A Russian citizen and one of the main figures behind the bitcoin exchange BTC-e was detained on Wednesday at a small village in northern Greece. According to Reuters, the man was arrested by Greek police at the request of the US authorities on suspicion of laundering $4 billion through the platform.
Earlier, the BTC-E’s representatives informed that the exchange undergoes unplanned maintenance, citing data center issues as the reason for the outage. The lack of additional details and the fact that the maintenance was not scheduled at all provoked a lot of rumors. The topic has been actively discussed on Twitter and Reddit, with users suggesting that the platform was shut down and hacked.
Meanwhile, the police have identified the arrested man as Alexander Vinnik, 38, who owns, runs, and manages the popular Russia-based cryptocurrency exchange. The man, Reuters reported, was “a key person behind the platform, which has been offline since reporting “technical problems” late on Tuesday.”
Since 2011, when the exchange was opened, at least $4 billion in cash has been laundered via bitcoin transactions on the platform. The website, the police stated, had more than 7 million bitcoins deposited and 5.5 million bitcoins in withdrawals.
“An internationally sought ‘mastermind’ of a crime organization has been arrested” Greek police claimed in a statement. “Since 2011 the 38-year-old has been running a criminal organization which administers one of the most important websites of electronic crime in the world.”
The U.S. Ministry of Justice has issued an arrest warrant and is now looking to extradite Alexander Vinnik to the US. The police seized all electronic devices from his hotel room, including two laptops, five tablets, and mobile phones.
BTC-e, the U.S. Justice Department, and the Russian Foreign Ministry have not yet provided any comments.
BTC-e, which has been offline since Tuesday evening, is currently one of the biggest cryptocurrency exchanges, processing more than 3% of the total bitcoin transactions. Until now, the owners of the platform remained anonymous.
Being outside the reach of US and European law enforcement, the exchange has long been a target of hackers. According to a recent research by Google, 95% of all ransomware cash outs happened on the exchange. Still, it is unclear whether the platform itself is liable for these payments.
Meantime, computer security blog WizSecurity has unveiled that Alexander Vinnik has also been involved in the theft of the collapsed Japanese exchange Mt.Gox. Bitcoin journalist Torpey claimed there is a link between the two exchanges on his Twitter:
Source: BTC-e hacked Mt Gox. Full report coming very soon.
— Kyle Torpey (@kyletorpey) July 26, 2017
According to WizSecurity, the head of BTCE-e is directly connected to the Mt.Gox theft, which resulted in the loss of $2.21 billion in bitcoins.
“We won’t beat around the bush with it: Vinnik is our chief suspect for involvement in the MtGox theft (or the laundering of the proceeds thereof). This is the result of years of patient work, and these findings were surely independently uncovered by other investigators as well,” the website says. “Everyone who worked on the case have patiently kept quiet while forwarding findings to law enforcement, so as not to tip suspects off and to maximize the chances of arrests.”
Over the last few years, WizSecurity has been working to trace the movement of virtual currency from Mt.Gox to Vinnik’s digital wallet, WME. In 2011, the hackers stole Mt.Gox hot wallet private keys, what allowed them to immediately access a number of bitcoins as well as spend the funds from any of the exchange addresses. The hackers then regularly stole bitcoins and sent them to Vinnik’s wallets.
By 2013, the amount stolen totaled around 630,000 bitcoins. Around 300,000 bitcoins were moved from his wallets to BTC-e, while the remaining coins were deposited to other exchanges. What helped investigators to identify Vinnik is moving the funds back onto Mt.Gox, as all accounts he used on the exchange could lead to his WME wallet.
Besides, investigators found that Alexander Vinnik is linked to thefts from Bitcoinica and Bitfloor in 2011 and 2012. If it was proved that BTC-e owner stole bitcoins from Mt. Gox, the case involving former chief executive Mark Karpeles would finally be closed. During a hearing at the Tokyo District Court earlier this month, Karpeles officially pleaded not guilty to charges of embezzlement and data manipulation. “I swear to God that I am innocent,” he said in court.
BTC-e meantime is expected to come back online within the next 5-10 days after completing work on restoring the platform.
Update2: На данный момент ведутся работы по восстановлению работы сервиса. Примерные сроки от 5 до 10 дней. Спасибо за понимание #btce
— BTC-E (@btcecom) July 26, 2017