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Former BTC-e Exchange CEO Might Be the Missing Link in Russian Investigation

Originally published on: BTCMANAGER
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September 05, 2018

A cryptocurrency expert and former CEO of a major cryptocurrency exchange is now awaiting extradition in Greece, as new evidence suggests that he might be the missing link connecting Russian money with the 2016 election meddling.

Money-Laundering Accusations

Alexander Vinnik, a Russian citizen who was detained last year after U.S. prosecutors in San Francisco accused him of supervising a digital-currency exchange that helped criminals launder billions of dollars, has become the center of a three-way fight between Russia, France, and the U.S.

Vinnik was in charge of BTC-e, the oldest bitcoin exchange in the market until it was seized by the U.S. government in July 2017 when he was suspected of being involved in some of the largest bitcoin exchange hacks including the Mt. Gox and Bitcoinica incidents.

According to Elliptic, a cryptocurrency analysis firm, Vinnik’s BTC-e exchange handled some Bitcoins which were later traced back to a hacking unit named Fancy Bear.

If the name Fancy Bear sounds familiar, it’s because it’s one of the names given to the Russian military intelligence officers who Mueller separately accused of stealing and releasing Democrats’ emails to sway votes in the 2016 elections.

“There was a strong link between much of the funds allegedly used by the Fancy Bear group and BTC-e,” said Tom Robinson, Elliptic’s chief data officer. “What I can’t say for certain is whether Fancy Bear obtained them directly from BTC-e, or whether there was an intermediary.”

Vinnik’s lawyer, Ilias Spyrliadis, says his client denies any money-laundering accusations coming from the U.S., saying that he had no control over the $9 billion worth of Bitcoin that supposedly ran through BTC-e.

The U.S. Department of Justice says that Vinnik and BTC-e catered to cybercriminals and allowed them to launder criminal proceeds from Bitcoin and other digital currencies and turn them into cash. BTC-e failed to vet customers and allowed money to be moved in and out anonymously.

Vinnik won’t comment on the Russian fraud accusations, Spyrliadis said, adding that his client also denies the French charges including money laundering.

A Three-Way Fight for Extradition

According to Bloomberg, a cooperating Vinnik would open the door to the U.S. gaining strategic information on Russian hackers.

However, Russia strongly opposes Vinnik’s extradition to the U.S., with its foreign ministry saying that the extradition of Vinnik is in clear violation of the basics of international law.

Russia also lashed out at France, following a Greek regional court’s approval of Vinnik extradition to France.

“It is obvious that Russia cannot leave these actions unanswered,” its Foreign Ministry warned in the statement.

As the three countries are fighting to extradite Vinnik, Greece seems to be in the worst position, as the majority of the pressure is aimed at its courts.

The country’s Supreme Court is set to rule on the extradition requests from both France and Russia. That puts the decision into the hands of Greece’s new justice minister.

Before coming to any resolution on extradition, the Greek justice ministry will also need to examine a political asylum request by Vinnik. According to a justice ministry spokeswoman, the minister declined to comment on the case as he has just assumed his post.

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