
Officials arrest suspect in $4 billion Bitcoin money laundering scheme - cszerzo
https://arstechnica.com/tech-policy/2017/07/officials-arrest-suspect-in-4-billion-bitcoin-money-laundering-scheme/
======
dang
Related discussion at
[https://news.ycombinator.com/item?id=14858495](https://news.ycombinator.com/item?id=14858495).

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rcarrigan87
"Conventional financial institutions comply with anti-money laundering
regulations that make it difficult for criminal organizations to use their
payment infrastructure."

Yes, yes of course. Just like how HSBC physically expanded their teller
windows to make it easy for Mexican drug cartels to make cash deposits.

[https://www.theguardian.com/business/2012/jul/17/hsbc-
execut...](https://www.theguardian.com/business/2012/jul/17/hsbc-executive-
resigns-senate)

~~~
samfriedman
>Just like how HSBC physically expanded their teller windows to make it easy
for Mexican drug cartels to make cash deposits.

I can't seem to find any mention of this in the linked article?

~~~
UseStrict
OP didn't link to the right article:
[https://www.theguardian.com/business/2012/dec/14/hsbc-
money-...](https://www.theguardian.com/business/2012/dec/14/hsbc-money-
laundering-fine-management)

~~~
rcarrigan87
My bad, thank you!

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sjs382
The timing of this and the bitmixer.io [0] voluntary shutdown a few days ago
is a bit strange.

0:
[https://news.ycombinator.com/item?id=14843373](https://news.ycombinator.com/item?id=14843373)

~~~
joosters
Yes, the takedown of AlphaBay and Hansa darkmarkets, the bitmixer.io shutdown,
the arrest of this guy and the BTC-e exchange 'down for maintenance' are all
related, I would guess.

The person arrested is allegedly named Alexander Vinnik, according to
[https://thebitcoinnews.com/alexander-vinnik-admin-btc-e-
arre...](https://thebitcoinnews.com/alexander-vinnik-admin-btc-e-arrested-
greece-4-billion-bitcoin-money-laundering/) \- but no idea where they got that
name from.

~~~
r721
"Alexander Vinnik" comes from updated Reuters article (with photo):

[http://www.reuters.com/article/us-greece-russia-arrest-
idUSK...](http://www.reuters.com/article/us-greece-russia-arrest-
idUSKBN1AB1OP)

~~~
nannal
Worth noting that BTC-e owner's name was Alexander and he was supposedly
Russian.

~~~
nannal
[https://twitter.com/ReutersTech/status/890232366320553984](https://twitter.com/ReutersTech/status/890232366320553984)

It's confirmed

------
celticninja
They should at least say he is the owner of btc-e.com to give it context. The
site was used by cyber criminals but it was also a legit operation, much like
HSBC.

~~~
joosters
Do you know for sure that this is related to btc-e ? It's the most likely
suspect (it is currently 'down for maintenance' and it was started in 2011,
the same year mentioned in the AP story), but I can't find any concrete
evidence of who the owners of btc-e actually were.

The site has always hidden its origins, and the only information I could find
was that the founders' names are supposedly Aleksey and Alexander, based on
[https://www.coindesk.com/btc-e-recent-issues-caused-surge-
us...](https://www.coindesk.com/btc-e-recent-issues-caused-surge-users/)

~~~
r721
Confirmed by Reuters now:

>BREAKING: Russian man arrested in Greece connected to BTC-e cryptocurrency
exchange - sources

[https://twitter.com/ReutersTech/status/890232366320553984](https://twitter.com/ReutersTech/status/890232366320553984)

UPD

>A Russian national arrested in Greece on Wednesday on suspicion of laundering
criminal funds by switching them into bitcoins is a key person behind the
BTC-e crypto-currency exchange, two sources close to the exchange told
Reuters.

[http://www.reuters.com/article/us-greece-russia-arrest-
bitco...](http://www.reuters.com/article/us-greece-russia-arrest-bitcoin-
idUSKBN1AB27W)

~~~
hackermailman
BTC-E was run out of Bulgaria in the beginning, surprised this guy didn't
learn from the dozens of arrests of Russian credit card processors who
violated US gambling laws and went on vacation/lured to meetings into
extradition areas like Greece or Turkey. This arrest was apparently over
laundering Ransomware coins [http://www.newsbtc.com/2017/07/26/btc-e-
responsible-launderi...](http://www.newsbtc.com/2017/07/26/btc-e-responsible-
laundering-95-ransomware-proceeds/)

BTC-E was famous for it's one word replies to technical support tickets like
"works" and "try" when he wanted you to try something again, and of course the
troll box on the front page that was a never ending source of problems like
naive users being fished for information on their account details or tricked
into pumping up the value of some altcoin.

------
grandalf
Money "laundering" is used to hide transactions from view so that the parties
involved in the transaction can avoid scrutiny or legal consequences for their
actions.

The DoD accounting scandal is an example of the US Government effectively
laundering massive sums of money to evade accountability:

[http://www.cnn.com/2016/08/23/politics/us-army-audit-
account...](http://www.cnn.com/2016/08/23/politics/us-army-audit-accounting-
errors/index.html)

Also, governments use other tactics that are illegal in the private sector
extensively, such as fudging their accounting to hide market volatility.

[https://www.sec.gov/news/testimony/2006/ts061506cc.htm](https://www.sec.gov/news/testimony/2006/ts061506cc.htm)

Governments care about private sector money laundering mainly because it can
be used to conceal tax evasion. If drug lords and human traffickers simply
paid their fair share of taxes chances are money laundering would not be on
governments' radar.

~~~
MichaelGG
What? Laundering often ends up with them paying taxes - for instance by
putting tons of cash through a laundromat. Taxes then paid, the criminals are
free to spend it as they wish. In fact, that's like, sort of the entire point
of it.

Money laundering (as an offence) is just a crude tool to make prosecutor's
lives far, far, easier.

~~~
mistermann
I suspect this is what's happening in Canada - billions of dollars of "under
the radar" money is coming into Canada to buy real estate, but the
construction & trades jobs it creates and resulting boost it provides to GDP
makes the government happy to turn a blind eye to the source of this money or
that they make no direct taxation revenue (and refuse to audit certain people
who are obviously breaking the law).

------
ryanlol
Media outlets claiming that the arrested guy is also a suspect for MtGox
theft.
[https://twitter.com/coindesk/status/890256080965599232](https://twitter.com/coindesk/status/890256080965599232)

I've personally looked at BTC-e's trade histories and am not inclined to
believe this. BTC-e's weak security track record also doesn't exactly support
this theory either.

EDIT: I guess wizsec came through [http://blog.wizsec.jp/2017/07/breaking-
open-mtgox-1.html](http://blog.wizsec.jp/2017/07/breaking-open-mtgox-1.html)

>To be clear, this investigation turned up evidence to identify Vinnik not as
a hacker/thief but as a money launderer; his arrest news also suggests this is
what he is being suspected for. He may have merely bought cheap coins from
thieves and offered a laundering service. He is, however, a crucial piece of
the puzzle, as he will have likely known who he was dealing with and
laundering for, and so represents a major breakthrough in the case. We assume
that law enforcement will now be taking the appropriate next steps to pursue
all the remaining angles and hopefully identify the other individuals involved
as well.

------
nubela
This is the inherent problem with Bitcoin. It's just not anonymous! Imagine a
dollar that has a history of every transaction written on it. Monero is the
coin you want.

~~~
placeybordeaux
Monero, dash and zcash are the big three that have anonymity right? Any other
big coins in the space?

~~~
vocatus_gate
Unfortunately Monero is the only one doing it right: all transactions are
enforced private by default. Dash and zcash offer confidential transactions as
an opt-in feature, but so few people use them that it draws additional
scrutiny when they do.

At this point in time it's "Solo Monero" for privacy.

~~~
placeybordeaux
Private by default, but the default of 2 foreign tx seems to be largely what
people use. It'd be fun to trace it and start to show the probability that a
given tx traces to a given public key. I imagine that the older tx have closer
and closer to a uniform probability across older addresses. Might make for a
good data vis project.

~~~
vocatus_gate
Concurred. I hope they increase the default mandatory mixin level.

~~~
placeybordeaux
Why do you assume that the default is too low? There are obvious tradeoffs
here, some analysis would do the coin good.

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t3ra
[http://blog.wizsec.jp/2017/07/breaking-open-
mtgox-1.html](http://blog.wizsec.jp/2017/07/breaking-open-mtgox-1.html)

He is guy who has been identified in MtGox hacking

------
mads
Weird that [https://www.xbtce.com](https://www.xbtce.com) is still running.
Seems there are very few trades (3 in the last hour) being made but the "order
book" is flashing away like nothing is wrong. Chat is also dead...

~~~
jameskegel
Lots of exchanges get caught eventually doing what your posts suggest BTCe is
doing

------
Murkin
So they arrested him for running BTC-E and claim the exchange is a money
laundering scheme?

~~~
vkou
Not necessarilly. It could be that _some_ of BTC-E's activities/his non BTC-E
activities may have been money laundering.

For example, if you run a USD-BTC exchange, and I mail you a suitcase full of
money, then withdraw it as BTC, you would almost certainly be aiding money
laundering.

