Russian ex-con arrives in US to face crypto laundering charges

No peace for the wicked – the old saying appears apt in the case of computer wiz Alexander Vinnik, who has been extradited to the US not long after serving a jail term in France for money laundering.

Federal prosecutors in San Francisco have been after Vinnik, 42, since 2017, when he was accused of masterminding a bogus cryptocurrency platform known as BTC-e, which allegedly operated as a front to launder $4 billion in illicit gains – much of it linked to cybercriminal activity.

“The indictment alleges BTC-e facilitated transactions for cybercriminals worldwide and received criminal proceeds from numerous computer intrusions and hacking incidents, ransomware scams, identity theft schemes, corrupt public officials, and narcotics distribution rings,” said the US Department of Justice (DoJ), announcing Vinnik’s extradition on August 5.

The DoJ added that BTC-e was also used to abet crimes ranging from computer hacking and identity theft to public corruption and drug trafficking.

“After more than five years of litigation, Russian national Alexander Vinnik was extradited to the United States yesterday to be held accountable for operating BTC-e, a criminal cryptocurrency exchange, which laundered more than $4 billion of criminal proceeds,” confirmed Assistant Attorney General Kenneth Polite Jr.

Polite commended the government in Greece for facilitating the extradition, by having Vinnik brought there before transfering him to the US. The Russian computer expert had been recently released on parole from prison in Paris, where he had been sentenced to five years in 2020 for money laundering.

Crook facing second sentence

Now Vinnik stands to face another stretch in jail if found guilty of the charges in California, which include one count of running an unlicensed money service business, and 17 other laundering raps.

Despite doing “substantial business” on US soil, BTC-e was never registered with the Treasury, nor did it operate the required due diligence to weed out money laundering and other illicit activity. According to the DoJ, this allowed its users “to trade in bitcoin with high levels of anonymity” and Vinnik to cultivate “a customer base heavily reliant on criminal activity.”

Vinnik was originally apprehended while holidaying in Greece in 2017 before being sent to France to face the separate money laundering charges there. A human rights group in Russia tried unsuccessfully to have him repatriated in 2019, citing his wife’s terminal illness and two children.

Now the FBI, the criminal investigations wing of the IRS, the Department of Homeland Security, and the US Secret Service will finally have a chance to see their years-long probe into Vinnik vindicated if he is found guilty.

At the time of writing, no date for Vinnik’s criminal trial has been set and civil charges against him are also pending. If convicted of the latter, the Russian ex-convict and the exchange he allegedly masterminded face fines of more than $100 million.