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Feds bust individual tied to the collapse of two Bitcoin exchanges

Feds bust individual tied to the collapse of two Bitcoin exchanges

Last week the U.S. Department of Justice indicted Alexander Vinnik on fraud and money laundering charges tied to not just one, but two Bitcoin exchanges.  And since the Mt. Gox criminal trial is being led by Japanese prosecutors over in the Far East, this indictment is only the second major bust taking place in the U.S., and the first since the feds took down the Silk Road portal a few years ago.

This week, one of Bitcoin’s largest and most notorious coin exchanges was brought down by law enforcement — and police and prosecutors are now beginning to explain why. On Thursday, the Department of Justice unsealed an indictment against Alexander Vinnik — thought to be the operator, or one of the operators of Bitcoin exchange BTC-e — charging him with 21 counts of money laundering and other related financial crimes. The counts range from operating an unlicensed money transmittal business to a variety of money laundering charges, including laundering associated with ransomware payouts and a theft from the now-defunct Mt Gox exchange. More generally, the indictment paints BTC-e as a hub of criminal activity, laundering the proceeds of everything from drug trafficking to ransomware attacks.

As some suspected, Vinnik’s alleged crimes go beyond just operating the exchange. Feds believe he played a role in the theft of more 800,000 bitcoin — about $400 million at the time — from Mt. Gox, a staggering loss that ultimately shuttered the exchange. According to the indictment, 530,000 of those bitcoin ended up passing through wallets controlled by or associated with Vinnik, although his role in the larger scheme remains unclear. – The Verge

Interestingly, Bitcoin is not the only cryptocurrency being targeted for theft and cyber-hacking as Ethereum experienced their own loss of cryptos from customer accounts a few weeks ago, and a P2P crypto called Varitasium saw its price manipulated down during low volume hours similar to how the financial cartels crash gold and silver prices.

There is a growing call by politicians and in many financial centers to bring in sovereign regulation over the cryptocurrency markets.  And while the Bitcoin community desperately wants their market to remain de-centralized and outside the purview of regulators, the bottom line is that unless the crypto community itself polices its own exchanges and platforms, then a rise in criminal activity in the Bitcoin space will leave governments with no choice but to claim dominion over this market, and bring an end to the potential cryptocurrencies have as being an alternative to mainstream investments.

Kenneth Schortgen Jr is a writer for The Daily Economist,,, and Viral Liberty, and hosts the popular youtube podcast on Mondays, Wednesdays and Fridays. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.



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