Two Russians Charged with Hacking Mt. Gox Bitcoin Exchange, Allegations Claim 647,000 Bitcoins Involved in Money Laundering

The US Department of Justice has charged two Russians, Alexey Bilyuchenko, 43, and Aleksandr Verner, 29, with the hacking of Mt. Gox. The crypto exchange was plundered in 2011 and ultimately collapsed. At the same time, the Russians have been charged with operating the BTC-e crypto exchange.

The DOJ states that the defendants sought to launder 647,000 Bitcoin – valued today at around $16.8 billion.

Bilyuchenko is also charged with working with Alexander Vinnik to operate BTC-e from 2011 to 2017, when it was shuttered.

Vinnik is currently in US custody after being extradited from France to the US last year. Rumors indicate he may be a pawn in a potential prisoner exchange with Russi.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, called the announcement a milestone in two major crypto investigations.

“These indictments highlight the department’s unwavering commitment to bring to justice bad actors in the cryptocurrency ecosystem and prevent the abuse of the financial system.”

U.S. Attorney Damian Williams for the Southern District of New York said that as criminals have become more sophisticated, they have become experts in the latest tech to enforce the law.

 “As alleged, Alexey Bilyuchenko and Aleksandr Verner thought they could outsmart the law by using sophisticated hacks to steal and launder massive amounts of cryptocurrency, a novel technology at the time, but the charges unsealed demonstrate our ability to tenaciously pursue these alleged criminals, no matter how complex their schemes, until they are brought to justice.”

According to court documents in 2011, Bilyuchenko, Verner, and their co-conspirators allegedly gained access to the server holding the cryptocurrency wallets for Mt. Gox on a computer server in Japan. The Bitcoin were transferred from Mt. Gox to wallets controlled by the defendants. The DOJ claims that Bilyuchenko, Verner and laundered the bulk of the Bitcoins stolen through Mt. Gox principally through Bitcoin addresses associated with accounts Bilyuchenko, Verner, and their co-conspirators controlled at two other online Bitcoin exchanges.

In April 2012, Bilyuchenko, Verner, and their partners allegedly negotiated and entered into a fraudulent contract to provide purported advertising services to a Bitcoin brokerage service based in the Southern District of New York. Under the guise of the Advertising Contract, in order to conceal and liquidate the Bitcoins stolen from Mt. Gox, Bilyuchenko, and Verner allegedly made regular requests to the owner and operator of the New York Bitcoin Broker to make large wire transfers into various offshore bank accounts, including in the names of shell corporations, controlled by Bilyuchenko, Verner, and others.

Mt. Gox ceased operations in 2014 after the theft was revealed.

The DOJ adds that BTC-e was one of the primary ways cybercriminals worldwide transferred, laundered, and stored the criminal proceeds of their illegal activities.

BTC-e served over one million users worldwide, moving millions of bitcoin worth of deposits and withdrawals and processing billions of dollars worth of transactions. BTC-e received criminal proceeds from numerous computer intrusions, hacking incidents, ransomware events, identity theft schemes, corrupt public officials, and narcotics distribution rings.

The SDNY indictment charges Bilyuchenko and Verner with conspiracy to commit money laundering. The NDCA indictment charges Bilyuchenko with money laundering conspiracy and operating an unlicensed money services business.


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