A recent arrest of Russian national, Alexander Vinnik today by Greek police may be more substantial than initially though. The alleged operator of cryptocurrency exchange BTC-e was also revealed to be a chief suspect for involvement into the former MtGox theft, which roiled the industry some years ago, according to a recent report .
Earlier today, Finance Magnates covered the arrest of Mr. Vinnik who was arrested on suspicions of running a $4 billion money laundering operation related to illicit business activities with Bitcoin. He had been suspected of heading a criminal organization since 2011 that “owns, operates and manages one of the world’s leading e-crime websites”, police said in a statement.
The arrest also coincided with the blackout of BTC-e, which has been ‘under maintenance’ for over 24 hours. This has caused many of its users to express fears that the platform had been hacked. Interestingly, the exchange has remained one of the most mercurial in the industry, disclosing very little public information about its operations or its operators – BTC-e is one of the most established or longest lasting exchanges, boasting a large base of customers.
A Russian man (L) suspected of running a money laundering operation is escorted by a plain-clothes police officer to a court in Thessaloniki, Greece July 26, 2017. (REUTERS)
The plot thickens
Mr. Vinnik has apparently been under investigation for years by a group of bitcoin security specialists, following prior investigations into MtGox. To date, the events surrounding MtGox have been the largest theft in the cryptocurrency industry – originally MtGox hot wallet private keys were stolen, facilitating access to a large number of bitcoins.
During this same period, a number of wallets controlled by Mr. Vinnik were receiving a stream of coins using the aforementioned compromised keys for nearly two years. In just under three years, nearly 630,000 BTC had been stolen from MtGox by a hacker – this enigmatic hack is suspected to have been in connection with Mr. Vinnik himself, who maintains a key place in the overall situation.
Interestingly, many of these coins that made their way into Mr. Vinnik’s wallets were also eventually bound for BTC-e, and consequently sold off or laundered. A recent report suggests that upwards of 300,000 BTC ended up on BTC-e, though other coins were deposited to other exchanges. The nature of the movements also seem to point to Mr. Vinnik’s involvement namely with BTC-e.
To further complicate matters, additional tranches of coins stolen from Bitcoinica, Bitfloor, and others between 2011 and 2012 were all apparently laundered via the same wallets that the MtGox theft was tied to. It will be interesting to see what a more lengthy analysis yields, especially with so many question markets surrounding money-laundering episodes over the past few years.