all sorts of criminals which was bound to attract a lot of attention and one of the people associated with BTC-e, Vinnik, is said to have used the exchange to launder bitcoins stolen from other exchanges including Bitcoinica and Mt. Gox.

If I am not wrong, the BTC-e guys openly challenged the feds after the latter tried multiple times to get the website closed down (for the refusal to conduct KYC). They thought that since they were all based in Russia, the Feds will never be able to catch them. It ended very badly for them. First, one of the founders (Alexander Vinnik) was arrested in Greece and in all certainty he will be deported to the US (where he will be given life without parole). Just a few weeks later, a part of their funds (both crypto and fiat) were seized by the feds. And surprisingly even after all this, these guys refused to back down. They set up another website (WEx.nz), restored the user balance (partly in crypto and partly in tokens), resumed trading and once again challenged the feds. The feds devoted all their resources to finish them once and for all, and in the end it was a similar story. 

I'm sure it was reported that Vinnik had gone on hunger-strike in protest about being extradited to the US to faces charges.
I think he ended up in quite a serious condition and his legal team were fighting the extradition to the US.

https://www.coindesk.com/alleged-btc-e-operator-alexander-vinnik-seeks-extradition-to-russia

https://www.facebook.com/cointelegraph/videos/alexander-vinnik-to-go-on-hunger-strike-from-monday/319482565448456/

Seems that there arrest paperwork at the time was also out of date at the time of Mr Vinnik's arrest which in turn should cause the investigation some problems as they technically broke the law to detain Mr Vinnik.

I read about it. It worried me initially because for a long time I have been a BTC-E user, and if Vinnik has actually used this exchange to launder the stolen coins, it very well could be that people like me have withdrawn them.

BTC-E was a very popular amongst non criminals too, just like how people currently like the relative freedom that Binance still offers. It was one of the most liquid exchanges overall and never really had many problems prior to their shutdown.

At the end of the day, it has never really been proven that BTC-E was used to launder stolen coins. It might just as well have been a dirty cheat by authorities to strengthen their case against Vinnik.

Perhaps he is thinking that dying from a hunger strike is preferable to spending the rest of the life in some super-max prison without any possibility of parole. The Greek authorities haven't released any news about him for the past few months. But I don't think that Greece has the balls to refuse the extradition request from the United States.

even if it were true, there's clear favoritism going on: several banks have been caught violating money-laundering legislation over the years, and many more have likely got away with it.

And yet those banks are considered "institutional", and are given an incredibly light touch punishment. Fines they can easily afford, and no individuals are held responsible, regardless of how brazen the violations were.

It's the equivalent of not bringing a letter from your parents to miss gym class, but instead of afternoon detention, detention for the entire rest of your life. With murderers. As I was saying, who do these people think they are to behave like this?

I got my first crypto in 2012 (purchased from LBC) and I stored those coins in BTC-e wallet until 2014. After the Mt Gox scandal, there was a lot of FUD going on and I decided that it was not safe to store the coins in exchange wallets. So in 2014, I moved those coins to a Blockchain.info wallet. But until 2014, BTC-e was the only exchange that I used to trade my coins (BTC and LTC). Somehow I didn't liked Mt Gox, as they were asking for too much personal information.

Now coming to the money laundering part, the FBI claims that Vinnik laundered most of the stolen coins (2011-13) through BTC-e codes. So any user who hasn't dealt with those codes should not have any dirty coins in their wallets. But then, none of this has been proven. They just want to make sure that he stays in jail until his death, just like the case with Ross Ulbricht.

There are other news articles spreading that an American judge wants Mark Karpeles to face a class action lawsuit against him. It might expose more of the connection between the Mtgox theft and BTCe, I reckon.

We cannot rule out an inside job and an attempted exit scam in any exchange failure in the cryptospace anymore.

If you can freely do anything you like as the most powerful government in the world, there for that exact reason nobody is going against you, would there really be a reason to not behave like this? It's a clear form of power abuse.

As for banks being caught money laundering but ended up with a fine they have no problems paying, that's purposely done like this. It's a welcome form of income from the side of the government.

If you fine banks with amounts that are well beyond the profits they made from laundering money, they will stop because it's no longer worth the risk, which means that governments lose an important form of income.

This whole system is rotten to its core.

i don't follow your logic. if "dirty coins" were deposited into BTC-E's wallet and traded for codes, any user withdrawing from BTC-E could have ended up with some of those dirty coins. customers have some plausible deniability though, since they could have been legitimately using them as an exchange. traders were doing nothing illegal.

They're being given light punishment precisely because they're big enough to be institutional and carry enough clout to be protected from being taken down. It will be an interesting day if Coinbase or a similar major cryptocurrency company ever grows to comparable size and influence of legacy financial institutions, and how things are going to be handled when they are caught committing similar misdeeds.

Also, give them a heavy punishment and those politicians who did it or those under those institution's influence not protecting them can say goodbye to their campaign funding hehehe. Corruption is real.

Maybe I'm being very ignorant here, but let's go:

Does anyone create exchange (in this case BTC-e). Because the owner of BTC-e was not constantly forbidding US citizens from using their exchange, will this owner of BTC-e be arrested? Shouldn't it be US citizens' responsibility not to use exchanges that are not regulated in their country?

How can the US government prove that BTC-e owners have forced US citizens to use their exchange?

And about Bank Secrecy Act, that's US law, right? BTC-e wasn't based in Russia? Why is USA meddling in the lives of people in other countries?

We all know that if it were a bank, the most that would happen would be to pay a light fine

They accepted fiat money without doing adequate KYC for years, that's enough to cause them trouble. They accepted USA residents or citizens and dealt with USD, that's another thing. In 2017 they at least blocked Americans from using their exchange (or at least prevented them from sending/receiving fiat money, don't remember now), but that was too late. Vinnik cashing goxbtc and other stolen monies was probably the main thing that did them in.

Difficult to say if BTC-e was based in a singular, it's easier to list countries the business and employees were associated with: UK, Bulgaria, Cyprus, Russia (not sure about Ukraine). At least some of their IT infrastructure was in the US.