US Extradites Russia Accused of Cryptocurrency Laundering

Blockchain and Cryptocurrencies, Cybercrime, Fraud Management and Cybercrime

Alexander Vinnik makes his first appearance in US federal court.

Prajeet Nair (@prajeetspeaks) •
August 5, 2022

US Extradites Russia Accused of Cryptocurrency Laundering
Alexander Vinnik at the Supreme Court in Athens, Greece, on November 15, 2017. (Source: Shutterstock)

A Russian national accused of running a cryptocurrency exchange used to launder hacking proceeds made his first appearance in federal court in San Francisco today.

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The United States extradited 42-year-old Alexander Vinnik from Greece after France returned him there on Thursday for legal proceedings. A Paris court sentenced Vinnik in December 2020 to a five-year sentence for money laundering. Greek authorities first arrested Vinnik in 2017 at the behest of the United States (see: Greece to send Russian cybercrime suspect to France).

Vinnik, who allegedly founded the now-defunct BTC-e cryptocurrency exchange in 2011, faces up to 55 years in prison under US law for a series of charges including money laundering and involvement in illegal currency transactions. Federal prosecutors say BTC-e, which closed in 2017, received more than $4 billion worth of bitcoin deposits. Vinnik “maintains his innocence,” his lawyer Frédéric Bélot tells Information Security Media Group.

The Russian state news service Tass says Kremlin diplomats intend to provide him with legal support during the US proceedings. Moscow sought his return to Russia after his arrest in Greece; Vinnik faces misdemeanor charges of embezzlement and computer fraud in Russia. Tass describes Vinnik as an “IT specialist”.

Vinnik intended from the start for the exchange to be a haven for criminals, prosecutors allege, ensuring the anonymity of its users, taking steps to hide and anonymize transactions, and not implementing anti-money laundering processes.

Among the hacking incidents that Vinnik allegedly helped through money laundering was the theft of $460 million from the now-closed Mt. Gox bitcoin exchange.

The Treasury Department’s anti-money laundering unit, FinCEN, in 2017 assessed a $110 million civil penalty against BTC-e for knowingly violating US anti-money laundering laws and a $12 million fine. against Vinnik.

In June 2020, New Zealand police seized $90 million from a company allegedly owned by Vinnik. Police officials announced that they seized the money from the Canton Business Corp., which Vinnik allegedly used to house stolen funds.

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