This has been a crazy week for Bitcoin (again). BTC-e, one of Bitcoin’s largest and most notorious coin exchanges was brought down by law enforcement and its founder has been arrested. On Thursday, the Department of Justice unsealed an indictment against Alexander Vinnik, thought to be one of the operators of Bitcoin exchange BTC-e. Charged with 21 counts of money laundering and other related financial crimes. The counts range from operating an unlicensed money transmittal business to a variety of money laundering charges, including laundering associated with ransomware payouts and a theft from the now-defunct Mt Gox exchange. The indictment paints BTC-e as a hub of criminal activity, laundering the proceeds of everything from drug trafficking to ransomware attacks.
Vinnik’s alleged crimes go beyond just operating the exchange. Feds believe he played a role in the theft of more 800,000 Bitcoin, about $400 million at the time. According to the indictment, 530,000 of those Bitcoin ended up passing through wallets controlled by or associated with Vinnik, although his role in the larger scheme remains unclear.
Vinnik is in custody, arrested while on vacation in Greece, but the Bitcoin world is still sorting through the larger implications of his arrest. BTC-e was one of the last major exchanges outside the reach of conventional finance, and now that it’s gone, it’s unclear what might replace it. There are many legitimate uses of Bitcoin, but Bitcoin transactions have also become essential for online crime. There will continue to be demand for exchanges like BTC-e, and with feds directly targeting exchanges that don’t play by the book.
NEVER LEAVE YOUR COINS ON AN EXCHANGE! But the main issue is of course the coming split on August 1st and Bitcoin Cash. Take action if needed.