On 25th July, FinCEN, an agency within the US treasury department, levied a fine on both Vinnik and BTC-e to the amount of $88,596,314 and $12,000,000, plus interest as provided by law for the involvement in certain monetary related criminal activities.
In accordance to a court order released on July 25th in the northern district of California, the US government has filed a $100 million lawsuit against estranged cryptocurrency exchange BTC-e and its owner – Alexander Vinnik.
Following an investigation from two years ago by the US Department of Justice, Alexander Vinnik – whom authorities allege laundering over $4 billion in 2011 by means of a cyber hack, was arrested in Greece circa mid-2017. Vinnik was accused of laundering stolen cryptocurrencies from several crypto exchanges including Mt Gox to the tune of 850,000 Bitcoins in 2014.
Due to the strict regulatory requirements meted upon crypto platforms in the U.S, the FinCEN expects all financial institutions falling under this category to adhere to these rules. They alleged that the Cyprus/Seychelles Islands incorporated exchange – BTC-e had at no point in time slated any anti-money laundering policy or engage in such practices as KYC (Know Your Customer) or AML (Anti-Money Laundering). Not to mention establishing a preemptive measure towards the detection and prevention of suspicious transactions.
However, the filed complaint explicitly debunks BTC-e’s adherence to any of the FinCEN laid-down directives for a digital monetary servicing firm such as a crypto exchange:
“At no point in time did BTC-e have any AML policies or procedures, let alone an effective program for detecting and preventing suspicious transactions. To the contrary, BTC-e’s lax policies encouraged persons engaged in criminal activity to use its services, and BTC-e became the virtual currency exchange of choice for criminals looking to launder their illegal proceeds.”
Vinnik, as of late, has been indicted for 17 counts of anti-money laundering, two counts of engaging in unlawful monetary transactions in the US. Vinnik alongside his supposedly spearheaded exchange were both charged with one count of operating an unlawful money services business and another count of conspiracy to engage in money laundering practices.
The charges levied against the Russian native include: unlicensed money services business, supervision of a digital currency exchange that aids criminals launder money, conspiracy by means of failing to file a Suspicious Activity Report – “SAR”, transacting in cash obtained through illegal means, and etc.
40-year-old Alexander Vinnik has requested to be extradited to his home country where he faces less criminal charges. And although a Russian citizen, Vinnik is more likely to be sentenced in the US where he is charged with 21 counts of monetary affiliated charges with a possible jail term of 55 years in a US prison.
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