BTC-e, which has been offline since Tuesday evening, is now one of the biggest cryptocurrency exchanges, processing more than 3% of the total bitcoin transactions. However, behind the exchange lay a multibillion dollar money laundering operation that shielded the nefarious activities of a variety of criminals starting from drug dealers to computer hackers.
Perhaps the most famous cyber-attack Vinnik is accused of profiting from is the raid on Mt. Gox, then the world's biggest Bitcoin exchange, which collapsed in 2014 after huge sums of crypto-currency were stolen from its customers.
Vinnik was charged with 17 counts of money laundering and two counts of engaging in unlawful monetary transactions.
The US Attorney's Office in California's northern district said the indictment covered "operating an unlicensed money service business, money laundering and related crimes." Allegedly Vinnik conducted substantial business in the United States without following appropriate protocols to protect against money laundering and other crimes.
Besides, investigators found that Alexander Vinnik is linked to thefts from Bitcoinica and Bitfloor in 2011 and 2012. In practice, however, BTC-E did not require anything from customers opening a new account, the indictment said.
The scale of BTC-e was huge.
Users began scrutinizing the possibility that the man arrested a day before in Thessaloniki could be somehow connected to the problems at the BTC-e exchange soon after the first reports. But the open nature of its shared transaction ledger, the blockchain, often makes it possible to do forensic analysis of financial flows on the Bitcoin network.
The BTC-e deposits were made to several different BTC-e accounts.
He stated, that another administrator of BTC-e probably has access to the exchange, and now, most likely tries to solve the situation.
Prosecutors say that Vinnik tried to hide his activities but links with the proceeds of the Mt. Gox debacle exist. The perpetrators of a ransomware program called CryptoWall used BTC-e to cash out hundreds of thousands of dollars worth of Bitcoin. Regardless of the region it served, FinCEN maintains that BTC-e was required to comply with U.S. AML laws, regulations, and practices. Whether or not the indicted Alexander Vinnik has a majority, or minority or no position in the BTC-e exchange is as yet unknown and is pure conjecture. The most recent tweet, written in Russian on Wednesday, said that the site expected to go back online in 5 to 10 days.