The past few days have been rather horrible for BTC-E and its customers. Not only did the company suffer from a major outage, but the operator has been arrested as well. To top it all off, the exchange has been fined for US$110m. This indictment related to alleged money laundering practices. Sources claim BTC-E is responsible for laundering 95% of all global ransomware proceeds. Platform customers will not be too happy about this development, that much is evident.
It is safe to say BTC-E may never recover from these incidents. Suffering from a major outage is one thing. Unfortunately, the timing couldn’t be worse, as there is more bad news pertaining to this company. Google indicated close to 95% of all ransomware proceeds in Bitcoin passed through the exchange. It is unclear if this was done willingly or not, though. Then again, one of the platform’s operators has been arrested on charges of money laundering as well.
BTC-E is the Center of Attention Right now
Alexander Vinnik was arrested in Greece yesterday afternoon. He is also linked to the platform as being one of its operators. Unfortunately, that is the least of his concerns right now. According to the DOJ, Vinnik committed a long list of crimes. A total of 17 counts of money laundering has been filed against him. There are also two charges of engaging in unlawful monetary transactions. All of this goes to show things aren’t looking that great for BTC-E right now. More importantly, it remains to be seen how this will affect the exchange’s customers in general.
The DOJ also claims Vinnik received funds from the Mt. Gox hack. That incident has always been met with a lot of skepticism. Many people assumed Mark Karpeles was responsible for stealing over 600,000 bitcoins. However, he continues to claim he is innocent and never took any money. If the money ended up in Vinnik’s hands, he may have been telling the truth after all. The investigation is still ongoing, mind you, and it will be interesting to see what type of evidence turns up next.
Going after a Russian exchange is quite a gutsy move by the DOJ. After all, the US and Russia are not on the best of terms right now. Then again, FinCEN feels they need to hold any foreign-located money transmitters accountable for their actions. This does not mean the exchange will be shut down for the time being, though. In fact, it seems likely BTC-E will continue to operate without problems. A very intriguing situation to keep an eye on indeed.
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