[2017-07-27]Mt.Gox Hack + BTC-e: The Biggest Money Laundering Scheme in Bitcoin

[Vladdirescu87]

FinCEN and Greek police have revealed new details about the case of $4 billion money laundering via BTC-e exchange. BTC-e appeared to be connected with 300,000 BTC stolen from Mt. Gox.

As we reported yesterday, the largest Russian cryptocurrency exchange, BTC-e, froze all services soon after the arrest of its owner and administrator. On July 25, Greek police arrested Alexander Vinnik in Thessaloniki, Greece, on a US warrant. The BTC-e exchange had gone offline sometime Tuesday morning, July 26, and remains unavailable.

Read the full article: https://coinidol.com/mtgox-btce-the-biggest-money-laundering-in-bitcoin/

[p3ppymon]

FinCEN and Greek police have revealed new details about the case of $4 billion money laundering via BTC-e exchange. BTC-e appeared to be connected with 300,000 BTC stolen from Mt. Gox.

As we reported yesterday, the largest Russian cryptocurrency exchange, BTC-e, froze all services soon after the arrest of its owner and administrator. On July 25, Greek police arrested Alexander Vinnik in Thessaloniki, Greece, on a US warrant. The BTC-e exchange had gone offline sometime Tuesday morning, July 26, and remains unavailable.

Read the full article: https://coinidol.com/mtgox-btce-the-biggest-money-laundering-in-bitcoin/

Holy cow!
This is very serious business!!!
Hope all users will be able to get their coins back.

[Rahar02]

The collapse of BTC-e, one of the oldest and well known exchanges, teaches all the community another lesson: trust is a ticking time bomb that's why you shouldn't store bitcoin in exchanges for a long time instead just use it to sell and buy bitcoin, then withdraw immediately. Fortunately, this event doesn't affect bitcoin price and I just saw the price, it is increasing again. So, I am wondering whether their customers could get what they've deposited or withdraw bitcoin from btc-e?

[bbc.reporter]

This is what I love about bitcoin and the cryptospace. There are more plot twists than my favorite tv show Game of Thrones.

How did they prove that the stolen bitcoins from MtGox were laundered in BTCe? What bitcoin mixers were used to hide their transactions? Is it also connected to the closure of Bitmixer?

[Kemarit]

This is what I love about bitcoin and the cryptospace. There are more plot twists than my favorite tv show Game of Thrones.

How did they prove that the stolen bitcoins from MtGox were laundered in BTCe? What bitcoin mixers were used to hide their transactions? Is it also connected to the closure of Bitmixer?

I suggest you read here mate:

http://blog.wizsec.jp/2017/07/breaking-open-mtgox-1.html?m=1

WizSec (bitcoin security specialists) conducted a private independent investigation the largest Bitcoin theft - MtGox collapse. They have put up a through investigation and follow the trail linking BTc-e owner Alexander Vinnik with the hack coins in Mt. Gox:

- In September 2011, the MtGox hot wallet private keys were stolen
- Over time, the hacker regularly emptied out whatever coins they could spend using the compromised keys, and sent them to wallet(s) controlled by Vinnik.
- By mid 2013 when the funds spendable from the compromised keys had slowed to a near halt, the thief had taken out about 630,000 BTC from MtGox
- After the coins entered Vinnik's wallets, most were moved to BTC-e and presumably sold off or laundered (BTC-e money codes were a popular choice). In total some 300,000 BTC ended up on BTC-e, while other coins were deposited to other exchanges, including MtGox itself.
- Some of the funds moved to BTC-e seem to have moved straight to internal storage rather than customer deposit addresses, hinting at a relationship between Vinnik and BTC-e.
- Moving coins back onto MtGox was what let they identify Vinnik, as the MtGox accounts he used could be linked to his online identity "WME". As WME, Vinnik had previously made a public outcry that coins had been confiscated from him (the coins in question coming from Bitcoinica).

Regarding the Bitmixer, it didn't mentioned about a mixing services being involved in laundering the money. We can only speculate that the closure of Bitmixer.io was just a coincidence, otherwise, if new development will come out linking them to the crimes.

[Iranus]

Regarding the Bitmixer, it didn't mentioned about a mixing services being involved in laundering the money. We can only speculate that the closure of Bitmixer.io was just a coincidence, otherwise, if new development will come out linking them to the crimes.

Bitmixer was a large mixer which handled reasonably high volumes.  It's extremely unusual for them to suddenly come out with an irrational statement that they hate anonymity all of a sudden. 

I don't know if they were tied to the Mt. Gox coins, but it seems like they were definitely part of the US government's new attack on the dark web and illegal BTC-based services.

Either they were under direct pressure from the government or they were scared of coming under direct pressure from the government in the future.  Either way it's a bad sign for all BTC services which help to bring anonymity, whether it's mixing services, exchanges or dark net markets.

[CryptoBry]

I am following this news about BTC-e founder being arrested in Greece for money laundering charges. This can be the signal for the end of this big exchange based in Russia. I hope that the Russian government can do something inorder to protect the many clients of BTC-e so their funds/coins can still be recovered.

It is always sad to hear of people who became victims of scamming programs. Good to know that the arms of the law eventually caught the man behind this big fraud. He should be paying for the crime he committed against many people.

[Kemarit]

Regarding the Bitmixer, it didn't mentioned about a mixing services being involved in laundering the money. We can only speculate that the closure of Bitmixer.io was just a coincidence, otherwise, if new development will come out linking them to the crimes.

Bitmixer was a large mixer which handled reasonably high volumes.  It's extremely unusual for them to suddenly come out with an irrational statement that they hate anonymity all of a sudden. 

I don't know if they were tied to the Mt. Gox coins, but it seems like they were definitely part of the US government's new attack on the dark web and illegal BTC-based services.

Either they were under direct pressure from the government or they were scared of coming under direct pressure from the government in the future.  Either way it's a bad sign for all BTC services which help to bring anonymity, whether it's mixing services, exchanges or dark net markets.

I really think that there are more compelling reasons for Bitmixer to suddenly just shut down its business like that. You are earning a lot of money then all of a sudden without any sign (well the Bitmixer wallet was emptied) we learned that they are closing their mixing services. As I have only speculate, it has something to do with authorities or government agency investigating them for whatever reasons. And yeah, he come out with irrational statement about the reason of his closing which doesn't make any sense to all of us. And he is even telling other mixing services to close its services as well. So illogical indeed.

[kxp]

I have only 1 question after all: why regardless of those negative news BTC is still rising?
I heard about BTC-E all the day since 2014 and now it's down but the rate is even higher. I'd expect it to fall  at least short-term. WTF?

[bouren]

Regarding the Bitmixer, it didn't mentioned about a mixing services being involved in laundering the money. We can only speculate that the closure of Bitmixer.io was just a coincidence, otherwise, if new development will come out linking them to the crimes.

Bitmixer was a large mixer which handled reasonably high volumes.  It's extremely unusual for them to suddenly come out with an irrational statement that they hate anonymity all of a sudden. 

I don't know if they were tied to the Mt. Gox coins, but it seems like they were definitely part of the US government's new attack on the dark web and illegal BTC-based services.

Either they were under direct pressure from the government or they were scared of coming under direct pressure from the government in the future.  Either way it's a bad sign for all BTC services which help to bring anonymity, whether it's mixing services, exchanges or dark net markets.

Or maybe such cases make them re-think in what way they leading the bitcoin. It may be a simple sentiment hit that they maybe involved in this all scandals somewhere. Maybe they didn't do that intentionally.

I have only 1 question after all: why regardless of those negative news BTC is still rising?
I heard about BTC-E all the day since 2014 and now it's down but the rate is even higher. I'd expect it to fall  at least short-term. WTF?

Consider yourself, did you cash out your bitcoin as btc-e closed? Why would closure of an exchange will impact the whole trading or create panic?

[SvenBomvolen]

As I heard Russia is going to protect it's citizen and say that everything is the USA's fiction. Let's see what is going to be in the end after this battle (Russia vs USA). I hope the situation will have positive end for all exchanger users. I can imagine how do they panic now.

[marky89]

As I heard Russia is going to protect it's citizen and say that everything is the USA's fiction. Let's see what is going to be in the end after this battle (Russia vs USA). I hope the situation will have positive end for all exchanger users. I can imagine how do they panic now.

The Russian Federation already banned btc-e.com -- this is why many Russians access the site through a mirror at btc-e.nz. The Russian government also just banned access by their population to some forty other bitcoin/crypto exchange sites. So even though BTC-E's target audience was Russians and Russian speakers, I don't think Russia will do anything.

[Wayan_Pedjeng]

I suggest you read here mate:

http://blog.wizsec.jp/2017/07/breaking-open-mtgox-1.html?m=1

WizSec (bitcoin security specialists) conducted a private independent investigation the largest Bitcoin theft - MtGox collapse. They have put up a through investigation and follow the trail linking BTc-e owner Alexander Vinnik with the hack coins in Mt. Gox:

- In September 2011, the MtGox hot wallet private keys were stolen
- Over time, the hacker regularly emptied out whatever coins they could spend using the compromised keys, and sent them to wallet(s) controlled by Vinnik.
- By mid 2013 when the funds spendable from the compromised keys had slowed to a near halt, the thief had taken out about 630,000 BTC from MtGox
- After the coins entered Vinnik's wallets, most were moved to BTC-e and presumably sold off or laundered (BTC-e money codes were a popular choice). In total some 300,000 BTC ended up on BTC-e, while other coins were deposited to other exchanges, including MtGox itself.
- Some of the funds moved to BTC-e seem to have moved straight to internal storage rather than customer deposit addresses, hinting at a relationship between Vinnik and BTC-e.
- Moving coins back onto MtGox was what let they identify Vinnik, as the MtGox accounts he used could be linked to his online identity "WME". As WME, Vinnik had previously made a public outcry that coins had been confiscated from him (the coins in question coming from Bitcoinica).

Regarding the Bitmixer, it didn't mentioned about a mixing services being involved in laundering the money. We can only speculate that the closure of Bitmixer.io was just a coincidence, otherwise, if new development will come out linking them to the crimes.

Oh God! Previously I was thinking that Vinnik was just involved in laundering the stolen coins from Mt Gox. But now it is clear that he was the mastermind behind the Mt Gox robbery itself. How ironic? In 2011, Mt Gox and BTC-e were the only major exchanges out there. And now it seems like one of them was robbed by the other.

[Baofeng]

I suggest you read here mate:

http://blog.wizsec.jp/2017/07/breaking-open-mtgox-1.html?m=1

WizSec (bitcoin security specialists) conducted a private independent investigation the largest Bitcoin theft - MtGox collapse. They have put up a through investigation and follow the trail linking BTc-e owner Alexander Vinnik with the hack coins in Mt. Gox:

- In September 2011, the MtGox hot wallet private keys were stolen
- Over time, the hacker regularly emptied out whatever coins they could spend using the compromised keys, and sent them to wallet(s) controlled by Vinnik.
- By mid 2013 when the funds spendable from the compromised keys had slowed to a near halt, the thief had taken out about 630,000 BTC from MtGox
- After the coins entered Vinnik's wallets, most were moved to BTC-e and presumably sold off or laundered (BTC-e money codes were a popular choice). In total some 300,000 BTC ended up on BTC-e, while other coins were deposited to other exchanges, including MtGox itself.
- Some of the funds moved to BTC-e seem to have moved straight to internal storage rather than customer deposit addresses, hinting at a relationship between Vinnik and BTC-e.
- Moving coins back onto MtGox was what let they identify Vinnik, as the MtGox accounts he used could be linked to his online identity "WME". As WME, Vinnik had previously made a public outcry that coins had been confiscated from him (the coins in question coming from Bitcoinica).

Regarding the Bitmixer, it didn't mentioned about a mixing services being involved in laundering the money. We can only speculate that the closure of Bitmixer.io was just a coincidence, otherwise, if new development will come out linking them to the crimes.

Oh God! Previously I was thinking that Vinnik was just involved in laundering the stolen coins from Mt Gox. But now it is clear that he was the mastermind behind the Mt Gox robbery itself. How ironic? In 2011, Mt Gox and BTC-e were the only major exchanges out there. And now it seems like one of them was robbed by the other.

The investigations has shown that somewhat Vinnik may be really involved. But its up to the authorities to decide his faith. Meanwhile they should extensively and meticulous investigates to really identify who is behind the Mt. Gox hacked. Whether Mark and Vinnik are involved, its up to the investigating body to get the evidence.

The Russian Federation already banned btc-e.com -- this is why many Russians access the site through a mirror at btc-e.nz. The Russian government also just banned access by their population to some forty other bitcoin/crypto exchange sites. So even though BTC-E's target audience was Russians and Russian speakers, I don't think Russia will do anything.

Thanks for the info. Is the server located to Russia though? The reason I'm asking is because if its located there then Russia needs to be involved as well. But if not, then US can get the server and start the investigation right away.

[Blocken]

Sad. And too bad normies can't understand the difference between this and Crypto's themselves.

[Netnox]

As I heard Russia is going to protect it's citizen and say that everything is the USA's fiction. Let's see what is going to be in the end after this battle (Russia vs USA). I hope the situation will have positive end for all exchanger users. I can imagine how do they panic now.

The Russian Federation already banned btc-e.com -- this is why many Russians access the site through a mirror at btc-e.nz. The Russian government also just banned access by their population to some forty other bitcoin/crypto exchange sites. So even though BTC-E's target audience was Russians and Russian speakers, I don't think Russia will do anything.

But as long as Vinnik remains as a Russian citizen (I am not quite sure about that, as somewhere I read that he was holding a Cypriot passport), Russia needs to provide him with legal and diplomatic support. Anyway, they are not going to be happy with the Americans arresting him.

[Carlton Banks]

Dunno, what's the actual evidence for any of this? Sound like a classic "someone said something" story to me




It's equally possible that the US and/or Russian authorities just needed to get rid of an awkward opponent who set up their business in a way that was too difficult to use the law to shut down, so US/Russia simply concocted a plot to kill 2 birds with 1 stone (i.e. get rid of another awkward situation, the Mt Gox robbery)

Also equally possible (maybe more likely, actually) is that Vinnik was simply a front man for a bigger (unknown) fish, and that was the real reason BTC-e.com operated unmolested by the authorities for, what, 6-7 years?

I mean, come on people, you think this kind of business can be run for so long without the help of some corruption? Was Vinnik running this site from his own private country? Yeah, that's right, he was running it from Russia


I'll be much more convinced about this story (which is exactly what this news is: a story, with no provably independent evidence) if the Mt Gox BTC is returned in full to its rightful owners. Don't hold your breath, though.

[Prem.Soorajpaul]

Don't believe any of these fancy stories being propagated by the mainstream media. I don't believe that Alexander Vinnik was behind the Mt Gox robbery. It was most likely an inside job, with the knowledge of Mark Karpeles.

[MAbtc]

Don't believe any of these fancy stories being propagated by the mainstream media. I don't believe that Alexander Vinnik was behind the Mt Gox robbery. It was most likely an inside job, with the knowledge of Mark Karpeles.

Well, I don't think the indictments and press releases suggest that he was necessarily behind the theft of the coins themselves. I don't see charges of computer intrusion.

This was also back in 2012, when even these sums of bitcoins weren't particularly impressive in value. On the Russian forums, and among people that have seem to have some inside information regarding BTC-e, nobody seems to think Vinnik was an owner or significant admin. It's conceivable that he just approached BTC-e as a potential liquidity provider (having accumulated coins from the Gox theft, or bought the coins from someone who did, with the intention of washing them).

If the stories are true that Karpeles just let a stolen wallet.dat get drained for years (totalling hundreds of thousands of bitcoins), that's simply embarrassing for him, and I don't see how this is some grand vindication, either.