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BTC-e and its founder charged in 21-count indictment over hack of Mt. Gox

458 points by ryanlol 9y ago

agorabinary 9y ago
>The takedown of this large virtual currency exchange I haven't kept up to date on exchange volume. Was btc-e still a popular exchange (up until this takedown of course)?
- ryanlol 9y ago
  https://data.bitcoinity.org/markets/volume/30d?c=e&t=b https://data.bitcoinity.org/markets/volume/30d?c=e&t=b BTC-e was still pretty big.
  - subroutine 9y ago
    When they say that "Bitcoin Exchange Alleged to Have Received Deposits Valued at Over $4 Billion", does that really mean $4 Billion USD? How is that exchange value established?
    - thesmok 9y ago
      As I remember, all exchange transactions on btc-e were public, so anyone could sum/verify the amount of money going through exchange. I've used btc-e actively in 2013, earning good money on trading BTC to USD and back during the period of rapid price growth.
ryanlol 9y ago
There's been no mentions of coin seizures anywhere as far as I can tell. Usually you'd see some boasting about that. Perhaps these guys were actually smart about their cold storage?
- JohnJamesRambo 9y ago
  He wasn't too smart, he redeposited some of the coins in Mt. Gox and that's how they identified him!
- artursapek 9y ago
  https://xkcd.com/538/ https://xkcd.com/538/
  - brokenmachine 9y ago
    I love xkcd, but I'm getting sick of seeing that one.
    - ccrush 9y ago
      Good ol' 538.
    - artursapek 9y ago
      It applies all too often to comments made around here
- benwilber0 9y ago
  Page 6 article 20 says they operated their servers in the United States. If that's true then I'm pretty sure they've already been seized. They were probably on aws
  - quickthrower2 9y ago
    That could just be the web farm. The clearing might be done from Russia.
  - ryanlol 9y ago
    That shouldn't give the feds any more than their hotwallet.
  - idonotknowwhy 9y ago
    In which case, maybe they also have a copy of the private keys in Russia, and can move the funds somewhere safe.
gruez 9y ago
>Russian National And Bitcoin Exchange So nothing will happen to the site or its owner, other than maybe they won't be able to transfer out USD.
- ryanlol 9y ago
  They've already had the Greek cops go pick up the said Russian National.
- wgjordan 9y ago
  >So nothing will happen to the site or its owner "Defendant Alexander Vinnik Was Arrested in Greece to Face Charges in the United States; Bitcoin Exchange Alleged to Have Received Deposits Valued at Over $4 Billion" - article subtitle
  - deleted 9y ago
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- sillysaurus3 9y ago
  Even though you were mistaken in this case, it's only because Vinnik stepped out of Russia. If he had stayed, he'd have been mostly untouchable. No extradition treaty exists between Russia and the US; not so for Greece.
mirimir 9y ago
Interesting. Bitcoin stolen from Sheep Marketplace also ended up in a BTC-E account. https://www.reddit.com/r/SheepMarketplace/comments/1t0ueq/sheep_marketplace_scam_scheme_figured_out_scammer/ https://www.reddit.com/r/SheepMarketplace/comments/1t0ueq/sh... https://www.theguardian.com/technology/2013/dec/09/recovering-stolen-bitcoin-sheep-marketplace-trading-digital-currency-money https://www.theguardian.com/technology/2013/dec/09/recoverin...
- deleted 9y ago
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- meowface 9y ago
  I wonder how much BTC-e knew about these money sources. Were they a general "don't ask, don't tell" laundering operation that just so happened to be used by these people because it was their best laundering option, or were they directly involved in some of the hacks?
  - olalonde 9y ago
    What are the odds that whoever was running BTC-e also happened to be involved in any of those hacks? It's definitely a case of "don't ask, don't tell" and perhaps, making that policy known.
    - celticninja 9y ago
      I always thought this was possible, btce was set up by a group of crypto currency hackers, they are in a perfect position to know how exchanges work and the possible security issues they may have, they also have an easy way to launder the stolen coins. Further, bad publicity for their competitors is good publicity for them.
  - mirimir 9y ago
    Well, BTC-e did have an "anything goes" reputation.[0] 0) http://invezz.com/analysis/forex/147-btc-e-anonymity-reigns-at-worlds-second-largest-bitcoin-exchange http://invezz.com/analysis/forex/147-btc-e-anonymity-reigns-...
aarongolliver 9y ago
The website still says "down for unscheduled maintenance"
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lettergram 9y ago
I still don't understand, the U.S. is charging a Russian with a white collar crime? The crime was committed outside the U.S., he didn't come to the U.S., the servers weren't in the U.S., Mt.Gox was based out of Japan, and Greek police arrested him. I've seen this enough to know this is common, but what is going on with this world?
- ptenk 9y ago
  BTC-E didn't specifically bar US customer from trading there, so the indictment is on the grounds that their services were offered to US citizens, therefore liable to US Law.
  - kloncks 9y ago
    iirc they rejected deposits from any American bank accounts and specifically said they won't work with German or US residents or citizens.
    - ptenk 9y ago
      Don't know if this is recently, but as a US citizen, I've wired funds from an American bank successfully to BTC-e back in 2013.
      - aarongolliver 9y ago
        Was about to respond with the same, 2013. This could have been before the US gov ruled one way or another about some specific rules for bitcoin.
    - ryanlol 9y ago
      Yeah, they said this and then made exceptions when users complained. If I recall correctly they started charging a slightly higher fee for US wires.
- 1stranger 9y ago
  > As for defendant BTC-e, the indictment alleges that, despite doing substantial business in the United States, BTC-e was not registered as a money services business with the U.S. Department of the Treasury, had no anti-money laundering process, no system for appropriate “know your customer” or “KYC” verification, and no anti-money laundering program as required by federal law. It's not just about Mt. Gox.
openmosix 9y ago
The question for me is: why US? He is a Russian citizen, the company is based in Bulgaria, servers in Russia, legal HQ in Cyprus and all the services operated from Seychelles - arrested in Greece. The MtGox hack affected a Japanese company. I'm not debating the nature of the crimes, etc - I am just wondering, when does it become a US case? I can get the "there were US customers" - but why not Europe? Or Japan? Or Russia? Or Australia? I'm sure BTC-e had customers from all over the world (and money laundry is pretty much a crime everywhere). So, when does it become "you have broken the US law and you are under arrest"?. Does it work the other way around too? If you start a gay social network in US, can Russia come in (the first time you are flying in one of the Russia's partners territories) and say "you are breaking Russian gay laws, you are under arrest"?
- RandVal30142 9y ago
  > If you start a gay social network in US, can Russia come in (the first time you are flying in one of the Russia's partners territories) and say "you are breaking Russian gay laws, you are under arrest"? Yes.
  - toomuchtodo 9y ago
    People often don't realize that if you fly through US airspace after violating certain US laws as non-citizens, you will be apprehended through an emergency layover coordinated with the carrier. That's a contributor to why US federal three letter agencies constantly ingest passenger manifests.
    - khuey 9y ago
      Like this guy http://www.cbc.ca/news/canada/montreal/man-removed-from-aeromexico-flight-id-d-1.904877 http://www.cbc.ca/news/canada/montreal/man-removed-from-aero...
      - dumbneurologist 9y ago
        what ever happened to him? the news with his name stops the day he was arrested.
ue_ 9y ago
Interesting, I have been using BTC-E for a while, I had no idea this sort of thing happened. Was it knowingly assisted by someone at BTC-E, or did BTC-E just act as a dumb machine? BTC-E was one of the eastiest ways for me to change BTC and LTC in day trading. Are there comparable websites with small fees? I'm not interested in buying with fiat money.
- pizza 9y ago
  The admin moved > 600K bitcoins from Mt Gox
- jonknee 9y ago
  > Was it knowingly assisted by someone at BTC-E, or did BTC-E just act as a dumb machine? The defendant is who run/ran BTC-E, so it's alleged to have come from the very top. The reasons why you found it so easy are probably related to why the US sees it as a criminal enterprise: > According to the indictment, since its inception, Vinnik and others developed a customer base for BTC-e that was heavily reliant on criminals, including by not requiring users to validate their identity, obscuring and anonymizing transactions and source of funds, and by lacking any anti-money laundering processes. It continues: > The indictment alleges BTC-e was operated to facilitate transactions for cybercriminals worldwide and received the criminal proceeds of numerous computer intrusions and hacking incidents, ransomware scams, identity theft schemes, corrupt public officials, and narcotics distribution rings. Thus, the indictment alleges, BTC-e was used to facilitate crimes ranging from computer hacking, to fraud, identity theft, tax refund fraud schemes, public corruption, and drug trafficking. The investigation has revealed that BTC-e received more than $4 billion worth of bitcoin over the course of its operation.
- floatboth 9y ago
  If you're "not interested in buying with fiat money" there's no reason to use an exchange that supports it. You can just use e.g. https://shapeshift.io https://shapeshift.io
Dolores12 9y ago
1) Arresting btc-e admin made all US customers to lose their balances on btc-e exchange. I highly doubt btc-e will come back online. 2) If you run online exchanger and have a single US customer, then you have to register your operation in USA. I find it ridiculously stupid.
- ccrush 9y ago
  It gets better: while criminal charges for illegal banking practices are part of United States Code (title 18 covers crimes), the banking REGULATIONS that one must adhere to are codified at the State level. This means you must apply for 50 or so different licenses in order to legally do business as a Money Transfer Agent and Money Services Busimess in the United States. Although it seems overly burdensome and deliberately conceived to hinder practicing this line of business, the truth is that it creates an environment where consumers of the products and services offered by these businesses are better protected from fraud, as well as fostering an ecosystem of diverse business practices which leads to an advanced rate of innovation. It's a strange system, but it works very well. The downside is that it takes about $30M in cash to start one of these businesses just to fulfill regulatory requirements vis-à-vis the licensing, deposit, and audit requirements.
  - bb611 9y ago
    You can cover >25% of the US population in just the top 3 states (CA, TX, NY). The system isn't that strange, almost every business in the US is primarily regulated by the states. What's strange is that most Americans don't realize this.
    - hippich 9y ago
      what even more strange is that whole world should follow quirky us system rules. put usa citizens in jail for not following usa rules, not foreign companies.
      - PeterisP 9y ago
        You don't have to follow USA rules unless you do business within USA. The key point is that doing fully digital business online (as opposed to selling physical goods online to people within your country) doesn't mean that no jurisdiction applies, it means that all of them do - if you do international trade with USA, then you have to be mindful of USA laws.
disillusioned 9y ago
An interesting comment validated here, from 7 years ago: https://news.ycombinator.com/item?id=1533033 https://news.ycombinator.com/item?id=1533033
- quickthrower2 9y ago
  That comment is very general though. Exchanging bitcoins for cash, gold, diamonds for example would be harder to trace.
  - hellbanner 9y ago
    Exchanging BTC for cash, gold or diamonds is much more difficult ( and there's a higher perceived danger ). How would you go about trading your BTC for diamonds? Btc-to-diamonds.website ? If it's online, it's tracked by 5 eyes Tor? 5-eyes is even more interested Craigslist? Great, go meet a stranger in a parking lot and gamble that you don't get robbed. The comment is general but it's right. As it & other posters in this thread have pointed out - existing power structures control the world. The internet does not exist in an imaginary "stateless" vacuum.
    - quickthrower2 9y ago
      If you are in the underworld you know people who you can do dealings with. Effectively a dark pool. Dark in both senses of the word.
      - hellbanner 9y ago
        The average BTC holder is not, so it's not a good option.
- flatfilefan 9y ago
  People are trying to resolve this problem in a similar way the bitcoin itself functions: https://github.com/bitsquare/bitsquare https://github.com/bitsquare/bitsquare
mrb 9y ago
BTC-E has been seen by the Bitcoin community as "shady" for years. People have always recommend others to avoid using it. It was rumored to be an easy place to sell stolen Bitcoins. It has always offered strangely convoluted pathways to transfer fiat to financial institutions (see http://bitcoinworldwide.net/how-to-deposit-money-into-btc-e http://bitcoinworldwide.net/how-to-deposit-money-into-btc-e). I'm glad BTC-E finally got taken down. I am not surprised it was involved in illegal activities. One less shady Bitcoin company. Now the top 12 or so volume-ranked Bitcoin exchanges listed at https://cryptowat.ch https://cryptowat.ch are perfectly legitimate trustworthy companies. The ones I'm not sure about are CEX.IO and Luno (not saying they aren't trustworthy, I just don't know them that well) and, well, Bitsquare which as a decentralized exchange is bound to have some shady participants.
- Dolores12 9y ago
  Any cryptocoin exchanger is involved in criminal activity, because criminals have to sell their stolen coins as fast as possible. And you find out that you were a part of criminal activity only afterwards...
- stepik777 9y ago
  If you want to exchange cryptocurrency for USD then sure, those other exchanges are better. But not everyone wants USD.
- strgrd 9y ago
  > It has always offered strangely convoluted pathways to transfer fiat to financial institutions Your link is not evidence of "strange convolution." The reason there are so many steps/screenshots is because the payment service is in Russian, and the guide is designed for non-Russian speakers. Most people never dealt with fiat on BTC-e, and would use someone like Coinbase to fund the purchase of coins, and trade exclusively in crypto on BTC-e. > Now the top 12 or so volume-ranked Bitcoin exchanges listed at https://cryptowat.ch https://cryptowat.ch are perfectly legitimate trustworthy companies. BTC-e was number six on that list...
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mikob 9y ago
Although I don't understand the US's involvement in this -- a man breaking the rules is being put to justice, and I'm very glad. I'm also impressed by the feds work in the cryptocurrency space. In recent years the fed has really started to reverse the trope of the government not being technologically adept. There are too many that become wealthy through illicit means and it's good news that something effective is being done about it.
- always_good 9y ago
  >Although I don't understand the US's involvement in this -- a man breaking the rules is being put to justice, and I'm very glad. This is a terrifying comment. Not much different than a Thai person saying the same about a German rotting in their jail because he offended their king on Twitter. "Justice!"
  - mikeyouse 9y ago
    Because insulting someone and stealing millions of dollars are equal somehow?
    - ryanlol 9y ago
      Whose money did BTC-e steal?
      - mikob 9y ago
        I suppose you're not very familiar with BTC-e. It had a reputation of taking funds from users -- there was nothing effectively stopping them (until now) from locking users out of their accounts randomly, or disappearing user's funds.
        ryanlol 9y ago
        >I suppose you're not very familiar with BTC-e. There's probably 5 or less people more familiar with BTC-e than I am. >It had a reputation of taking funds from users Compared to the other big exchanges they've mostly had a reputation of not doing that. Essentially all the people I can find complaining about suspended BTC-e accounts got shut down due to inconsistencies in their incoming wires. I'm looking at BTC-e user database right now, only 0.2857% of the users are banned. Much fewer than you'd see at any other exchange, but I suppose that's not a very meaningful metric given the ease of registrations.
bigbrooklyn 9y ago
Justice playing whac-a-mole https://en.wikipedia.org/wiki/Liberty_Reserve https://en.wikipedia.org/wiki/Liberty_Reserve
grandalf 9y ago
This illustrates how the DOJ is years behind when it comes to understanding cryptocurrency technology and markets. It won't take long for one of the cryptocurrencies with private transactions to rise in dominance, since this sort of crackdown imposes costs and uncertainty on all participants. If the goal of the DOJ was to fight crime, the most effective approach would have been simply to infiltrate mixers and trace money flows relevant to investigations, something BTC is perfect for. Instead, this move sends a strong signal to the cryptocurrency community that hardening measures are needed. For instance: http://zerocoin.org/ http://zerocoin.org/
- MichaelGG 9y ago
  Pretty sure that won't matter. Monero will hinder blockchain analysis, but if you're wiring out millions they can just demand you prove the legitimacy. "I got untraceable coins" is on the level of excuse as "I got this sack full of cash". So long they prevent people from cashing out big time, then they're on the same level as cash (see, needing to deposit boxes of cash with HSBC).
  - grandalf 9y ago
    Good point. I think it will take a fairly significant transition away from fiat currencies before that situation is eliminated... But one of the incentives of getting rid of cash is to transform the money into something that can be efficiently sent over a large distance, which is something cryptocurrencies already do.
    - openasocket 9y ago
      > I think it will take a fairly significant transition away from fiat currencies before that situation is eliminated... Not really, so long as the IRS and taxes remain a thing. And someone notices the guy who hasn't had a job in the last five years is driving around in a brand new Tesla and living it up in a mansion.
      - grandalf 9y ago
RachelF 9y ago
An interesting analysis of the evidence here: Breaking open the MtGox case, part 1 http://blog.wizsec.jp/2017/07/breaking-open-mtgox-1.html http://blog.wizsec.jp/2017/07/breaking-open-mtgox-1.html
SwellJoe 9y ago
So, does that mean I can't get the BTC I deposited in BTC-e ages ago? I somehow didn't even know any of this was going down. (I have no idea how much it was...maybe a quarter of a coin, which is a reasonable amount of money today.)
- dest 9y ago
  You may get it back in the future, if they open again… or not. Sorry for your loss It is reasonably well-known that it is dangerous to leave money on exchanges. BTC is only yours when it's in a wallet with a private key that is known to you, and no third party.
  - quickthrower2 9y ago
    I've got 1 btc there that I convertes to Etherium just hours before they went down. Was waiting for my wallet to sync before transferring out. So even a few hours in an exchange is dangerous. Used btc for years so trusted them but got unlucky.
  - SwellJoe 9y ago
    I've lost more in my own local wallets due to losing both of the USB flash drives that contained the keys (as ridiculous as it sounds, I think my girlfriend's cat stole one of them). Realistically, I've come to think cryptocurrency just isn't for me; it's too damned easy to lose. I also forgot my passphrase for some other BTC (I think I remember it, but it doesn't work, so, there those went). It's not huge sums; 1 BTC here (which was only worth about $300 when I "lost" it), a half BTC there, but the only BTC I still have access to is the half of one I have at Coinbase. I may yet find one of those flash drives, or figure out what my passphrase actually is for the others. But, what I have found for sure is that BTC is too hard to keep safe (mostly from myself).
    - throwaway899 9y ago
      Well that is just your own mistake. You are supposed to backup the 'seed' into a safe location that can be used to recover the wallet
baby 9y ago
I am so happy right now that I moved my litecoins from btc-e to a personal wallet. I've learned my lesson.
techaddict009 9y ago
Question is who has the control over BTC-e's crypto? Will they be returned to users?
- joering2 9y ago
  The will be auctioned since they were forfeiture by Feds, like this: http://thehill.com/policy/technology/290745-feds-to-auction-16-million-in-bitcoin http://thehill.com/policy/technology/290745-feds-to-auction-...
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seanwasere 9y ago
I guess the world will now go back to using USD for its crimes
atmosx 9y ago
I would like to know how he was arrested in Greece. Was there an Interpol warrant or something or they just made a phonecall and the Greek authorities promptly put the guy on a ship to US?
stepik777 9y ago
They are boasting about how they caught the guy who robbed Mt. Gox but they just did the same - a lot of people just lost access to their money on BTC-e. They are not all criminals, BTC-e was a convenient way to exchange bitcoins to/from rubles and was used by many people in Russia who were interested in cryptocurrencies.
sjreese 9y ago
Where is the FBI in this? It was a FBI black op against silk road -> follow the money! Who was silk road's bank < Mt Gox - Who bankrupt Mt Gox < FBI Who had access to Trademill database < FBI Who authorized the attack on BitCoin after saying don't use it's not safe < FBI Today the seizure of all BitCoin in BTC-e is done by the FBI - Hopefully the number of FBI SA's going to jail over this Black Op will be limited. But, their greed is transnational to hide their seizure of overseas assets.. that is, What was seized and who accounted for it! Think DrugWar - we will be looking for SA's living beyond their means as with silk road
Cellestro 9y ago
And yet the BTC-E Twitter says they'll be back in 5-10 days. They're not coming back.

458 points by ryanlol 9y ago

>The takedown of this large virtual currency exchange I haven't kept up to date on exchange volume. Was btc-e still a popular exchange (up until this takedown of course)?

ryanlol 9y ago
https://data.bitcoinity.org/markets/volume/30d?c=e&t=b https://data.bitcoinity.org/markets/volume/30d?c=e&t=b BTC-e was still pretty big.
- subroutine 9y ago
  When they say that "Bitcoin Exchange Alleged to Have Received Deposits Valued at Over $4 Billion", does that really mean $4 Billion USD? How is that exchange value established?
  - thesmok 9y ago
    As I remember, all exchange transactions on btc-e were public, so anyone could sum/verify the amount of money going through exchange. I've used btc-e actively in 2013, earning good money on trading BTC to USD and back during the period of rapid price growth.

ryanlol 9y ago

There's been no mentions of coin seizures anywhere as far as I can tell. Usually you'd see some boasting about that. Perhaps these guys were actually smart about their cold storage?

JohnJamesRambo 9y ago
He wasn't too smart, he redeposited some of the coins in Mt. Gox and that's how they identified him!
artursapek 9y ago
https://xkcd.com/538/ https://xkcd.com/538/
- brokenmachine 9y ago
  I love xkcd, but I'm getting sick of seeing that one.
  - ccrush 9y ago
    Good ol' 538.
  - artursapek 9y ago
    It applies all too often to comments made around here
benwilber0 9y ago
Page 6 article 20 says they operated their servers in the United States. If that's true then I'm pretty sure they've already been seized. They were probably on aws
- quickthrower2 9y ago
  That could just be the web farm. The clearing might be done from Russia.
- ryanlol 9y ago
  That shouldn't give the feds any more than their hotwallet.
- idonotknowwhy 9y ago
  In which case, maybe they also have a copy of the private keys in Russia, and can move the funds somewhere safe.

gruez 9y ago

>Russian National And Bitcoin Exchange So nothing will happen to the site or its owner, other than maybe they won't be able to transfer out USD.

ryanlol 9y ago
They've already had the Greek cops go pick up the said Russian National.
wgjordan 9y ago
>So nothing will happen to the site or its owner "Defendant Alexander Vinnik Was Arrested in Greece to Face Charges in the United States; Bitcoin Exchange Alleged to Have Received Deposits Valued at Over $4 Billion" - article subtitle
- deleted 9y ago
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sillysaurus3 9y ago
Even though you were mistaken in this case, it's only because Vinnik stepped out of Russia. If he had stayed, he'd have been mostly untouchable. No extradition treaty exists between Russia and the US; not so for Greece.

mirimir 9y ago

Interesting. Bitcoin stolen from Sheep Marketplace also ended up in a BTC-E account. https://www.reddit.com/r/SheepMarketplace/comments/1t0ueq/sheep_marketplace_scam_scheme_figured_out_scammer/ https://www.reddit.com/r/SheepMarketplace/comments/1t0ueq/sh... https://www.theguardian.com/technology/2013/dec/09/recovering-stolen-bitcoin-sheep-marketplace-trading-digital-currency-money https://www.theguardian.com/technology/2013/dec/09/recoverin...

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meowface 9y ago
I wonder how much BTC-e knew about these money sources. Were they a general "don't ask, don't tell" laundering operation that just so happened to be used by these people because it was their best laundering option, or were they directly involved in some of the hacks?
- olalonde 9y ago
  What are the odds that whoever was running BTC-e also happened to be involved in any of those hacks? It's definitely a case of "don't ask, don't tell" and perhaps, making that policy known.
  - celticninja 9y ago
    I always thought this was possible, btce was set up by a group of crypto currency hackers, they are in a perfect position to know how exchanges work and the possible security issues they may have, they also have an easy way to launder the stolen coins. Further, bad publicity for their competitors is good publicity for them.
- mirimir 9y ago
  Well, BTC-e did have an "anything goes" reputation.[0] 0) http://invezz.com/analysis/forex/147-btc-e-anonymity-reigns-at-worlds-second-largest-bitcoin-exchange http://invezz.com/analysis/forex/147-btc-e-anonymity-reigns-...

aarongolliver 9y ago

The website still says "down for unscheduled maintenance"

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lettergram 9y ago

I still don't understand, the U.S. is charging a Russian with a white collar crime? The crime was committed outside the U.S., he didn't come to the U.S., the servers weren't in the U.S., Mt.Gox was based out of Japan, and Greek police arrested him. I've seen this enough to know this is common, but what is going on with this world?

ptenk 9y ago
BTC-E didn't specifically bar US customer from trading there, so the indictment is on the grounds that their services were offered to US citizens, therefore liable to US Law.
- kloncks 9y ago
  iirc they rejected deposits from any American bank accounts and specifically said they won't work with German or US residents or citizens.
  - ptenk 9y ago
    Don't know if this is recently, but as a US citizen, I've wired funds from an American bank successfully to BTC-e back in 2013.
    - aarongolliver 9y ago
      Was about to respond with the same, 2013. This could have been before the US gov ruled one way or another about some specific rules for bitcoin.
  - ryanlol 9y ago
    Yeah, they said this and then made exceptions when users complained. If I recall correctly they started charging a slightly higher fee for US wires.
1stranger 9y ago
> As for defendant BTC-e, the indictment alleges that, despite doing substantial business in the United States, BTC-e was not registered as a money services business with the U.S. Department of the Treasury, had no anti-money laundering process, no system for appropriate “know your customer” or “KYC” verification, and no anti-money laundering program as required by federal law. It's not just about Mt. Gox.

openmosix 9y ago

The question for me is: why US? He is a Russian citizen, the company is based in Bulgaria, servers in Russia, legal HQ in Cyprus and all the services operated from Seychelles - arrested in Greece. The MtGox hack affected a Japanese company. I'm not debating the nature of the crimes, etc - I am just wondering, when does it become a US case? I can get the "there were US customers" - but why not Europe? Or Japan? Or Russia? Or Australia? I'm sure BTC-e had customers from all over the world (and money laundry is pretty much a crime everywhere). So, when does it become "you have broken the US law and you are under arrest"?. Does it work the other way around too? If you start a gay social network in US, can Russia come in (the first time you are flying in one of the Russia's partners territories) and say "you are breaking Russian gay laws, you are under arrest"?

RandVal30142 9y ago
> If you start a gay social network in US, can Russia come in (the first time you are flying in one of the Russia's partners territories) and say "you are breaking Russian gay laws, you are under arrest"? Yes.
- toomuchtodo 9y ago
  People often don't realize that if you fly through US airspace after violating certain US laws as non-citizens, you will be apprehended through an emergency layover coordinated with the carrier. That's a contributor to why US federal three letter agencies constantly ingest passenger manifests.
  - khuey 9y ago
    Like this guy http://www.cbc.ca/news/canada/montreal/man-removed-from-aeromexico-flight-id-d-1.904877 http://www.cbc.ca/news/canada/montreal/man-removed-from-aero...
    - dumbneurologist 9y ago
      what ever happened to him? the news with his name stops the day he was arrested.

ue_ 9y ago

Interesting, I have been using BTC-E for a while, I had no idea this sort of thing happened. Was it knowingly assisted by someone at BTC-E, or did BTC-E just act as a dumb machine? BTC-E was one of the eastiest ways for me to change BTC and LTC in day trading. Are there comparable websites with small fees? I'm not interested in buying with fiat money.

pizza 9y ago
The admin moved > 600K bitcoins from Mt Gox
jonknee 9y ago
> Was it knowingly assisted by someone at BTC-E, or did BTC-E just act as a dumb machine? The defendant is who run/ran BTC-E, so it's alleged to have come from the very top. The reasons why you found it so easy are probably related to why the US sees it as a criminal enterprise: > According to the indictment, since its inception, Vinnik and others developed a customer base for BTC-e that was heavily reliant on criminals, including by not requiring users to validate their identity, obscuring and anonymizing transactions and source of funds, and by lacking any anti-money laundering processes. It continues: > The indictment alleges BTC-e was operated to facilitate transactions for cybercriminals worldwide and received the criminal proceeds of numerous computer intrusions and hacking incidents, ransomware scams, identity theft schemes, corrupt public officials, and narcotics distribution rings. Thus, the indictment alleges, BTC-e was used to facilitate crimes ranging from computer hacking, to fraud, identity theft, tax refund fraud schemes, public corruption, and drug trafficking. The investigation has revealed that BTC-e received more than $4 billion worth of bitcoin over the course of its operation.
floatboth 9y ago
If you're "not interested in buying with fiat money" there's no reason to use an exchange that supports it. You can just use e.g. https://shapeshift.io https://shapeshift.io

Dolores12 9y ago

1) Arresting btc-e admin made all US customers to lose their balances on btc-e exchange. I highly doubt btc-e will come back online. 2) If you run online exchanger and have a single US customer, then you have to register your operation in USA. I find it ridiculously stupid.

ccrush 9y ago
It gets better: while criminal charges for illegal banking practices are part of United States Code (title 18 covers crimes), the banking REGULATIONS that one must adhere to are codified at the State level. This means you must apply for 50 or so different licenses in order to legally do business as a Money Transfer Agent and Money Services Busimess in the United States. Although it seems overly burdensome and deliberately conceived to hinder practicing this line of business, the truth is that it creates an environment where consumers of the products and services offered by these businesses are better protected from fraud, as well as fostering an ecosystem of diverse business practices which leads to an advanced rate of innovation. It's a strange system, but it works very well. The downside is that it takes about $30M in cash to start one of these businesses just to fulfill regulatory requirements vis-à-vis the licensing, deposit, and audit requirements.
- bb611 9y ago
  You can cover >25% of the US population in just the top 3 states (CA, TX, NY). The system isn't that strange, almost every business in the US is primarily regulated by the states. What's strange is that most Americans don't realize this.
  - hippich 9y ago
    what even more strange is that whole world should follow quirky us system rules. put usa citizens in jail for not following usa rules, not foreign companies.
    - PeterisP 9y ago
      You don't have to follow USA rules unless you do business within USA. The key point is that doing fully digital business online (as opposed to selling physical goods online to people within your country) doesn't mean that no jurisdiction applies, it means that all of them do - if you do international trade with USA, then you have to be mindful of USA laws.

disillusioned 9y ago

An interesting comment validated here, from 7 years ago: https://news.ycombinator.com/item?id=1533033 https://news.ycombinator.com/item?id=1533033

quickthrower2 9y ago
That comment is very general though. Exchanging bitcoins for cash, gold, diamonds for example would be harder to trace.
- hellbanner 9y ago
  Exchanging BTC for cash, gold or diamonds is much more difficult ( and there's a higher perceived danger ). How would you go about trading your BTC for diamonds? Btc-to-diamonds.website ? If it's online, it's tracked by 5 eyes Tor? 5-eyes is even more interested Craigslist? Great, go meet a stranger in a parking lot and gamble that you don't get robbed. The comment is general but it's right. As it & other posters in this thread have pointed out - existing power structures control the world. The internet does not exist in an imaginary "stateless" vacuum.
  - quickthrower2 9y ago
    If you are in the underworld you know people who you can do dealings with. Effectively a dark pool. Dark in both senses of the word.
    - hellbanner 9y ago
      The average BTC holder is not, so it's not a good option.
flatfilefan 9y ago
People are trying to resolve this problem in a similar way the bitcoin itself functions: https://github.com/bitsquare/bitsquare https://github.com/bitsquare/bitsquare

mrb 9y ago

BTC-E has been seen by the Bitcoin community as "shady" for years. People have always recommend others to avoid using it. It was rumored to be an easy place to sell stolen Bitcoins. It has always offered strangely convoluted pathways to transfer fiat to financial institutions (see http://bitcoinworldwide.net/how-to-deposit-money-into-btc-e http://bitcoinworldwide.net/how-to-deposit-money-into-btc-e). I'm glad BTC-E finally got taken down. I am not surprised it was involved in illegal activities. One less shady Bitcoin company. Now the top 12 or so volume-ranked Bitcoin exchanges listed at https://cryptowat.ch https://cryptowat.ch are perfectly legitimate trustworthy companies. The ones I'm not sure about are CEX.IO and Luno (not saying they aren't trustworthy, I just don't know them that well) and, well, Bitsquare which as a decentralized exchange is bound to have some shady participants.

Dolores12 9y ago
Any cryptocoin exchanger is involved in criminal activity, because criminals have to sell their stolen coins as fast as possible. And you find out that you were a part of criminal activity only afterwards...
stepik777 9y ago
If you want to exchange cryptocurrency for USD then sure, those other exchanges are better. But not everyone wants USD.
strgrd 9y ago
> It has always offered strangely convoluted pathways to transfer fiat to financial institutions Your link is not evidence of "strange convolution." The reason there are so many steps/screenshots is because the payment service is in Russian, and the guide is designed for non-Russian speakers. Most people never dealt with fiat on BTC-e, and would use someone like Coinbase to fund the purchase of coins, and trade exclusively in crypto on BTC-e. > Now the top 12 or so volume-ranked Bitcoin exchanges listed at https://cryptowat.ch https://cryptowat.ch are perfectly legitimate trustworthy companies. BTC-e was number six on that list...

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mikob 9y ago

Although I don't understand the US's involvement in this -- a man breaking the rules is being put to justice, and I'm very glad. I'm also impressed by the feds work in the cryptocurrency space. In recent years the fed has really started to reverse the trope of the government not being technologically adept. There are too many that become wealthy through illicit means and it's good news that something effective is being done about it.

always_good 9y ago
>Although I don't understand the US's involvement in this -- a man breaking the rules is being put to justice, and I'm very glad. This is a terrifying comment. Not much different than a Thai person saying the same about a German rotting in their jail because he offended their king on Twitter. "Justice!"
- mikeyouse 9y ago
  Because insulting someone and stealing millions of dollars are equal somehow?
  - ryanlol 9y ago
    Whose money did BTC-e steal?
    - mikob 9y ago
      I suppose you're not very familiar with BTC-e. It had a reputation of taking funds from users -- there was nothing effectively stopping them (until now) from locking users out of their accounts randomly, or disappearing user's funds.
      - ryanlol 9y ago
        >I suppose you're not very familiar with BTC-e. There's probably 5 or less people more familiar with BTC-e than I am. >It had a reputation of taking funds from users Compared to the other big exchanges they've mostly had a reputation of not doing that. Essentially all the people I can find complaining about suspended BTC-e accounts got shut down due to inconsistencies in their incoming wires. I'm looking at BTC-e user database right now, only 0.2857% of the users are banned. Much fewer than you'd see at any other exchange, but I suppose that's not a very meaningful metric given the ease of registrations.

bigbrooklyn 9y ago

Justice playing whac-a-mole https://en.wikipedia.org/wiki/Liberty_Reserve https://en.wikipedia.org/wiki/Liberty_Reserve

grandalf 9y ago

This illustrates how the DOJ is years behind when it comes to understanding cryptocurrency technology and markets. It won't take long for one of the cryptocurrencies with private transactions to rise in dominance, since this sort of crackdown imposes costs and uncertainty on all participants. If the goal of the DOJ was to fight crime, the most effective approach would have been simply to infiltrate mixers and trace money flows relevant to investigations, something BTC is perfect for. Instead, this move sends a strong signal to the cryptocurrency community that hardening measures are needed. For instance: http://zerocoin.org/ http://zerocoin.org/

MichaelGG 9y ago
Pretty sure that won't matter. Monero will hinder blockchain analysis, but if you're wiring out millions they can just demand you prove the legitimacy. "I got untraceable coins" is on the level of excuse as "I got this sack full of cash". So long they prevent people from cashing out big time, then they're on the same level as cash (see, needing to deposit boxes of cash with HSBC).
- grandalf 9y ago
  Good point. I think it will take a fairly significant transition away from fiat currencies before that situation is eliminated... But one of the incentives of getting rid of cash is to transform the money into something that can be efficiently sent over a large distance, which is something cryptocurrencies already do.
  - openasocket 9y ago
    > I think it will take a fairly significant transition away from fiat currencies before that situation is eliminated... Not really, so long as the IRS and taxes remain a thing. And someone notices the guy who hasn't had a job in the last five years is driving around in a brand new Tesla and living it up in a mansion.
    - grandalf 9y ago

RachelF 9y ago

An interesting analysis of the evidence here: Breaking open the MtGox case, part 1 http://blog.wizsec.jp/2017/07/breaking-open-mtgox-1.html http://blog.wizsec.jp/2017/07/breaking-open-mtgox-1.html

SwellJoe 9y ago

So, does that mean I can't get the BTC I deposited in BTC-e ages ago? I somehow didn't even know any of this was going down. (I have no idea how much it was...maybe a quarter of a coin, which is a reasonable amount of money today.)

dest 9y ago
You may get it back in the future, if they open again… or not. Sorry for your loss It is reasonably well-known that it is dangerous to leave money on exchanges. BTC is only yours when it's in a wallet with a private key that is known to you, and no third party.
- quickthrower2 9y ago
  I've got 1 btc there that I convertes to Etherium just hours before they went down. Was waiting for my wallet to sync before transferring out. So even a few hours in an exchange is dangerous. Used btc for years so trusted them but got unlucky.
- SwellJoe 9y ago
  I've lost more in my own local wallets due to losing both of the USB flash drives that contained the keys (as ridiculous as it sounds, I think my girlfriend's cat stole one of them). Realistically, I've come to think cryptocurrency just isn't for me; it's too damned easy to lose. I also forgot my passphrase for some other BTC (I think I remember it, but it doesn't work, so, there those went). It's not huge sums; 1 BTC here (which was only worth about $300 when I "lost" it), a half BTC there, but the only BTC I still have access to is the half of one I have at Coinbase. I may yet find one of those flash drives, or figure out what my passphrase actually is for the others. But, what I have found for sure is that BTC is too hard to keep safe (mostly from myself).
  - throwaway899 9y ago
    Well that is just your own mistake. You are supposed to backup the 'seed' into a safe location that can be used to recover the wallet

baby 9y ago

I am so happy right now that I moved my litecoins from btc-e to a personal wallet. I've learned my lesson.

techaddict009 9y ago

Question is who has the control over BTC-e's crypto? Will they be returned to users?

joering2 9y ago
The will be auctioned since they were forfeiture by Feds, like this: http://thehill.com/policy/technology/290745-feds-to-auction-16-million-in-bitcoin http://thehill.com/policy/technology/290745-feds-to-auction-...

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seanwasere 9y ago

I guess the world will now go back to using USD for its crimes

atmosx 9y ago

I would like to know how he was arrested in Greece. Was there an Interpol warrant or something or they just made a phonecall and the Greek authorities promptly put the guy on a ship to US?

stepik777 9y ago

They are boasting about how they caught the guy who robbed Mt. Gox but they just did the same - a lot of people just lost access to their money on BTC-e. They are not all criminals, BTC-e was a convenient way to exchange bitcoins to/from rubles and was used by many people in Russia who were interested in cryptocurrencies.

sjreese 9y ago

Where is the FBI in this? It was a FBI black op against silk road -> follow the money! Who was silk road's bank < Mt Gox - Who bankrupt Mt Gox < FBI Who had access to Trademill database < FBI Who authorized the attack on BitCoin after saying don't use it's not safe < FBI Today the seizure of all BitCoin in BTC-e is done by the FBI - Hopefully the number of FBI SA's going to jail over this Black Op will be limited. But, their greed is transnational to hide their seizure of overseas assets.. that is, What was seized and who accounted for it! Think DrugWar - we will be looking for SA's living beyond their means as with silk road

Cellestro 9y ago

And yet the BTC-E Twitter says they'll be back in 5-10 days. They're not coming back.