BTC-e Assets Seized By US Authorities: Difference between revisions

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[[File:Btce.jpg|thumb|BTC-e Logo And Homepage]]The BTC-e platform was officially registered in London, however it was widely known to be used for laundering stolen or extorted funds on a regular basis. For example, there is evidence that it was one of the most popular methods for criminals to cash out ransomware payments. Despite this reputation, there were many people who still used the exchange to transact with their legitimate currency. When the US government seized the domain, it was seen as overreaching by many who lost their funds in other countries. Unfortunately, under the US civil asset forfeiture laws, it’s generally guilty until proven innocent, and the bar for proving innocence are extremely high. There have been countless cases where people have been travelling with cash legitimately earned, and had it seized and not returned. The team behind the exchange vowed to continue operating, and ultimately relaunched as WEX.
[[File:Btce.jpg|thumb|BTC-e Logo And Homepage]]The BTC-e platform was officially registered in London, however it was widely known to be used for laundering stolen or extorted funds on a regular basis. For example, there is evidence that it was one of the most popular methods for criminals to cash out ransomware payments. Despite this reputation, there were many people who still used the exchange to transact with their legitimate currency. When the US government seized the domain, it was seen as overreaching by many who lost their funds in other countries. Unfortunately, under the US civil asset forfeiture laws, it’s generally guilty until proven innocent, and the bar for proving innocence are extremely high. There have been countless cases where people have been travelling with cash legitimately earned, and had it seized and not returned. The team behind the exchange vowed to continue operating, and ultimately relaunched as WEX.


This exchange or platform is based in Russia, or the incident targeted people primarily in Russia.<ref name="thenextweb-8" /><ref name="coindesk-9" /><ref name="newsdotbitcoin-10" /><ref name="nasdaq-11" /><ref name="kylegibson-86" /><ref name="bitcoinexchangeguide-218" /><ref name="ccn-238" /><ref name="theverge-239" /><ref name="newsdotbitcoin-240" /><ref name="newsdotbitcoin-241" /><ref name="cointelegraph-242" /><ref name="cointelegraph-243" /><ref name="reddit-244" /><ref name="newsdotbitcoin-999" /><ref name="ciphertrace-1152" /><ref name="slowmisthacked-1160" /><ref name="wikipedia-4420" /><ref name="bbc-4421" /><ref name="cryptoassetrecovery-4422" /><ref name="bitcoinmagazine-4821" /><ref name="ccn-7304" /><ref name="theblockcrypto-7525" />
This exchange or platform is based in Russia, or the incident targeted people primarily in Russia.<ref name="thenextweb-8" /><ref name="coindesk-9" /><ref name="newsdotbitcoin-10" /><ref name="nasdaq-11" /><ref name="kylegibson-86" /><ref name="bitcoinexchangeguide-218" /><ref name="ccn-238" /><ref name="theverge-239" /><ref name="newsdotbitcoin-240" /><ref name="newsdotbitcoin-241" /><ref name="cointelegraph-242" /><ref name="cointelegraph-243" /><ref name="reddit-244" /><ref name="newsdotbitcoin-999" /><ref name="ciphertrace-1152" /><ref name="slowmisthacked-1160" /><ref name="wikipedia-4420" /><ref name="bbc-4421" /><ref name="cryptoassetrecovery-4422" /><ref name="bitcoinmagazine-4821" /><ref name="ccn-7304" /><ref name="theblockcrypto-7525" /><ref name="comparitech-10032" />


== About BTC-e ==
== About BTC-e ==
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<ref name="ccn-7304">[https://www.ccn.com/trump-doj-sues-bitcoin-exchange/ https://www.ccn.com/trump-doj-sues-bitcoin-exchange/] (Mar 19, 2022)</ref>
<ref name="ccn-7304">[https://www.ccn.com/trump-doj-sues-bitcoin-exchange/ https://www.ccn.com/trump-doj-sues-bitcoin-exchange/] (Mar 19, 2022)</ref>


<ref name="theblockcrypto-7525">[https://www.theblockcrypto.com/linked/69093/new-zealand-police-seize-90-million-from-alleged-btc-e-operator-alexander-vinnik https://www.theblockcrypto.com/linked/69093/new-zealand-police-seize-90-million-from-alleged-btc-e-operator-alexander-vinnik] (Apr 10, 2022)</ref></references>
<ref name="theblockcrypto-7525">[https://www.theblockcrypto.com/linked/69093/new-zealand-police-seize-90-million-from-alleged-btc-e-operator-alexander-vinnik https://www.theblockcrypto.com/linked/69093/new-zealand-police-seize-90-million-from-alleged-btc-e-operator-alexander-vinnik] (Apr 10, 2022)</ref>
 
<ref name="comparitech-10032">[https://www.comparitech.com/crypto/cryptocurrency-scams/ Worldwide crypto & NFT rug pulls and scams tracker - Comparitech] (Dec 15, 2022)</ref></references>

Latest revision as of 14:38, 5 January 2024

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BTC-e Logo And Homepage

The BTC-e platform was officially registered in London, however it was widely known to be used for laundering stolen or extorted funds on a regular basis. For example, there is evidence that it was one of the most popular methods for criminals to cash out ransomware payments. Despite this reputation, there were many people who still used the exchange to transact with their legitimate currency. When the US government seized the domain, it was seen as overreaching by many who lost their funds in other countries. Unfortunately, under the US civil asset forfeiture laws, it’s generally guilty until proven innocent, and the bar for proving innocence are extremely high. There have been countless cases where people have been travelling with cash legitimately earned, and had it seized and not returned. The team behind the exchange vowed to continue operating, and ultimately relaunched as WEX.

This exchange or platform is based in Russia, or the incident targeted people primarily in Russia.[1][2][3][4][5][6][7][8][9][10][11][12][13][14][15][16][17][18][19][20][21][22][23]

About BTC-e

"BTC-e was a cryptocurrency trading platform founded in July 2011 by Alexander Vinnik and Aleksandr Bilyuchenko". "BTC-e was established in July 2011, handling a few coin pairs, including Bitcoin/U.S. dollar and I0Coin to Bitcoin. By October 2011, they supported many different currency pairs, including Litecoin to dollars, Bitcoin to rubles and RuCoin to rubles." "It was a component of the CoinDesk Bitcoin Price Index since the index's September 2013 formation."

"[A]s of February 2015 handled around 3% of all Bitcoin exchange volume. Until the 25th of July 2017, it allowed trading between the U.S. dollar, Russian ruble and euro currencies, and the Bitcoin, Litecoin, Namecoin, Novacoin, Peercoin, Dash and Ethereum cryptocurrencies."

"BTC-e was operated by ALWAYS EFFICIENT LLP which is registered in London and is listed as having 2 officers (Sandra Gina Esparon and Evaline Sophie Joubert) and two people with significant control: Alexander Buyanov and Andrii Shvets."


The Reality

"According to internet rumors, 66,000 bitcoins were suspected to have been stolen from the BTC-e exchange. The user inquired on the blockchain that the block with a block height of 477472 was transferred out of 66163.40004136 bitcoins. It is suspected that the BTC-e user was stolen by hackers of a huge amount of bitcoins." "According to Pawel Kuskowski, CEO & Co Founder at Coinfirm, right after the arrest of Alexander Vinnik, broadly referred to as the mastermind behind BTC-e, over 66,000 BTC were moved …across the Bitcoin ecosystem."

"According to a statement by Michael D. Ambrosio, a special agent with the USSS, “BTC-e was noted for its role in numerous ransomware and other cyber-criminal activity;" "one set of security researchers estimated that BTC-e was used to convert 95% of all ransomware payments into fiat currency."

What Happened

Authorities in the United States seized the btc-e.com domain and 38% of user funds from the platform.

In July 2017, “BTC-e was taken down by authorities, following the arrest of 38-year-old Russian national Alexander Vinnik in Greece, for allegedly laundering $4 billion of ill-gotten bitcoins.” "The US government closed the exchange on allegations that it was involved in laundering money for ransomware schemes."

Key Event Timeline - BTC-e Assets Seized By US Authorities
Date Event Description
July 25th, 2017 Main Event Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.
November 22nd, 2018 8:40:13 PM MST Wex.Nz Domain Offline Bitcoin.com reports that Wex, the successor to the now-defunct BTC-e exchange, has lost its wex.nz domain. New Zealand’s Domain Name Commission (DNC) suspended the domain and several others after it found that the registrant had used fake contact details. Wex users have been complaining that they are unable to withdraw their funds from the platform. The exchange has moved to a new domain, wex.link, and resumed operations, but its administrators have been relatively quiet since the summer when users began experiencing withdrawal issues. The BTC-e platform has had a controversial history and was relaunched as Wex in 2017 after going offline[24].
August 6th, 2022 3:30:02 PM MDT Alexander Vinnik Extradition According to Bitcoin.com, Alexander Vinnik, the alleged operator of the now-defunct crypto exchange BTC-e, has been extradited to the United States from Greece after more than five years of legal battles. Vinnik was charged with running BTC-e, which was accused of laundering over $4 billion in criminal proceeds, facilitating global cybercrime transactions, and operating as an unlicensed money service business. Initially arrested in Greece in 2017, he was later sent to France, where he served a prison sentence for money laundering and faced other charges. U.S. authorities withdrew a request for his extradition from France to expedite the process via Greece. Russia had also sought Vinnik's extradition but was unsuccessful. Vinnik's extradition has sparked controversy and accusations of unfriendly actions by the Greek authorities, with claims that he was transferred without proper legal procedures.[25] "At the beginning of August [2022] Alexander Vinnik, the alleged operator of BTC-e was extradited from Greece to the US. Based on the allegations, Vinnik conducted business with drug dealers and ransomware hackers via the crypto exchange."[26]

Total Amount Lost

The total amount lost has been estimated at $990,000,000+ USD.

Immediate Reactions

"On July 25, 2017, users began complaining that any attempts to access the site were met with a message from the US Department of Justice stating that the domain had been seized due to a joint US Secret Service/FBI investigation."

“A BTC-e admin updated users on Bitcointalk and on Twitter about the exchange’s situation, and revealed that they controlled over 55% of user funds, and that the remaining 45% would be reimbursed through a Bitfinex-like token. The exchange then relaunched as World Exchange Services (WEX) and updated users on its current situation.”


"According to a statement by Michael D. Ambrosio, a special agent with the USSS, “BTC-e was noted for its role in numerous ransomware and other cyber-criminal activity; its take-down is a significant accomplishment and should serve as a reminder of our global reach in combating transnational cybercrime.”" "BTC-e denied these allegations and stated that the individual arrested in connection with these crimes, the aforementioned Alexander Vinnik, was not an employee or founder of the now-defunct crypto exchange."


Ultimate Outcome

"In response to this, those behind BTC-e launched another exchange and rebranded themselves as Wex.nz, promising to repay any customers who had lost funds from the seizure. Wex.nz was a 1:1 copy of the previous BTC-e site and sought to pick up where the old BTC-e platform left off." "To repay its customers BTC-e created WEX tokens, which were used to represent customers' seized equity. The WEX tokens represented $1 and were issued to account for the value of customers cryptocurrencies at the time of the theft.”

"On June 22, 2020, the Asset Recovery Unit in New Zealand announced the freezing of $90 million as part of a global investigation into BTC-e—the now-defunct Bitcoin exchange run by Alexander Vinnik. Police Commissioner Andrew Coster said that the “New Zealand Police has worked closely with the Internal Revenue Service of the United States to address this very serious offending.”"

Alexander Vinnik, the alleged operator of the now-defunct crypto exchange BTC-e, was extradited to the United States from Greece after more than five years of legal battles. Vinnik was charged with running BTC-e, which was accused of laundering over $4 billion in criminal proceeds, facilitating global cybercrime transactions, and operating as an unlicensed money service business. Initially arrested in Greece in 2017, he was later sent to France, where he served a prison sentence for money laundering and faced other charges. U.S. authorities withdrew a request for his extradition from France to expedite the process via Greece. Russia had also sought Vinnik's extradition but was unsuccessful. Vinnik's extradition has sparked controversy and accusations of unfriendly actions by the Greek authorities, with claims that he was transferred without proper legal procedures.[25]


" number of complaints have been filed against the e[Wex.nz] xchange with the Russian police since August. Users who have lost money have created a website, wex-scam.com, as well as a couple of Telegram channels, to support each other and share the latest available information. According to a post from Oct. 21, 35 individuals have already filed requests with the Russian Ministry of Internal Affairs to initiate a criminal investigation against Wex.

[24]

Total Amount Recovered

There do not appear to have been any funds recovered in this case.

Ongoing Developments

"At the beginning of August Alexander Vinnik, the alleged operator of BTC-e was extradited from Greece to the US. Based on the allegations, Vinnik conducted business with drug dealers and ransomware hackers via the crypto exchange."[26]

While the U.S. Justice Department thanked the Greek government and justice ministry “for all their efforts in securing the defendant’s transfer to the United States,” the spokesperson of the Russian Ministry of Foreign Affairs Maria Zakharova stated that Moscow is “outraged by the unfriendly actions of the Greek authorities” and accused Washington of conducting a “real hunt for Russian citizens,” calling Vinnik’s hasty extradition an “abduction.” While not mentioned in the DOJ announcement, the owner of BTC-e is suspected of having collaborated with Russian intelligence, too.[25]

In her comments, Zoe Konstantopoulou described the case as a multi-year “judicial, diplomatic, intergovernmental scandal,” while referring to his extradition as a “violent disappearance from Greek territory” which “constitutes a Mafia method and a criminal act… a serious violation of international law and Greek legislation,” committed with the participation of two foreign states. Vinnik sought asylum in Greece and his defense team has been trying to also secure a release on humanitarian grounds. His wife died in 2020 and their two sons are now growing up without parents.[25]

General Prevention Policies

BTC-e came about and rose to prominence due to a lack of regulatory clarity and more legitimate options for crypto traders.

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

When using any third party custodial platform (such as for trading), it is important to verify that the platform has a full backing of all assets, and that assets have been secured in a proper multi-signature wallet held by several trusted and trained individuals. If this can't be validated, then users should avoid using that platform. Unfortunately, most centralized platforms today still do not provide the level of transparency and third party validation which would be necessary to ensure that assets have been kept secure and properly backed. Therefore, the most effective strategy at present remains to learn proper self custody practices and avoid using any third party custodial platforms whenever possible.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.

References

  1. ↑ Cryptocurrency exchange WEX/BTC-e tied to Bitcoin ransomware hackers (Feb 2, 2020)
  2. ↑ Criminal Case Against Failed WEX Crypto Exchange Points at Russian Law Enforcement - CoinDesk (Feb 2, 2020)
  3. ↑ Report: Troubled Crypto Exchange Wex Finds New Owner | Exchanges Bitcoin News (Feb 2, 2020)
  4. ↑ Criminal Case Against Failed WEX Crypto Exchange Points at Russian Law Enforcement (Feb 2, 2020)
  5. ↑ 100 Crypto Thefts: A Timeline of Hacks, Glitches, Exit Scams, and other Lost Cryptocurrency Incidents (Jan 25, 2020)
  6. ↑ Bitcoin Scams and Cryptocurrency Hacks List - BitcoinExchangeGuide.com (Mar 5, 2020)
  7. ↑ BTC-e Users' Funds Stuck in Limbo as Exchange Blames Third Party (Mar 7, 2020)
  8. ↑ Why the feds took down one of Bitcoin’s largest exchanges - The Verge (Mar 8, 2020)
  9. ↑ BTC-e Domain Seizure by U.S. Law Enforcement Sparks Jurisdiction Questions | News Bitcoin News (Mar 8, 2020)
  10. ↑ After FBI Takedown: BTC-e Exchange Says They Still Possess Databases and Wallets | News Bitcoin News (Mar 8, 2020)
  11. ↑ US Government Seizes Russian Bitcoin Exchange BTC-e Domain (Mar 8, 2020)
  12. ↑ FBICO? BTC-e Considers Debt Tokens and ICO to Repay Users (Mar 8, 2020)
  13. ↑ BTC-e Seized by US Government : Bitcoin (Mar 8, 2020)
  14. ↑ France Rejects Russian Request to Extradite BTC-e Operator Alexander Vinnik – Bitcoin News (May 27, 2021)
  15. ↑ CipherTrace Cryptocurrency Crime and Anti-Money Laundering Report 2020 (Jun 20, 2021)
  16. ↑ SlowMist Hacked - SlowMist Zone (Jun 26, 2021)
  17. ↑ BTC-e - Wikipedia (Dec 12, 2021)
  18. ↑ https://www.bbc.com/news/world-europe-50821547 (Dec 12, 2021)
  19. ↑ What Happened To BTC-e.com (and Wex.nz)? – Crypto Asset Recovery (Dec 12, 2021)
  20. ↑ Binance Freezes Funds on Multiple Accounts with Dubious Crypto Exchange - Bitcoin Magazine: Bitcoin News, Articles, Charts, and Guides (Dec 27, 2021)
  21. ↑ https://www.ccn.com/trump-doj-sues-bitcoin-exchange/ (Mar 19, 2022)
  22. ↑ https://www.theblockcrypto.com/linked/69093/new-zealand-police-seize-90-million-from-alleged-btc-e-operator-alexander-vinnik (Apr 10, 2022)
  23. ↑ Worldwide crypto & NFT rug pulls and scams tracker - Comparitech (Dec 15, 2022)
  24. ↑ 24.0 24.1 BTC-e Successor Wex Loses .nz Domain - Bitcoin.com (Oct 11, 2023)
  25. ↑ 25.0 25.1 25.2 25.3 Alleged BTC-e Operator Alexander Vinnik in US Custody After Immediate Extradition From Greece - Bitcoin.com (Oct 11, 2023)
  26. ↑ 26.0 26.1 Ivars Azuins Was Extradited to the United States, Charged with Wire and Securities Fraud - Finance Magnates (Oct 11, 2023)
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