One of the largest Bitcoin exchanges was taken down last week by the US, the story made waves all over the internet and the details are now coming out on what went wrong for BTC-e.
On Thursday, the US Department of Justice charged Alexander Vinnik – thought to be one of the Administrators at the Bitcoin Exchange BTC-e, charging him with money laundering and a cascade of other crimes involving bitcoin. He is also being associated with the hacking of and stealing from Mt Gox exchange, which was one of the biggest exchanges back in 2013, handling over more than 70% of all Bitcoin trades.
The Gox incident in 2013, where 800K Bitcoins (approximating to $390 million at the time) were stolen from the exchange, it is said that some 500K of the stolen bitcoins were funneled through BTC-e in a bid to make them spendable, to turn it into white money. The wallets these coins were passing through are being associated to Vinnik.
It is said that some 500K of the stolen bitcoins were funneled through BTC-e in a bid to make them spendable
The alleged charges against Vinnik and by association, the Bitcoin Exchange BTC-e, tell us that the exchange was involved in extensive money laundering activity, and was also involved in transmitting and receiving funds from the infamous Ransomware attacks. Vinnik was arrested in Greece while on vacation, and is currently in the process of being extradited from Greece to the US. BTC-e meanwhile has been siezed by the US Department of Justice as can be seen by the notice on the website itself, and all associated funds and coins are currently seized.
Bitcoin BTC-e Exchange
BTC-e, being one of the largest exchanges around was being used by hundreds of thousands of users across the globe. However, recent dark market crackdowns suggest that law enforcement officials are taking an aggressive stance against cryptocurrency related thefts and incidents. This means, effectively, that the assets seized will not be returned to the users. There is a petition going on Change.org where the users are requesting the US to cooperate with the users. There is also a statement out from BTC-e, in Russian, but the crux is they are hoping they get access to the exchange so that they can help the users get their money, or part of it back.
It is suggested meanwhile, to keep your coins safely in wallets and to stay away from exchanges until you know who you are working with and what do they stand for.