The founder of the BTC-e Bitcoin exchange has been facing criminal charges for money laundering, conspiracy, unlawful monetary transactions. Off lately, the BTC-e Bitcoin exchange is facing civil complaint of $100 million for the monetary penalties owned as the alleged violations of the Bank Secrecy Act. The complaint that has been lodged by DOJ strictly alleges that one of the CEOs of the BTC-e Bitcoin named Alexander Vinnik has willingly failed to follow the Anti-Money Laundering (AML) procedures and as well as failed to report suspicious activity amongst the other violations.

Kenneth A. Blanco, U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) Director has announced the Department of Justice’s (DOJ) civil complaint against BTC-e and Vinnik. FinCEN has alleged that the Bank Secrecy Act (BSA) violations warranted a penalty of $12 million against Vinnick and $88,596,314 against BTC-e. As per the complaint, FinCEN has assessed the penalties based on the below-mentioned conduct:

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  • Failure Registering as an MSB: It has been known that BTC-e has never registered with FinCEN as a Money Services Business (MSB). The BSA also defines an MSB and as well needs them to register with FinCEN within 180 days of commencing the operations. In this case, FinCEN had assessed penalties in part due to the fact that the agency had concluded BTC-e was an MSB and has failed to register with the agency.
  • Failure Establishing Anti-Money Laundering Programs and Procedures: Under the BSA, an MSB must at any cost develop, implement, and maintain an effective anti-money laundering (AML) program that is reasonably designed to prevent the MSB from being used to facilitate money laundering and the financing of any sort of terrorist activities. FinCEN’s fines were based, in part, on BTC-e’s failure to have reasonable AML policies or procedures in place to prevent the criminal activity on the digital currency exchange.
  • Failure Filing Suspicious Activity Reports: Under the BSA, an MSB must file a suspicious activity report also known as SAR, if it becomes aware of transactions that the MSB knows, suspects, or has a minimum reason to suspect are suspicious where those transactions involve the MSB and aggregate to at least $2,000 total in value. The penalties of FinCEN were assessed in part owing to the fact that BTC-e did not file SARs and instead received proceeds from ransomware schemes, transferred funds to and from known darknet marketplaces, and as well as had deposited funds stolen from other digital currency exchanges into BTC-e accounts that Vinnik controlled.

BTC-e accounts had received criminal proceeds directly from the various cybercrimes, which even included numerous hacking incidents, ransomware payments, identity theft schemes, embezzlement by corrupt public officials, and narcotics distribution. A significant portion of business of BTC-e has been successfully derived from “suspected criminal activity”. Messages on BTC-e’s own forum openly and explicitly reflected some of the criminal activity in which the users on the platform were engaged and how they used BTC-e to launder the funds. BTC-e users had established accounts under monikers suggestive of criminality, including user names such as “ISIS,” “CocaineCowboys,” “blackhathackers,” “dzkillerhacker,” and “hacker4hire.” Despite these suspicious usernames, BTC-e did just nothing to identify these customers or to investigate whether these or any of its other customers were using its services to conduct, conceal, or even facilitate illegal activity.

BTC-e’s structure had permitted the criminals to conduct financial transactions with high levels of anonymity and thereby avoid apprehension by law enforcement or seizure of funds. This aspect of BTC-e contributed to its customers’ willingness to accept BTC-e’s unfavorable exchange rates compared to other legitimate digital currency exchangers that registered with FinCEN and that had an appropriate and effective anti-money laundering (AML) and “Know-Your-Customer” (KYC) policies in place. The customers who are situated within the United States (U.S.) used BTC-e to conduct at least 21,000 Bitcoin transactions worth over $296,000,000 and tens of thousands of transactions in other convertible virtual currencies. BTC-e made no effort to register with FinCEN or maintain any elements of an AML program or even took a step to report suspicious activity.

Here is the complete complaint.

Source: DOJ


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