In one of the earliest, biggest, and most widely publicized bitcoin robberies in the world, in the case of the collapsed cryptocurrency exchange Mt. Gox, the United States charged two Russian nationals.
A criminal complaint was filed by the Department of Justice to investigate the hacking of the Bitcoin exchange carried out by Alexey Bilyuchenko, 43, and Aleksandr Verner, 29. They laundered 647,000 bitcoins, worth $17.2 billion today, thanks to their conspiracy.
A second charge against Bilyuchenko is alleged to be a conspiracy to operate BTC-e, the "illicit exchange," from 2011 to 2017, in conjunction with Alexander Vinnik. Vinnik was extradited from Greece to the United States for a criminal investigation into BTC-e and money laundering charges against him in 2022. This was for his role in the operation of the exchange.
This event proved to be one of the earliest indications that cryptocurrency exchanges which allow users to convert their digital assets into traditional cash via conversions of their digital assets were vulnerable to cybercriminals in the first place as a result of this event. There have been many thefts in the industry since then.
In an attempt to contact Bilyuchenko or Verner to find their contact details, Reuters was unable to do so. Neither of them could be found, and it was unclear where they were located.
It is also alleged that Bilyuchenko conspired with Russian national Alexander Vinnik between 2011 and 2017 to operate the unlicensed BTC-e Bitcoin trading platform that he set up with Vinnik.
As one of Bilyuchenko's closest associates, he was arrested in Greece in 2017 and convicted of money laundering in France three years later. This made him a key associate of Alex Vinnik, an internationally recognized cybercrime kingpin. Now, Bilyuchenko is facing charges in California for operating BTC-e, an exchange that has since shut down out of business but has been accused by the Department of Justice of catering to cybercriminals.
Additionally, it is alleged that the pair is also suspected of using an advertising contract with Bitcoin brokerage service New York Bitcoin Broker to launder more of the funds. To accomplish this, the latter must request the former to send wire transfers into offshore accounts, under the names of shell companies, in their names.
There has been a lot of talk about Vinnik since he was arrested in Greece several years ago. He now finds himself in California awaiting his trial on charges that he ran a crypto exchange called BTC-e. He was arrested in France for money laundering charges. A threat known as Locky was also developed by him and has been credited with being a key factor in its development.
If they are based in Russia, Bilyuchenko and Verner are unlikely to face trial at this time, since it is unclear where they are currently living.
BTC-e funds are being moved on the blockchain as reported by CoinDesk in March. There was a transaction in November 2022 between a crypto wallet and BTC-e's wallet involving 3,299 bitcoin, which was the first time a transaction had been sent from the exchange wallet since 2017. Two unidentified recipients received over 10,000 bitcoins six years ago from a Chinese company.
There is no clarification if Bilyuchenko and Verner were among those beneficiaries in the DOJ filing.
Before it was taken down, Bitcoin-e was believed to have helped cash out 95% of the ransomware payments before being taken down. It was used by cybercriminals in over 100 countries to facilitate the transfer, laundering, and storage of criminal proceeds.
There are currently over a million users using BTC-E, who handle billions of dollars worth of Bitcoin deposits and withdrawals, corresponding to millions of bitcoins.
Mt Gox's longtime chief operating officer Mark Karpeles was convicted in Japan in 2019 of falsifying Mt Gox's financial data, but he was acquitted of embezzlement charges by a Japanese court as a result of the conviction. A suspension of his two-year and six-month sentence was imposed.
Two Russian citizens have been charged for their involvement in the Mt. Gox hack, which serves as a significant landmark in the ongoing quest for redress for the victims of this well-known cyberattack, which has been deemed a severe cyberattack in the past few years. Law enforcement agencies are tirelessly working to investigate and prosecute those who are responsible for large-scale cryptocurrency breaches, and the indictment is a testament to the dedication of these agencies.
Throughout the legal process, it will be important to keep track of the results and assess the potential costs and benefits for the global fight against cybercrime as the process unfolds. Due to this case, the need for robust cybersecurity measures and international cooperation has been highlighted to protect the integrity of digital assets. This will maintain public trust in crypto assets in general.
