[2017-07-26] Owner Of Russia's Largest BTC Exchange Arrested – Money May Be Lost

[Vladdirescu87]

The largest Russian cryptocurrency exchange, BTC-e, froze all transactions soon after the arrest one of its co-owners. BTC-e user funds may be lost.

Yesterday, July 25, Greek police arrested 38-year-old Russian citizen Alexander Vinnik, who turned out to be a co-owner of one of the largest and most popular Bitcoin exchanges in Russia. He was arrested in Thessaloniki, Greece, on a US warrant, on suspicion of laundering $4 million via Bitcoin transactions. According to a report by Bits.media, the BTC-e exchange had gone offline sometime Tuesday morning, July 26, and remains unavailable. The first message from the team of BTC-e stating that the exchange is offline due to "unscheduled technical work" appeared on its official Twitter page one hour later.

Read the full article: https://coinidol.com/owner-of-btc-e-arrested/

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[IconFirm]

They should have done Yoshit instead & done everyone a favour.....

[Kemarit]

For those who still have coins in BTC-e, this is a very sad day for them. Specially if you have lots of them stashed in that trading platform/exchanges. Little to no chance of recovering back your funds. Personally I don't have funds in them, but still this will impact the current market with so many negative news going around us and we are not even close to the feared Aug 1 date so I'm expecting that there will be drama a few hours before Aug 1. I really thought that there's something not right with their scheduled maintenance and I'm thinking that maybe they have been hacked, but unfortunately one of the owners have been arrested. The servers may have been seized and maybe the authorities are now snipping it for evidence linking it to money laundering scheme.

[just_Alice]

This is a very sad news for Russian bitcoiners. Many of them have some coins staying there.

I don't understand why they say that user funds may be never returned. The exchange wasn't hacked, right? So why ordinary people should suffer if one of the owners is on suspicion of money laundering?

[IconFirm]

I don't understand why they say that user funds may be never returned. The exchange wasn't hacked, right? So why ordinary people should suffer if one of the owners is on suspicion of money laundering?

Money laundering is US Gov slang for "we want what you got cos we can't control it".  I don't think using a .com address helps either, as it opens you up to US legislation (hence the US warrant).

History tells us that leaving funds on a centralised exchange is not at all clever, after all, this is not the first centralised exchange to fail & it won't be the last. The sooner crypto users start using decentralised exchanges (bisq, localbitcoins, etc), the safer their funds (& themselves) will be.

[Kprawn]

I don't understand why they say that user funds may be never returned. The exchange wasn't hacked, right? So why ordinary people should suffer if one of the owners is on suspicion of money laundering?

Money laundering is US Gov slang for "we want what you got cos we can't control it".  I don't think using a .com address helps either, as it opens you up to US legislation (hence the US warrant).

History tells us that leaving funds on a centralised exchange is not at all clever, after all, this is not the first centralised exchange to fail & it won't be the last. The sooner crypto users start using decentralised exchanges (bisq, localbitcoins, etc), the safer their funds (& themselves) will be.

We have been saying this for years and people still lose huge amounts of money on these centralized exchanges. There is

even one guy on Reddit that claims ALL his life savings were deposited on BTC-e  .... Why in Hell, would people do

something like that? People are so used to Fiat services that offer customer protection, that they lost the ability to think for

themselves. Bitcoin gives YOU, full control over your money, and that responsibility seems to be too much for some people.

[veleten]

They should have done Yoshit instead & done everyone a favour.....

made me smile,Yoshit would be a better choice for a closure
unfortunately,they are just a bad exchange,not a money laundering machine
although you never know,since american agencies tend to have very onesided view on everything that is russian
so there could be as much evidence as in the Iraqis weapons of mass destruction 
we just don't like you but like your money+you are russian,well here we go ,several hundreds of millions confiscated

[Coin-Keeper]

In addition to comments above, I ask myself why would you leave Russian soil and go to a place "inside" jurisdictions where the USA can have you arrested?  Alexander Vinnik will be gone, but just maybe there is a plan to remove him from accessing the coins and a "takeover" of sorts from the exchange inside can be accomplished.  The USA can't get the coins unless A. V. still has the keys to the coins.  Just a hope.

[Iranus]

Bitcoin gives YOU, full control over your money

Only if they decide to have it.  People haven't got that full control over their money until it's out of an exchange - until then, the exchange still has full control over your money.

It's important to note that customer protection can still exist in cryptocurrency exchanges.  Cryptocurrency opens up plenty of opportunities for decentralised exchanges to be created, and that will happen in time, but a lot of people will still be drawn to centralised exchanges if there is significant regulation for them.  BTC-e was not regulated properly to deal with US customers, and they got burned.

The lesson is that if you want to use centralised exchanges:

1.  Check whether the exchange complies with your country's regulations and has the correct financial licenses
2.  Deposit fiat only a part at a time and withdraw the coins before depositing more fiat.
3.  As you go, withdraw very quickly.  Coins should not be in exchanges for more than a day at a time.

[just_Alice]

I don't understand why they say that user funds may be never returned. The exchange wasn't hacked, right? So why ordinary people should suffer if one of the owners is on suspicion of money laundering?

Money laundering is US Gov slang for "we want what you got cos we can't control it".  I don't think using a .com address helps either, as it opens you up to US legislation (hence the US warrant).

History tells us that leaving funds on a centralised exchange is not at all clever, after all, this is not the first centralised exchange to fail & it won't be the last. The sooner crypto users start using decentralised exchanges (bisq, localbitcoins, etc), the safer their funds (& themselves) will be.

I disagree, but I respect your opnion, you have the right to express it.  Let's not  start a "Politics & Society" like discussion here.

I still think that the money ordinary people were keeping on the exchange should be returned to them, and I think most likely it will be returned.

[CryptoBry]

This is a very sad news for Russian bitcoiners. Many of them have some coins staying there. I don't understand why they say that user funds may be never returned. The exchange wasn't hacked, right? So why ordinary people should suffer if one of the owners is on suspicion of money laundering?

I think the government should act swiftly on this development and seize ownership of all the assets of that exchange with the view of returning any money left on the accounts of the exchange. Alas, I think they are not doing anything so we could not expect that anything is still left as money could already have traveled anywhere. This is indeed a very sad day for people who have their coins parked in BTC-e.

[Taki]

I am from Russia and just watch it on the news. As I get the work of the exchanger is frozen now, but Russian government plan to fight for it's citizen, so all users of the exchanger should take the waiting position, maybe this story will have a happy end.

[SvenBomvolen]

I am from Russia and just watch it on the news. As I get the work of the exchanger is frozen now, but Russian government plan to fight for it's citizen, so all users of the exchanger should take the waiting position, maybe this story will have a happy end.

Which waiting process if on the news they say that the exchanger was hacked and lot of money was stolen from the users? You need to read news more carefully, BTW on the forum there are a lot of threads about this topic with information from different sources 

[peter0425]

I am from Russia and just watch it on the news. As I get the work of the exchanger is frozen now, but Russian government plan to fight for it's citizen, so all users of the exchanger should take the waiting position, maybe this story will have a happy end.

Of course those people who have coins sitting in BTC-e can't do anything but to wait for an update. But I seriously doubt that they can get anything for now. If they can get their money back then it will take years because it will be investigated meticulously by the authorities to identify which coins came from the Mt. Gox hack and other exchanges. And I don't know if this will have a happy ending as you describe. So its really a sad day for people who have coins in BTC-e.

[Kprawn]

Bitcoin gives YOU, full control over your money

Only if they decide to have it.  People haven't got that full control over their money until it's out of an exchange - until then, the exchange still has full control over your money.

It's important to note that customer protection can still exist in cryptocurrency exchanges.  Cryptocurrency opens up plenty of opportunities for decentralised exchanges to be created, and that will happen in time, but a lot of people will still be drawn to centralised exchanges if there is significant regulation for them.  BTC-e was not regulated properly to deal with US customers, and they got burned.

The lesson is that if you want to use centralised exchanges:

1.  Check whether the exchange complies with your country's regulations and has the correct financial licenses
2.  Deposit fiat only a part at a time and withdraw the coins before depositing more fiat.
3.  As you go, withdraw very quickly.  Coins should not be in exchanges for more than a day at a time.

Nobody has figured out how to handle Fiat with Decentralized exchanges yet, so I am curious ....How are you going to link to

bank accounts and convert to cash, if you are not regulated? The Decentralized exchanges are just a pipe dream at this

stage. Use the centralized exchanges, but withdraw your coins when you done trading or converting to Fiat. 

[1Referee]

For those who still have coins in BTC-e, this is a very sad day for them. Specially if you have lots of them stashed in that trading platform/exchanges.

I am amongst those having a decent bit of value stuck in BTC-E as we speak. It's +$10,000 in fiat and +5BTC that we're talking about. So yes, it was/is indeed an unpleasent situation.

The servers may have been seized and maybe the authorities are now snipping it for evidence linking it to money laundering scheme.

I seriously don't hope so, because that would mean the chances of getting anything back are lower than ever (not that I have much hope right now). I am even willing to discard the $10,000 I have sitting there, just to get my BTC out. At this point there is nothing more to lose, so it's always better to get something out than nothing. Funny thing is that I was on the brink of depositting another 5BTC for trading purposes, but for whatever reason, I didn't do so. At the end, the 'losses' aren't as big as they in potential could have been - at least a positive tint to a negative situation.

[richardsNY]

Sorry to bring the bad news, but the domain is officially seized by the US. I was also hoping that this wouldn't happen, but there isn't anything else that we can do now. We should acknowledge that the price we paid (I personally lost 1 BTC) must be seen as an expensive lesson. People should stop using unlicensed exchanges since it is a guarantee for problems. It may take years, but eventually people will pay for it -- it's not worth it!

[1Referee]

Sorry to bring the bad news, but the domain is officially seized by the US.

It seems that this is indeed the case, unfortunately. If the chances were like 10% of getting anything back before this, it's now practically sub 1%.

We should acknowledge that the price we paid (I personally lost 1 BTC) must be seen as an expensive lesson. People should stop using unlicensed exchanges since it is a guarantee for problems. It may take years, but eventually people will pay for it -- it's not worth it!

I kept warning people for Bitfinex, but I myself kept also using something that turns out to be a shady thief hole. So yes, that's quite an expensive lesson for just using an exchange due to its 'privacy'. I have been a BTC-E trader since very early 2013, and never have I been asked to verify myself. That's why I liked it so much, but turns out, it came at a very high price. I am not sure what to do at this point - I could contact a lawyer on Monday to gain information on how to approach this, and to know if it's even worth to proceed with any sort of legal actions. What else is there to do?

[marky89]

This is a very sad news for Russian bitcoiners. Many of them have some coins staying there.

I don't understand why they say that user funds may be never returned. The exchange wasn't hacked, right? So why ordinary people should suffer if one of the owners is on suspicion of money laundering?

The problem is that they are pursuing the shutdown of BTC-E and a case against the owners. They are treating it like Liberty Reserve, as if the exchange and all customers are criminals. Unfortunately, the authorities (by being unable to arrest the actual owners or high level admins, or seize any significant funds) have created a situation where the most sensible thing for the BTC-E owners to do is exit scam.

Originally, I had hoped they would allow BTC-E to pay a hefty fine, implement AML procedures and continue operations. That seems unlikely now that they seized the domain and condemned not only the owners but also the userbase as criminals.

[Wayan_Pedjeng]

I have always thought why the exchange rates in BTC-e were lower than that in the other exchanges. Now I got the answer. Vinnik sold more than BTC300,000 of the stolen Mt Gox coins through BTC-e. Actually, BTC-e was a tool for him to sell his ill-gotten coins. There were always more sellers than buyers in BCT-e. And this is the reason.

[just_Alice]

This is a very sad news for Russian bitcoiners. Many of them have some coins staying there.

I don't understand why they say that user funds may be never returned. The exchange wasn't hacked, right? So why ordinary people should suffer if one of the owners is on suspicion of money laundering?

The problem is that they are pursuing the shutdown of BTC-E and a case against the owners. They are treating it like Liberty Reserve, as if the exchange and all customers are criminals. Unfortunately, the authorities (by being unable to arrest the actual owners or high level admins, or seize any significant funds) have created a situation where the most sensible thing for the BTC-E owners to do is exit scam.

Originally, I had hoped they would allow BTC-E to pay a hefty fine, implement AML procedures and continue operations. That seems unlikely now that they seized the domain and condemned not only the owners but also the userbase as criminals.

If that's true then it is even worse. Not all the users are criminals and their funds should be returned to them. Cases like this ruin the image of bitcoin, but unfortunately they happen in one country or another.

[richardsNY]

I could contact a lawyer on Monday to gain information on how to approach this, and to know if it's even worth to proceed with any sort of legal actions. What else is there to do?

I personally think that will be a huge waste of money IMHO. Sure, you have a decent amount stuck in btc-e, but going through a huge load of legal hassle will end up costing you thousands of dollars, if it isn't closer to the ten thousand range. But then again, Bitcoin could at some point reach +$10,000 levels, where the current value of your 5 Bitcoins will look like peanuts. Maybe that victims could pool their efforts and try to force something via that way -- I think that offers far more possibilities than having just one person take legal action. I personally consider my 1 BTC as lost, that's the reality.

[veleten]

I have always thought why the exchange rates in BTC-e were lower than that in the other exchanges. Now I got the answer. Vinnik sold more than BTC300,000 of the stolen Mt Gox coins through BTC-e. Actually, BTC-e was a tool for him to sell his ill-gotten coins. There were always more sellers than buyers in BCT-e. And this is the reason.

your answer could be wrong,Btc-e did have slightly lower exchange rates but it has nothing to do with sellers or buyers ,after all
people could always register and buy if they wanted,this exchange accepted anyone and was pretty "democratic" in terms of verification
saying Vinnik sold stolen coins from Mtgox is just repeating what the US agencies are saying as to why they had seized him and his assests
we never know if it is true or not I tend not to believe until I have any evidence or proof
nothing has been provided so far,same as with the russians tampering with the US elections,haha
oh but everybody knows they did,right? same is with the stolen coins,no proof,but we know he did....

[btc_angela]

I have always thought why the exchange rates in BTC-e were lower than that in the other exchanges. Now I got the answer. Vinnik sold more than BTC300,000 of the stolen Mt Gox coins through BTC-e. Actually, BTC-e was a tool for him to sell his ill-gotten coins. There were always more sellers than buyers in BCT-e. And this is the reason.

your answer could be wrong,Btc-e did have slightly lower exchange rates but it has nothing to do with sellers or buyers ,after all
people could always register and buy if they wanted,this exchange accepted anyone and was pretty "democratic" in terms of verification
saying Vinnik sold stolen coins from Mtgox is just repeating what the US agencies are saying as to why they had seized him and his assests
we never know if it is true or not I tend not to believe until I have any evidence or proof
nothing has been provided so far,same as with the russians tampering with the US elections,haha
oh but everybody knows they did,right? same is with the stolen coins,no proof,but we know he did....

Its all assumptions are far are the US government is concern. But I don't think that they will make this kind of moved without any evidence. We know how they work. Maybe they have already building their cases on BTC-e for months now and has finally made a breakthrough that's why they have seize and "control" of the coins and arrested the owner.

[dreamhouse]

It's ok the owner of btc-e is arrested, but why account money will be lost? There's no point for the government to seize customer accounts unless there are proof that money laundry is involved.

[veleten]

It's ok the owner of btc-e is arrested, but why account money will be lost? There's no point for the government to seize customer accounts unless there are proof that money laundry is involved.

probably because every single bitcoin that were in circulation at btc-e
has been transferred to a new address once it has been revealed
and the exchange is fined 111 millions and the owner 12 millions,do you think they will be paying the money out of their own funds?
all of the user's funds are now gone,there is no doubt about that
money laundry involved or not,common folks will not be getting their money back

[Taki]

During the six years of operation, BTC-e was able to gain the reputation as a reliable trading platform, and it's owners obviously dearly appreciate it. But in connection with the withdrawal of purses and equipment, count on a speedy resumption of work is not necessary.
Within 1-2 weeks the exchange plans to assess the loss and amount, available for return to users. In accordance with the statement, the staff of the exchange will attempt to start again within a month, and if they can't do that, then they will start the refund on 1st September.