Greek police have arrested an internationally-sought Russian man suspected of having used digital currency exchanges to launder billions of dollars for organised criminals involved in a range of activities including drug smuggling and cyber hacking.
Authorities in the US indicted Alexander Vinnik yesterday after he was detained near the city of Thessaloniki in the north of Greece following an investigation led by the US Department of Justice.
Vinnik, 38, is said to have helped launder funds stolen when the Japanese Mt Gox Bitcoin exchange was hacked, resulting in the loss of virtual currency worth hundreds of millions of euros.
Having obtained money stolen during the Mt Gox hack, prosecutors allege Vinnik laundered it through BTC-e and Tradehill, a virtual currency exchange he owned.
Greek police described Vinnik, whose arrest was the result of the latest in a string of US operations against Russian cyber criminals in Europe, as the “internationally-sought mastermind of a crime organisation”.
The Russian is thought to have headed up a gang that facilitated the laundering of as much as $4 billion (€3.41 billion) over the course of a number of years.
As well as helping criminals involved in drug trafficking and cyber crime, Vinnik stands accused of laundering the proceeds of tax refund schemes, identity theft and public corruption through virtual currency exchanges.
Brian Stretch, US attorney for the Northern District of California, said: “Cryptocurrencies such as Bitcoin provide people around the world new and innovative ways of engaging in legitimate commerce.
“As this case demonstrates, however, just as new computer technologies continue to change the way we engage each other and experience the world, so too will criminals subvert these new technologies to serve their own nefarious purposes.”
Chief Don Fort of the US Inland Revenue Service’s Criminal Investigation Division commented: “It is alleged that [Vinnik] stole identities, facilitated drug trafficking, and helped to launder criminal proceeds from syndicates around the world.
“Exchanges like this are not only illegal, but they are a breeding ground for stolen identity refund fraud schemes and other types of tax fraud.
“When there is no regulation and criminals are left unchecked, this scenario is all too common.”
Vinnik’s detention comes days after US authorities revealed they were behind the shutdown of two of the dark web’s largest and most notorious illicit marketplaces, AlphaBay and Hansa.
Earlier this week, the US Securities and Exchange Commission (SEC) said it was investigating offers and sales of digital assets by virtual organisations.
“The innovative technology behind these virtual transactions does not exempt securities offerings and trading platforms from the regulatory framework designed to protect investors and the integrity of the markets,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division.
