Another Co-Conspirator Charged With Money Laundering Conspiracy in BTC-e Case

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Another Co-Conspirator Charged With Money Laundering Conspiracy in BTC-e Case

Last week a US federal court unsealed an indictment charging a Belarusian and Cypriot national with money laundering conspiracy and operation of an unlicensed money services business in connection with BTC-e, the infamous cryptocurrency exchange whose primary operator Alexander Vinnik was arrested in Greece and charged in a 21-count indictment in July 2017.

According to the recently unsealed indictment of Aliaksandr Klimenka, between 2011 and July 2017, Klimenka, 42, allegedly controlled BTC-e with Vinnik and others. Klimenka was arrested in Latvia on Dec. 21, 2023, at the request of the United States.

BTC-e, founded in 2011, was one of the world’s largest and most widely used digital currency exchanges. According to the 2017 indictment, since its inception, Vinnik and others developed a customer base for BTC-e that was heavily reliant on criminals, including by not requiring users to go through a know-your-customer verification process allowing the exchange to be used to facilitate crimes ranging from hacking, to fraud, identity theft, tax refund fraud schemes, public corruption, and drug trafficking. According to authorities, BTC-e received more than $4 billion worth of bitcoin over the course of its operation.

BTC-e received over $29,000,000 worth of bitcoin from Joker’s Stash, once the world’s biggest carding forum which closed in 2021 
BTC-e had millions of dollars in transactions to Darknet Marketplaces, Mixers, peer-to-peer marketplaces, mixing services as well as compliant and non-compliant VASPs

As to Vinnik, the indictment alleges that he received funds from the Mt. Gox hack and laundered those funds through various online exchanges, including his own BTC-e. In August 2022, Vinnik was extradited from Greece to the Northern District of California to face charges including money laundering conspiracy and operation of an unlicensed money service business. Prior to his extradition to the US, Vinnik was extradited to France where he was convicted of money laundering. According to court documents, Vinnik is set to stand trial in September 2024.

In 2017, FinCEN also assessed a $110 million civil money penalty against BTC-e  for willfully violating U.S. anti-money laundering (AML) laws. Alexander Vinnik was assessed $12 million for his role in the violations.

The BTC-e case was one of the first major crypto-related investigations and has been investigated and prosecuted by authorities across the globe. As former IRS-Criminal Investigation Chief Don Fort explained to TRM Insights, “What better example of the US Government’s persistence in bringing bad actors to Justice in the cryptocurrency space. More than six years after the first indictment in BTC-e, it’s more of the same with the charging of Klimenka a few days ago.”

The BTC-e case is an example of interagency collaboration and coordination by the Department of Justice’s Criminal Division, the National Cryptocurrency Enforcement Team, the US Attorney’s Office for the Northern District of California, DOJ’s Office of International Affairs, the United States Secret Service, the FBI, IRS-Criminal Investigation, Homeland Security Investigations with support from the Greek Ministry of Justice and the Latvian government.

Trial Attorney C. Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Claudia Quiroz for the Northern District of California, both members of the National Cryptocurrency Enforcement Team (NCET), and Assistant U.S. Attorney Katherine Lloyd-Lovett for the Northern District of California are prosecuting the case.

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