Unlicensed Digital Currency Exchange BTC-e Allegedly Facilitated Criminal Activities Worldwide

Unlicensed Digital Currency Exchange BTC-e Allegedly Facilitated Criminal Activities Worldwide

Major Indictment Unveiled: Belarusian and Cypriot Nationals Face Charges in Cybercrime and Money Laundering Operation

In a significant development, an indictment was unsealed on Tuesday, charging a Belarusian and Cypriot national with money laundering conspiracy and operating an unlicensed money services business.

The indictment reveals an alleged connection between Aliaksandr Klimenka, 42, and the control of BTC-e, a digital currency exchange, along with other entities implicated in cybercrime activities.

Allegations Against Aliaksandr Klimenka: Control of BTC-e and Associated Entities

The indictment, spanning the period between 2011 and July 2017, asserts that Aliaksandr Klimenka, in collaboration with Alexander Vinnik and others, purportedly controlled BTC-e, a prominent digital currency exchange.

Additionally, Klimenka is accused of managing Soft-FX, a technology services company, and FX Open, a financial company.

BTC-e’s Role in Cybercrime and Money Laundering

The indictment paints BTC-e as a significant cybercrime and online money laundering entity, providing users with a platform to trade bitcoin with heightened anonymity.

The platform allegedly fostered a customer base heavily reliant on criminal activities, facilitating transactions for cybercriminals worldwide.

Criminal proceeds from various illicit activities, including computer intrusions, hacking incidents, ransomware scams, identity theft schemes, public corruption, and narcotics distribution rings, were purportedly funneled through BTC-e.

BTC-e Servers and Regulatory Violations

BTC-e’s servers, allegedly one of the primary means through which the operation was executed, were maintained in the United States and leased to and maintained by Klimenka and Soft-FX.

Despite substantial business conducted in the U.S., BTC-e reportedly violated regulatory requirements by not registering as a money services business with the U.S. Department of Treasury.

It lacked anti-money laundering processes, appropriate “know your customer” verification, and failed to establish an anti-money laundering program as mandated by federal law.

Arrest and Potential Penalties

Aliaksandr Klimenka was arrested in Latvia on December 21, 2023, at the request of the United States. He made his initial appearance in San Francisco and is currently in custody.

If convicted, Klimenka faces a maximum penalty of 25 years in prison.

Law Enforcement Response and Investigation Details

Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division, along with various law enforcement agencies, including the U.S. Secret Service, FBI, IRS Criminal Investigation, and Homeland Security Investigations, announced the charges.

The case is being investigated by the USSS, FBI, IRS:CI Oakland Field Office and Cyber Crime Unit, and HSI.

Prosecution and International Collaboration

The case is being prosecuted by Trial Attorney C. Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S.

Attorney Claudia Quiroz for the Northern District of California, members of the National Cryptocurrency Enforcement Team (NCET). The Justice Department’s Office of International Affairs collaborated with the Latvian government to secure Klimenka’s arrest.

Focus on Cryptocurrency Enforcement

The National Cryptocurrency Enforcement Team (NCET), established to combat illicit use of cryptocurrencies, works within the Criminal Division’s Computer Crime and Intellectual Property Section.

The NCET focuses on investigating individuals and entities enabling the use of digital assets for various crimes, with an emphasis on virtual currency exchanges, mixing and tumbling services, and infrastructure providers.

Presumption of Innocence and Allegations

It’s essential to note that an indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.