Greek police arrested Russian citizen Alexander Vinnik this week at the request of US law enforcement over suspicion of money laundering and alleged involvement with the Bitcoin exchange BTC-e, which may have had ties to the infamous Mt Gox theft that took place in 2014.
According to a report from The Verge, the BTC-e exchange was frequented by criminals due to its headquarters being located in Russia, outside of the reach of US and European law enforcement. A recent study from Google revealed that more than 95 percent of ransomware cash-outs took place on the BTC-e exchange. Ransomware is a type of malicious software that renders a user’s computer system unusable until a specific amount of money, in this case, cryptocurrency, is paid to the designer of the software. The Google study revealed that these Ransomware payments have made BTC-e one of the largest exchanges in existence, handling more than 3 percent of all Bitcoin transactions.
The man arrested, Alexander Vinnik, will be charged with money laundering and other financial crimes, some of which are potentially related to proceeds that were originally stolen during the Mt Gox theft in 2014. Vinnik served as an administrator of BTC-e. According to the report, Vinnik held ownership of accounts in which funds from the theft had passed through.
Cryptosecurity analysts have long suspected that Vinnik played a role in the original Mt Gox theft. A report released by Bitcoin security specialists WizSec claimed that Vinnik is the “chief suspect for involvement in the MtGox theft.”
We won’t beat around the bush with it: Vinnik is our chief suspect for involvement in the MtGox theft (or the laundering of the proceeds thereof). This is the result of years of patient work, and these findings were surely independently uncovered by other investigators as well. Everyone who worked on the case have patiently kept quiet while forwarding findings to law enforcement, so as not to tip suspects off and to maximize the chances of arrests.
“Cryptocurrencies such as Bitcoin provide people around the world new and innovative ways of engaging in legitimate commerce,” said U.S. Attorney Colin Stretch, whose office will be prosecuting Vinnik’s case. “As this case demonstrates, however, just as new computer technologies continue to change the way we engage each other and experience the world, so too will criminals subvert these new technologies to serve their own nefarious purposes.”
Tom Ciccotta is a libertarian who writes about economics and higher education for Breitbart News. You can follow him on Twitter @tciccotta or email him at firstname.lastname@example.org