Financial Fraud: Complaint Against Digital Currency Exchange BTC-e And Alexander Vinnik

FraudsWatch.com

<h2>United States Files &dollar;100 Million Civil Complaint Against Digital Currency Exchange BTC-e And Chief Owner-Operator Alexander Vinnik<&sol;h2>&NewLine;<p><strong>Complaint seeks to enforce federal penalties for alleged violations of Bank Secrecy Act<&sol;strong><&sol;p>&NewLine;<p>SAN FRANCISCO– The Department of Justice filed a civil complaint in federal court against digital currency exchange BTC-e&comma; also known as Canton Business Corporation&comma; and one of its chief owners and operators Alexander Vinnik&comma; announced United States Attorney David L&period; Anderson and U&period;S&period; Department of the Treasury’s Financial Crimes Enforcement Network &lpar;FinCEN&rpar; Director Kenneth A&period; Blanco&period; The complaint seeks to enforce monetary penalties FinCEN assessed against BTC-e and Vinnik for alleged violations of the Bank Secrecy Act &lpar;BSA&rpar;&comma; 31 U&period;S&period;C&period; §§ 5311-14 and 5316-32&period;<&sol;p>&NewLine;<p>BTC-e is a digital currency exchange organized as a corporation under the laws of Cyprus and&sol;or the Seychelles Islands&period; BTC-e operated in Bulgaria&comma; the Seychelles Islands&comma; and other jurisdictions&comma; including the Northern District of California&comma; and allowed its users to buy and sell bitcoin and other digital currencies anonymously through its web domain&comma; btc-e&period;com&period; Vinnik&comma; a Russian national&comma; occupied a senior leadership position within BTC-e&comma; controlled multiple BTC-e administrative accounts used to process BTC-e’s transactions&comma; and participated in the direction and supervision of BTC-e’s operations and finances&period; The civil complaint alleges that Vinnik operated several BTC-e accounts&comma; including some tied to thefts from other virtual currency exchanges such as Mt&period; Gox&period; Vinnik is currently incarcerated in Greece and is the subject of an extradition request to the Northern District of California in connection with criminal charges filed in this district&period;<&sol;p>&NewLine;<p>On July 26&comma; 2017&comma; FinCEN assessed monetary penalties against BTC-e and Vinnik for violations of the BSA&period; FinCEN assessed &dollar;12 million in penalties against Vinnick and &dollar;88&comma;596&comma;314 in penalties against BTC-e for BTC-e’s alleged willful violations of the BSA&period; The civil complaint seeks to enforce the monetary penalties issued by FinCEN&period;<&sol;p>&NewLine;<p>According to the complaint&comma; FinCEN assessed penalties based&comma; in part&comma; on the following conduct&colon;<&sol;p>&NewLine;<p>Failure to Register as an MSB&colon; BTC-e did not register with FinCEN as a Money Services Business &lpar;MSB&rpar;&period; The BSA defines an MSB and requires&comma; among other things&comma; MSBs to register with FinCEN within 180 days of beginning operations&period; In this case&comma; FinCen assessed penalties&comma; in part&comma; because the agency concluded BTC-e was an MSB and failed to register with the agency&period;<&sol;p>&NewLine;<p>Failure to Establish Anti-Money Laundering Programs and Procedures&colon; Under the BSA&comma; an MSB must develop&comma; implement&comma; and maintain an effective anti-money laundering &lpar;AML&rpar; program that is reasonably designed to prevent the MSB from being used to facilitate money laundering and the financing of terrorist activities&period; FinCEN’s fines were based&comma; in part&comma; on BTC-e’s failure to have reasonable AML policies or procedures in place to prevent criminal activity on the digital currency exchange&period;<&sol;p>&NewLine;<p>Failure to File Suspicious Activity Reports&colon; Under the BSA&comma; an MSB must file a suspicious activity report &lpar;SAR&rpar; if it becomes aware of transactions that the MSB &OpenCurlyDoubleQuote;knows&comma; suspects&comma; or has reason to suspect” are suspicious where those transactions involve the MSB and aggregate to at least &dollar;2&comma;000 in value&period; FinCEN’s penalties were assessed&comma; in part&comma; because BTC-e did not file SARs and instead received proceeds from ransomware schemes&comma; transferred funds to and from known dark net marketplaces&comma; and deposited funds stolen from other digital currency exchanges into BTC-e accounts that Vinnik controlled&period;<&sol;p>&NewLine;<p>This case is being handled by Assistant United States Attorney Kirstin Ault and U&period;S&period; Department of Justice Trial Attorney John Siemietkowski with assistance from Tina Louie&period;<&sol;p>&NewLine;

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