Alexander Vinnik, a Russian citizen who ran the crypto exchange BTC-e, pleaded guilty to money laundering charges in the US on May 3, according to a Bloomberg report.
BTC-e was one of the largest crypto exchanges in the world between 2011 and 2017. Prosecutors say it processed transactions worth $9 billion and had a customer base of more than 1 million worldwide.
Prosecutors added that BTC-e was used by cybercriminals to transfer, launder and store criminal proceeds from illegal activities. This included proceeds from hacking, ransomware and narcotics distribution.
According to a statement from the U.S. Attorney’s Office in San Francisco, Vinnik operated the exchange until he was arrested and BTC-e was shut down by police. Vinnik, sentenced to five years in prison for money laundering in France in 2020, faces up to 20 years in prison in the US
The statement noted:
“Vinnik operated BTC-e with the intent to promote these unlawful activities and was responsible for losses of at least $121 million.”
Prosecutors allege that BTC-e had no control system and allowed criminals to anonymously convert illegal funds into cryptocurrencies such as Bitcoin. Prosecutors said the exchange appeared to have handled Bitcoin traced to a Russian military intelligence hacking unit responsible for releasing Democrats’ emails during the 2016 U.S. election in an attempt to influence votes.
In recent months, there has been increasing scrutiny and regulatory crackdown on cryptocurrency-related fraud in the US. Sam Bankman-Fried, the co-founder of the now-defunct crypto exchange FTX, was sentenced to 24 years in prison in March for orchestrating a multibillion-dollar fraud scheme.
Furthermore, Do Kwon, the founder of Terraform Labs, was found liable for fraud in a civil case in April 2024. Terraform Labs collapsed in 2022, causing a series of bankruptcies and wiping $40 billion from the market.
More recently, Changpeng Zhao (CZ), the founder of Binance, one of the world’s largest crypto exchanges, was sentenced this week to four months in prison for failures that allowed illegal activities, including criminal and terrorist financing, to take place on the platform. CZ had previously pleaded guilty, while Binance paid the largest fine in history and agreed to be audited.
In addition, Jennifer Lee, former deputy director of the SEC’s Division of Enforcement, said this week that if Donald Trump is elected president for a second term this year, the U.S. Securities and Exchange Commission (SEC) “will continue to define its space and crypto will achieve.”