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Greece arrests Russian suspected of running $4 billion bitcoin laundering ring

LiveMint logoLiveMint 26-07-2017 Karolina Tagaris

Athens/Moscow/New York: A Russian man suspected of being the anonymous mastermind behind one of the world’s oldest cryptocurrency exchanges and of laundering at least $4 billion has been arrested in Greece, police officials said on Wednesday.

Police officials identified him as Alexander Vinnik, 38, who was arrested after a tip-off in a small beachside village in northern Greece on a US warrant. Police said the US would seek to extradite him.

Two officials close to the BTC-e virtual currency exchange, who declined to be named while commenting on an ongoing case, said Vinnik was a key person behind the platform, which has been offline since reporting “technical problems” late on Tuesday.

“An internationally sought ‘mastermind’ of a crime organisation has been arrested” Greek police said in a statement. “Since 2011 the 38-year-old has been running a criminal organisation which administers one of the most important websites of electronic crime in the world.”

Police said “at least” $4 billion in cash had been laundered through a bitcoin platform since 2011—the year BTC-e was founded—with 7 million bitcoins deposited, and 5.5 million bitcoins in withdrawals.

Bitcoin was the first digital currency to successfully use cryptography to keep transactions secure and hidden, making conventional financial regulation difficult if not impossible .

Vennik’s arrest is the latest in a series of US operations against Russian cyber criminals in Europe. Last week, the US justice department moved to shut down the dark web marketplace AlphaBay .

The US prosecutions come as scrutiny of Russian hackers intensifies, after US intelligence officials accused Moscow of hacking last year’s US presidential election to bolster Donald Trump’s chances, something Russia denies.

There was no indication Vennik’s case was connected to the US hacking charges. The US justice department, the Russian foreign ministry and BTC-e did not immediately respond to requests for comment.

Founded in 2011, BTC-e is one of the oldest and most obscure virtual currency exchanges, allowing users to trade bitcoin anonymously against fiat currencies, such as the US dollar, and other virtual currencies. Until today, the people behind it had remained anonymous.

It is known in crypto-currency markets as one with the most relaxed standards for checking the identity of its users, to combat money laundering, and for not collaborating with law enforcement.

This helped make it “a favourite money-laundering location” and the exchange has been connected to recent ransomware attacks, said James Smith, chief executive of Elliptic, a company that works with law enforcement to track illicit bitcoin transactions. Reuters

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