BTC-e’s Vinnik Case Drags on as New Accusations Continue Emerging

On July 25, 2019, United States prosecutors filed a criticism in opposition to the defunct cryptocurrency change BTC-e and its alleged former operator, Alexander Vinnik. The indictment was filed practically 24 months after Vinnik was arrested in Greece whereas on vacation along with his household and has adopted quite a few extradition requests from the U.S., France and Russia which have seen Vinnik’s case seem to morph from an investigation into alleged cash laundering to a tug-of-war over a strategic intelligence asset between the U.S. and Russia.

Vinnik’s arrest in July 2017

On July 26, 2017, the U.S. Division of Justice (DOJ) introduced that Vinnik had been arrested two days prior in Greece for allegedly collaborating within the operations of the shadowy cryptocurrency change BTC-e. The Russian citizen, who’s now 39 years outdated, was described because the mastermind behind a global money-laundering scheme that had processed over $four billion price of capital flows, together with roughly 300,000 Bitcoins (BTC) that had been stolen from now-defunct crypto change Mt.Gox. 

In response to BTC-e’s web site, the change was situated in Bulgaria, although it was topic to the legal guidelines of Cyprus, and was based mostly in each Cyprus and the Seychelles. On the time of Vinnik’s arrest, BTC-e was described as “one of many world’s largest and most generally used digital foreign money exchanges.”

U.S. requests Vinnik’s extradition

The DOJ produced a 21-count indictment for the operation of an “unlicensed cash service enterprise, cash laundering, and associated crimes,” with Chief Don Fort of the U.S. Inner Income Service’s Prison Investigation Division alleging that Vinnik additionally “stole identities, facilitated drug trafficking, and helped to launder prison proceeds from syndicates all over the world.” 

In response to the indictment, because the change’s inception in 2011, “Vinnik and others developed a buyer base for BTC-e that was closely reliant on criminals, together with by not requiring customers to validate their identification, obscuring and anonymizing transactions and supply of funds, and by missing any anti-money laundering processes.”

The Monetary Crimes Enforcement Community (FinCEN) assessed a $110 million civil cash penalty in opposition to BTC-e for the alleged willful violation of U.S. Anti-Cash Laundering (AML) legal guidelines. FinCEN additionally assessed a $12 million fantastic in opposition to Vinnik for his function within the firm’s operations. Nonetheless, any jail sentence can be imposed solely “after consideration of the U.S. Sentencing Pointers and the federal statute governing the imposition of a sentence.”

In an interview with RT throughout September 2017, Vinnik said that he didn’t think about himself to be responsible, rejecting accusations of being BTC-e’s operator. As a substitute, he claimed to have labored for the change for a brief time frame. The interview contradicted earlier assertions made by BTC-e that Vinnik “was by no means the pinnacle or the worker” of its service.

Russia requests Vinnik’s extradition

On Sept. 19, 2017, roughly two weeks from the date set for his court docket listening to in Thessaloniki, Greece to find out whether or not Vinnik can be extradited to the U.S., RT reported that Russia had despatched a competing extradition request for the accused BTC-e operator. Throughout the identical day, Vinnik agreed to the Russian extradition request, with one among his attorneys, Timofey Musatov, stating: 

“Alexander Vinnik was taken out of jail to the prosecutor of Thessaloniki, who launched him to the demand for his extradition to the Russian Federation for the crimes dedicated there. Alexander Vinnik agreed with this request, replied that he voluntarily needs to be extradited to Russia.”

The Russian request would see Vinnik face costs for a separate fraud case price roughly 667,000 Russian rubles (roughly $11,000). Against this, if extradited to California and convicted, Vinnik would withstand 55 years in jail within the U.S.

On Oct. 2, 2017, Vinnik attended a listening to in Thessaloniki to contemplate the U.S. extradition request. On Oct. four, the Greek court docket dominated in favor of Vinnik’s extradition to the U.S. On the identical day, Vinnik’s attorneys moved to enchantment the choice. Two days later, Russia’s International Ministry issued a press release criticizing the ruling. It described the decision as “unjust and a violation of worldwide legislation,” asserting that authorized precedent ought to point out that the Russian extradition request ought to “take precedence as Mr. Vinnik is a citizen of Russia.”

On Oct. 10, 2017, Russian Civic Chamber Deputy Secretary Sergey Ordzhonikidze asserted that the court docket’s resolution violated the Russia-Greece authorized help settlement. He said, “If a Greek court docket guidelines that a Russian nationwide is responsible, the problem have to be solved between Russia and Greece.” The next day, the court docket in Thessaloniki additionally dominated in favor of the Russian extradition request. 

On Dec. 13, 2017, the Greek Supreme Court docket rejected Vinnik’s enchantment to be extradited to Russia, delegating the accountability to Greece’s Ministry of Justice, Transparency and Human Rights. Throughout January 2018, Vinnik’s lawyer, Musatov, indicated that Vinnik would enchantment the ruling with the European Court docket of Human Rights.

Greek police reveal plot to assassinate Vinnik

Throughout Could 2018, Russian media reported that Greek police had uncovered a plan to kill Vinnik, with the plot purportedly tied to Russian criminals who didn’t need Vinnik to return house to Russia. In response to an nameless supply:

“Greek legislation enforcement acquired intelligence on plans to arrange an assassination by way of poisoning with the assistance of criminals. […] All of it started after Vinnik’s extradition to the USA was blocked. There [are] people who find themselves extraordinarily eager about him not coming to Russia. The assassination was ordered by some unknown individual from Russia.” 

In response to the plot, Vinnik was restricted from receiving any meals, water or issues from individuals unknown to him, and along with being supplied enhanced safety, he was prevented from coming into contact with different inmates. Greek police had been reportedly made conscious of the deliberate assassination firstly of 2018. Nonetheless, the plot was not made public for a number of months to help investigators. 

Throughout the identical month, Russia opened a prison inquiry into confessions penned by Vinnik, with sources allegedly telling Russian media outlet Sputnik that Vinnik wrote 4 letters to the Russian Inside Ministry between March and Could 2018, wherein he confessed to “crimes associated to monetary applied sciences” and that he was prepared to present testimony and help to Russia in associated investigations. In response to an nameless supply cited by the Russian media company:

“Vinnik wrote a number of confession letters to Russian legislation enforcement businesses, pleading responsible to crimes associated to monetary applied sciences. The Russian Inside Ministry’s investigative division has opened a prison probe into a number of unknowns.”

On Could 15, 2018, Russian media reported that U.S. intelligence companies had tried to steer Vinnik to simply accept a plea discount that might see him obtain a diminished jail sentence in change for admitting guilt and agreeing to extradition to the U.S. Vinnik reportedly rejected the supply.

Russia recordsdata new extradition request

One week later, the Russian Inside Ministry positioned Vinnik on the worldwide needed record for embezzling 750 million Russian rubles (roughly $11.5 million). The brand new prison case was launched on Could 21, 2018, with the Russian Prosecutor Common’s Workplace submitting a brand new extradition request with Greece’s Ministry of Justice shortly thereafter.

On Could 26, 2018, Vinnik’s lawyer, Musatov, tied the assassination plot to Vinnik’s data of Russian prison exercise and Vinnik’s willingness to help Russia in its investigations. He said: 

“Alexander has informed ‘I do know an excessive amount of and lots of people in Russia can be embarrassed if I’m again house.’ It’s possible that this tried homicide has been ready considering the chance of his return to the nation.”

France recordsdata extradition request for Vinnik

Throughout June 2018, Vinnik’s case was additional sophisticated by an extradition request filed by France. In response to the Related Press, the request sought to trial Vinnik for alleged crimes like cash laundering, extortion, cybercrime and cash laundering and allegedly defrauding French residents between 2016 and 2018. 

One other one among Vinnik’s attorneys, Ilias Spyrliadis, emphasised that the “authorized challenge that can require our consideration is which [extradition request] may have precedence, as they’re based mostly on two worldwide arrest warrants and one European arrest warrant.” Whereas the Greece’s Ministry of Justice would have the ultimate say concerning the U.S. and Russian extradition requests, Greece’s Supreme Court docket would have remaining jurisdiction over the French request because of it being a European warrant.

Throughout the first week of July 2018, Musatov claimed that the Thessaloniki court docket had tried to find out whether or not Vinnik can be extradited behind closed doorways. Musatov informed Russian media that the court docket was trying to extradite Vinnik via an expedited process. On July 13, 2018, the Thessaloniki court docket dominated in favor of the French request to take custody of the accused BTC-e operator. Vinnik instantly appealed the ruling, which might be heard by Greece’s Supreme Court docket later within the 12 months.

Mueller investigation ties BTC-e to Russian hackers

Throughout July 2018, the stakes surrounding Vinnik’s case appeared to escalate, with the DOJ particular counsel investigating alleged Russian meddling through the 2016 U.S. presidential election, Robert Mueller, alleging that Russian focusing on of the Democratic Nationwide Committee had funded its operation utilizing capital that had flowed via BTC-e.

On July 24, blockchain analytics agency Elliptic printed a report asserting that funds had flowed via BTC-e by way of “Fancy Bear,” a cyber-espionage group reportedly related to prime Russian intelligence company, the Essential Directorate of the Common Employees of the Armed Forces of the Russian Federation (GRU). Elliptic’s chief knowledge officer, Tom Robinson, said:

“There was a robust hyperlink between a lot of the funds allegedly utilized by the Fancy Bear group and BTC-e. What I can’t say for sure is whether or not Fancy Bear obtained them instantly from BTC-e, or whether or not there was an middleman.”

The hyperlink between Fancy Bear and BTC-e was made public throughout 2017, with Elliptic figuring out that Fancy Pockets managed a pockets containing round $100,000 that had transferred funds to a BTC-e pockets.

Greek courts rule in favor of recent Russian extradition request, launches prison probe 

On July 30, 2018, Russian media reported that the Thessaloniki court docket had dominated in favor of Vinnik being extradited to Russia, following the consideration of a brand new request filed in Could of that 12 months. Greece’s Supreme Court docket additionally supported the Russian extradition request in a preliminary listening to on Sep. four. Nonetheless, the court docket was scheduled to overview its ruling in favor of the French extradition request inside two weeks of the ruling.

In the beginning of October 2018, the prosecutor’s workplace of the town of Thessaloniki launched a prison investigation into Vinnik. Following a preliminary investigation, the court docket was set to formally decide whether or not a prison case can be pursued. Vinnik’s lawyer, Musatov, said: “In accordance with the Greek laws, a preliminary investigation will happen, adopted by a choice whether or not a prison case needs to be initiated.”

Vinnik goes on starvation strike

On Nov. 19, 2018, one other lawyer of Vinnik, Zoe Konstantopoulou, accused the Greek Supreme Court docket of “grossly violating” Vinnik’s rights, asserting that Vinnik was not supplied with an official translation of the documentation pertaining to the French extradition request previous to the court docket’s overview of the Thessaloniki court docket’s resolution to extradite Vinnik to France that had been scheduled for a similar day. Konstantopoulou added the paperwork acquired by Vinnik didn’t have official seals or signatures.

Lower than one week later, Vinnik’s lawyer, Musatov, introduced that Vinnik had gone on a starvation strike to protest the Greek Supreme Court docket’s proceedings, following the court docket’s resolution to postpone its overview of the Thessaloniki court docket’s ruling till Nov. 29, 2018. Musatov said:

“Alexander Vinnik determined to go on a starvation strike as a result of he realized he was stripped of the correct for protection in France and, consequently, in Greece. […] If there isn’t a honest trial, he’ll inevitably be deported to the USA via France, the place he’ll get one thing near a life sentence, which equals demise.”

Greek Supreme Court docket upholds French extradition request

On Dec. 19, 2018, the Supreme Court docket of Greece upheld the Thessaloniki court docket’s ruling in favor of Vinnik’s extradition to France. The conflicting rulings once more relegated the accountability to find out Vinnik’s destiny to Greece’s Ministry of Justice. Throughout the listening to, Vinnik introduced that he’ll solely cease his starvation strike if extradited to Russia.

On Feb. 21, 2019, Russian human rights ombudswoman Tatiana Moskalkova introduced that Vinnik had stopped his 80-day starvation strike. 4 days later, Moskalkova petitioned the Greek Ministry of Justice to request Vinnik’s extradition to Russia. The ombudswoman estimated Vinnik had misplaced 30% of his physique weight, describing him as being “on the verge of demise.” She wrote:

“I enchantment to you, Mr. Minister, with a request to extradite Alexander Vinnik, a citizen of the Russian Federation, in opposition to whom prison proceedings have been instituted on the territory of the Russian Federation, in tough marital standing and state of well being, to the Russian Federation for additional investigation into his case.” 

Moskalkova additionally wrote to the president of the Worldwide Committee of the Crimson Cross, Peter Maurer, Greek Minister of Well being Andreas Xanthos, and Greek ombudsman Andreas Pottakis, requesting that Vinnik be supplied with medical help after ceasing his starvation strike. The Ombudswoman asserted that Vinnik’s spouse was critically in poor health after being recognized with mind most cancers, with Vinnik’s imprisonment threatening to render two minor kids orphans.

On Feb. 28, 2019, Vinnik was admitted to a specialist clinic for therapy following his starvation strike. At a press convention, Vinnik’s lawyer, Konstantopoulou, said that Vinnik was “a detainee with out costs, with no sentence and with out rights.” Konstantopoulou screened a video exhibiting a gaunt-looking Vinnik, whom she described as being in an “exceptionally important state of well being.”

“Alexander Vinnik has been on this process of torturous ready for the previous 19 months […] with out the justice minister answering him on whether or not he’ll hear him and what his resolution shall be.”

Russian commissioner for human rights petitions U.N. for Vinnik’s launch

On March 5, 2019, ombudswoman Moskalkova met with United Nations Excessive Commissioner for Human Rights Michelle Bachelet to request her help in looking for Vinnik’s extradition again to Russia. Emphasizing the deteriorating well being of each Vinnik and his spouse, Moskalkova said: “Given the distinctive humanitarian state of affairs, I’d ask for assist to extradite him to Russia so that he’s nearer to his household.”

Two weeks later, Vinnik lodged an enchantment with a court docket within the Greek metropolis of Piraeus requesting his launch or extradition to Russia based mostly on humanitarian causes. Because of the situation of his well being, Vinnik was transported to the court docket by way of ambulance. Vinnik’s attorneys additionally criticized the Greek judicial system for detaining him for greater than the utmost 18 months permitted for pretrial detention. On April 11, 2019, the Piraeus court docket rejected the request. On July 11, 2019, the Thessaloniki court docket prolonged the interval of Vinnik’s detention by six months.

$100 million civil criticism filed within the U.S. in opposition to BTC-e and Vinnik

On July 25, 2019, the U.S. prosecutors filed a criticism within the Northern District of California, looking for to recuperate civil cash penalties for violations of the Financial institution Secrecy Act. The court docket asserted that it workouts jurisdiction because of BTC-e and Vinnik transacting throughout the Northern District of California. 

The court docket is looking for to recuperate civil cash penalties of $12 million from Vinnik and $88.6 million from BTC-e. Vinnik faces 17 counts of cash laundering and two counts of partaking in illegal financial transactions, whereas each he and BTC-e every face one rely of conspiracy to commit cash laundering and one rely of working an illegal cash companies enterprise.

The indictment asserts that BTC-e “made no effort to register with FinCEN” or “preserve any parts of an AML program” regardless of greater than 21,000 BTC transactions price not less than $296 million being carried out by U.S.-based customers on the change.

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