Two Belarusians And Cyprus Charged With US For Running BTC-e Crypto Exchange Without Permit

The developer of the illegal BTC-e crypto exchange was sentenced to prison. (Photo; Doc. Pulish0x)

JAKARTA - The United States Department of Justice (DOJ) has indicted two Belarusian and Cypriotian nationals, Aliaksandr Klimenka and Alexander Vinnik, on charges of operating the BTC-e crypto exchange without permission and engaging in money laundering conspiracy. BTC-e, which operates from 2011 to 2017, is suspected of being a means for cybercriminals to commit various crimes, ranging from computer hacking to drug trafficking.

Klimenka and Vinnik were arrested in Latvia and Greece in 2023 and 2017, on US request. Both were then extradited to the US to face trial. If found guilty, they face prison sentences of up to 25 years. In addition, they are also suspected of controlling several technology and financial companies linked to BTC-e.

BTC-e is one of the oldest and largest crypto exchanges in the world, which primarily targets the Russian market, even though its servers are located in the US. According to DOJ, BTC-e is not listed as a money service business with the US Treasury, has no anti-money laundering process, has no "identify your customers" or "KYC" verification system accordingly, and does not have an anti-money laundering program in accordance with federal law.

KYC verification is a process of verifying customer identities to ensure compliance with regulations. This usually involves providing personal information such as name, address, and identification documents such as SIM or passport when opening accounts on crypto exchanges or platforms. KYC helps prevent money laundering, fraud, and other illegal activities in the crypto space.

The DOJ claims that BTC-e facilitates transactions for cybercriminals globally, including those involved in computer hacking, fraud, identity theft, tax return fraud schemes, public corruption, and drug trafficking. BTC-e is also allegedly used to launder around $4 billion (Rp62.6 trillion) from proceeds of crime, including stolen funds from crypto exchange Mt. Gox, which went bankrupt in 2014.

The BTC-e case is one example of the US efforts to narrow surveillance of illegal activity in the crypto market, particularly in exchanges operating in areas that do not follow legal requirements. Recently, the US Securities and Exchange Commission (SEC) also accused crypto exchanges Binance and Coinbase of offering unregistered securities to customers, among other accusations. The two exchanges are in a continuing legal battle with the SEC.

There are concerns that push by US policymakers for strict regulation in the crypto industry is pushing businesses overseas, as reported by Cryptonews, citing a 2024 market outlook report from the ETP 21Shares provider. According to the report, the US has the largest global crypto market share, but also has the highest regulatory risk.