The notorious BTC-e or BTC-exchange, founded in 2011, was one of the largest crypto / fiat exchange services for its time. However as of July 25 2017 the exchange has been closed by federal agencies and Alexander Vinnik, thought to be a operator on the site, was arrested while on vacation in Greece. A day later the Department of Justice released a indictment on Vinnik, charging him with 21 counts of money laundering and various other related crimes. The charges range from unlicensed money transmission to money laundering including funds from the now in-existant Mt.Gox.

Investigations linking stolen funds and looking at BTC-e's “sketchy ownership and control” were going on for quite a while before they caught Vinnik, with private and federal investigations being hidden from the public eye to secure success in the arrest. While Vinnik was on vacation in Greece, several federal agencies busted him in a small beach side village. The indictment released by the justice department described Vinnik as the operator of BTC-e and linked several BTC-e admin wallets to him that contained stolen funds from Mt. Gox, Bitcoinica, Bitfloor and several other thefts from back in 2011 and 2012. Of course he denies all of this, and while evidence is there, the clear role Vinnik has in these ransomware attacks is unclear.

The site was also operated with no transmitting license neither was it registered with Fin-cen, a intelligence network that's mandatory for all financial companies dealing with US customers. Since 2013 it had been clear that Bitcoin exchanges had to follow a set of rules and failure to do so will result in charges. BTC-e was one of the largest exchanges not registered with Fin-cen, which already made it a large target for law enforcement, even without other charges applied. The indictment also stated the site had a "criminal design". “BTC-e’s system was designed so that criminals could accomplish financial transactions with anonymity and thereby avoid apprehension by law enforcement or seizure of funds,” it also points out the fact users could transact funds only using a email, username, and password. The site also included various names the indictment thought were suspicious such as “CocaineCowboys,” “blackhathackers,” “dzkillerhacker,” “hacker4hire,” and “ISIS”. These names were used as evidence backing the count.

One of the most flashy claims that caught the attention of many was the accusations of laundering stolen funds from Mt. Gox. For those unaware Mt. Gox, started in late 2010, was one of the largest exchanges along with BTC-e, at one point transacting 80% of all BTC transactions. However, due to poor management and a hack that caused the company to go bankrupt, the site had redacted. The initial hack that had taken place in 2011 was seemingly resolved, however, it was found out later the hot keys connected to Mt. Gox's main wallet were stolen during that hack. Since then, 850,000 BTC (currently $19 billion USD) has been slowly stolen from the wallet and sent to various personal wallets.

WizSec has posted a blog about the findings of an investigation on the Mt. Gox theft. Alexnder Vinnik was found to have laundered 300,000 stolen BTC from Mt. Gox, along with various stolen funds from other exchanges, through BTC-e. These funds all ended up in different BTC accounts directly linked to BTC-e administrative accounts, which only admins and operators of BTC-e could access. At least one of the accounts was controlled by Vinnik and others were known and unknown (not named in the indictment or been removed from the published document.) Alexander Vinniks role in the actual hack remains a mystery to the authority's and the public eye, but one thing is for sure. He had a role, without a doubt.

The wallet known as “1Feex” bitcoin wallet, currently holds 79,957.21 BTC worth $3.7 billion. The wallet has never sent any bitcoin out of the address and it’s received a great deal of dust transactions since it was created on March 1, 2011. The wallets funds are know for being stolen funds from the Mt. Gox exchange. These funds are dormant and have not been touched until very recently (2022) when thousands of dollars were transferred from the wallet. While Mt. Gox tries to save what's left of it's name by promising returns, they still lost 850,000 BTC and is it very hard to just come up with that money.

While Bitcoins are used in many legitimate ways, they have become a essential part in online crimes. Especially drug and ransomware crimes. The government taking down bad actors and stopping them from being anonymous is something they seem to be counting on. However is posses several exchanges to stay out of the U.S thus out of reach from Fin-cen.“Exchanges will go one of two ways,” Sirer says. “Either they will clean their act, by first shopping for the most lenient jurisdictions and complying with relevant KYC/AML laws, or they'll go ‘fully underground,’ and operate with no rules, behind Tor and other anonymous communication technologies."

Or, like Bitfinex, you can operate in the gray zone, neither compliant with the laws nor go completely underground. None the less the case of Alexander Vinnik is a wild, still a bit curved, one. Currently Vinnik faces a 50-year prison term in the U.S. in the event of potential extradition. BTC-e is completely shut down by authorities, and $19 billion in stolen BTC is lingering about the blockchain.