Pierluigi Paganini July 27, 2017

Greek Police arrested a Russian man and accused him of running the BTC-e Bitcoin exchange to launder more than US$4bn worth of the cryptocurrency.

Greek Police have arrested the Russian national Alexander Vinnik (38) and they accuse the man of running the BTC-e Bitcoin exchange to launder more than US$4bn worth of the cryptocurrency.

The police seized two laptops, two tablets, mobile phones, a router, a camera, and four credit cards.

The authorities reported that since 2011, 7 million Bitcoin went into the BTC-e exchange and 5.5 million withdrawn.

According to the Greek media outlet the Daily Thess, he FBI tracked Alexander Vinnik for more than a year.

“38-year-old Russian Alexander Vinnik enjoyed his vacation with his partner in one of the most expensive hotels in Ouranoupoli in Halkidiki. He had not realized the slightest of the FBI steps he had been watching for months, informing the Greek prosecution authorities of his action.” reported the the Daily Thess. “Yesterday after a surprise operation he was arrested and today he was handcuffed to the prosecutor of the Thessaloniki Court of Appeals in order to start the proceedings for his extradition to the United States.” 

The Greek outlet reported that the Russian embassy in Greece has confirmed the arrest of the crook and is waiting for the extradition to the US.

The Tokyo-based group WizSec who investigated the Mt Gox case revealed that pilfering goes back as far as 2011, the experts are now accusing Vinnik of laundering the proceeds of the Bitcoin theft that caused the shut down of the major exchange.

“Earlier today news broke of an arrest in Greece of a Russian national suspected of running a large-scale money laundering operation focused on Bitcoin. The man has since been publicly identified as Alexander Vinnik, 38, and over $4 billion USD is said to have been trafficked through the operation since 2011.” reads a post published by Wizsec.

“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.”

Wizsec experts reported that after Mt Gox’s “hot wallet” private keys were stolen in 2011, the Bitcoin were transferred to a number of wallets “controlled by Vinnik”.

Below an excerpt from the Wizsec post;

• In September 2011, the MtGox hot wallet private keys were stolen, in a case of a simple copied wallet.dat file. This gave the hacker access to a sizable number of bitcoins immediately, but also were able to spend the incoming trickle of bitcoins deposited to any of the addresses contained.
• Over time, the hacker regularly emptied out whatever coins they could spend using the compromised keys, and sent them to wallet(s) controlled by Vinnik. This went on for long periods, but also had breaks — a prominent second phase of thefts happened later in 2012 and 2013.
• By mid 2013 when the funds spendable from the compromised keys had slowed to a near halt, the thief had taken out about 630,000 BTC from MtGox.

”

The experts at Wizsec discovered some of the stolen keys turning up at BTC-e wallets, these wallets were used to launder “ the crypto currencies stolen in various cyber heists between 2011 and 2012, including Bitcoinia and Bitfloor.

Vinnik transferred some coins back onto Mt Gox because the man used accounts that could be linked to his online identity ‘WME’.”

Earlier July, the trial of Mark Kapeles, the Mt Gox’s boss, started, according to documents filed with the Tokyo District Court, roughly 307,000 BTC were transferred to BTC-e wallets.

In the July 26 court hearing in Thessaloniki, Vinnik denied the accusations, now the final decision on the extradition will be taken by the Greek Minister of Justice.

The experts at Wizsec discovered some of the stolen keys turning up at BTC-e wallets, these wallets were used to launder the crypto currencies stolen in various cyber heists between 2011 and 2012, including Bitcoinia and Bitfloor.

Vinnik transferred some coins back onto Mt Gox because the man used accounts that could be linked to his online identity ‘WME’.”

Earlier July, the trial of Mark Kapeles, the Mt Gox’s boss, started, according to documents filed with the Tokyo District Court, roughly 307,000 BTC were transferred to BTC-e wallets.

In the July 26 court hearing in Thessaloniki, Vinnik denied the accusations, now the final decision on the extradition will be taken by the Greek Minister of Justice.

Pierluigi Paganini

(Security Affairs –  (Vinnik, BTC-e Bitcoin exchange)

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