- Prominent figures like Vinnik, Bankman-Fried and Zhao have faced DOJ charges for money laundering
- Popular crypto exchange KuCoin also faced similar accusations
Cryptocurrencies are increasingly linked to money laundering, with notable figures such as Sam Bankman-Fried and Changpeng Zhao facing jail terms. A new player could now be added to that list, with Alexander Vinnik, co-founder of BTC-e, an illegal crypto exchange, pleading guilty to similar charges.
According to a press release from the US Department of Justice (DoJ),
“A Russian today pleaded guilty to conspiracy to commit money laundering in connection with his role in operating the cryptocurrency exchange BTC-e from 2011 to 2017.”
According to the same, Alexander Vinnik, 44 years old, played an important role as one of the operators of BTC-e, recognized as one of the largest virtual currency exchanges in the world.
BTC-e under the DoJ’s radar
BTC-e operated from approximately 2011 until its closure by law enforcement in July 2017. During this time, the exchange facilitated transactions of more than $9 billion while serving more than one million users worldwide. This also included a notable customer base in the United States.
In its statement, the DoJ claimed:
“BTC-e was one of the primary ways cybercriminals around the world transferred, laundered and stored the criminal proceeds from their illegal activities.”
BTC-e’s operations were heavily dependent on shell companies and affiliated entities that did not have proper registration with FinCEN. It also neglected basic anti-money laundering (AML) and Know Your Customer (KYC) policies.
Alexander Vinnik set up numerous such shell companies and financial accounts worldwide to facilitate BTC-e’s transactions.
Now a federal district court judge will determine Vinnik’s sentence, taking into account several factors, including U.S. sentencing guidelines.
Here it is worth noting that in 2017, FinCEN imposed significant civil penalties totaling approximately $122 million on BTC-e and Vinnik for intentionally violating US AML laws.
KuCoin too?
In a recent development, the DoJ has too charged KuCoin, a major cryptocurrency exchange, along with founders Chun Gan and Ke Tang. The charges against them include conspiracy to violate the Bank Secrecy Act and conspiracy to operate an unlicensed money transmission business.
The DoJ claimed:
“Since its founding in 2017, KuCoin has received more than $5 billion and sent more than $4 billion in suspicious and criminal proceeds.”
Taken together, these developments highlight the ongoing challenges authorities face in combating financial crimes within the cryptocurrency ecosystem.
What do the numbers say?
However, a recent report from Chainanalysis paints a more positive picture of the crypto space. According to the blockchain data platform, there will be a sharp decline in money laundering activities in 2023, especially compared to 2022.
Source: Chain analysis