Bitcoin Exchange BTC-e Operator Jailed

BTC-e Operator Jailed On The Face Of Illegal Activity Accusations

BTC-e has come under the glare lately for its involvement with financial crimes including money laundering which funded ransomware attacks and drug trafficking. On Thursday, an indictment was unsealed against Alexander Vinnik, one of BTC-e operators by Department of Justice who charged him with operating unlicensed money transmittal activity and theft of approximately 400$ from Mt Gox exchange which is defunct presently.

Also Read: Illegal Bitcoin Exchange Administrator, imprisoned for 72 Months.

Shady Operations

Vinnik was put behind bars while he was vacationing in Greece. But the effect of his arrest on the Bitcoin world is surely going to be a farfetched one. People all over the globe are pondering over the next possible replacement of BTC-e which was the last major cryptocurrency exchange outside the purview of conventional finance.

In spite of having tones of legitimate users, Bitcoin is also becoming the stepping stone of online crimes. Demand for such illegal cryptocurrency market will always remain and with feds directing the spotlight on exchanges which don’t go by the rulebook, the split of Bitcoin in two halves is becoming starker.

BTC-e founded way back in 2011 always stood as the odd one out amongst its contemporaries. The sketchy ownership, control and weird exchange prices made this Eastern Europe exchange create a big question mark with its functioning. And the biggest blow came when BTC-e got connected with the massive theft at Mt. Gox which eventually lead to the latter’s bankruptcy.

WizSec findings

Synchronizing their move with the arrest of Vinnik, WizSec published a blog containing carefully researched details and findings of the infamous Mt. Gox theft. According to their report, the hot wallet private keys of Mt. Gox were stolen in 2011. The hacker circle stole Bitcoin through the same in 2012 and 2013 which were laundered through wallets under the control of Alexander Vinnik. 300000 Bitcoins stolen from Mt. Gox was transferred to three interconnected BTC-e accounts which are directly linked with BTC-e administrative accounts. The same could only the accessed by operators and administrators.

Suspicion thickens

The core system of BTC-e was designed under multiple layers of anonymity for criminals to accomplish their malicious goals. Unlike digital currency exchanges and legitimate payment processors, registering with BTC-e only required an email address, username and password. Suspicious usernames like hacker4hire, ISIS, blackhathackers, CocaineCowboys and dzkillerhacker solidified the case of money laundering allegations.

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$9 Million Bitcoin Ponzi Scheme: Holder Josh Garza Founded Guilty