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Bitcoin Crime Security The Almighty Buck United States

US Indicts Suspected Russian 'Mastermind' of $4 Billion Bitcoin Laundering Scheme (reuters.com) 99

Posted by BeauHD from the dirty-laundry dept.
schwit1 shares a report from Reuters: A U.S. jury indicted a Russian man on Wednesday as the operator of a digital currency exchange he allegedly used to launder more than $4 billion for people involved in crimes ranging from computer hacking to drug trafficking. Alexander Vinnik was arrested in a small beachside village in northern Greece on Tuesday, according to local authorities, following an investigation led by the U.S. Justice Department along with several other federal agencies and task forces. U.S. officials described Vinnik in a Justice Department statement as the operator of BTC-e, an exchange used to trade the digital currency bitcoin since 2011. They alleged Vinnik and his firm "received" more than $4 billion in bitcoin and did substantial business in the United States without following appropriate protocols to protect against money laundering and other crimes. U.S. authorities also linked him to the failure of Mt. Gox, a Japan-based bitcoin exchange that collapsed in 2014 after being hacked. Vinnik "obtained" funds from the hack of Mt. Gox and laundered them through BTC-e and Tradehill, another San Francisco-based exchange he owned, they said in the statement.
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US Indicts Suspected Russian 'Mastermind' of $4 Billion Bitcoin Laundering Scheme More

US Indicts Suspected Russian 'Mastermind' of $4 Billion Bitcoin Laundering Scheme

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  • And in next weeks news (Score:1, Funny)

    by Anonymous Coward
    We will find out he met with the Kush and Jr last year. The Mooch will deny it happened right before Jr posts the entire email chain on twitter.

  • Suspected of not being HSBC. (Score:4, Insightful)

    by Anonymous Coward on Thursday July 27, 2017 @08:18PM (#54895721)

    You can launder as much crime money as you want if you are a bank.

    • Re: (Score:2)

      by torkus ( 1133985 )

      No no no...you can't do that!

      You have to follow all the anti-money-laundering rules first and launder your money through the gaping holes in the 'advanced' software and algorithms they use.

      Oh wait... :)

  • Sorry libertarians. We tried it and all it's brought us is pain for everyone including and especially those that didn't play the game. It's hard to imagine how Ransomware would work without crypto currency.

    • Re: (Score:1)

      by Anonymous Coward

      It's hard to imagine how Ransomware would work without crypto currency.

      Things can rarely be uninvented. Criminals don't generally care if something is illegal, either. Good luck, champ. -PCP

    • Re:Bitcoin needs to be illegal to own. (Score:5, Interesting)

      by Hentes ( 2461350 ) on Thursday July 27, 2017 @09:54PM (#54896049)

      Now I'm not a fan of many aspects of of BTC. The fact that there's a finite number of coins lead to a gold rush and speculation bubbles instead of a stable growth, and for all the big plans about replacing all the money in the world the system scales very badly. But it's definitely not a "currency" designed for crime. Every BTC transaction is broadcast to the whole internet, making it much more traceable than paper money. The problem is not BTC, but that BTC laundries are allowed to operate due to the technical and general incompetence of financial authorities. These places have existed for years and did their business quite openly, some of them are literally calling themselves laundries. I'm surprised a crackdown took so long.

      • If it's not a currency designed for crime and so easy to trace, why is it so freakishly popular with criminals?
        • Every single digital fragment of bitcoin from origin to current holder is completely and totally recorded in a ledger that anyone can connect to the network and download and analyze. However, every step on the path is essentially a massive random account number. Nothing in the system tells you who has what number, which sets of numbers are the same etc. However tracking known addresses and monitoring transaction activity can paint a picture pretty quickly. That is what "metadata" is all about.
          • The transparency breaks in exchanges like BTC-E, MtGox, etc. Money goes in one address and pops out another clean as a whistle. That's why the SEC, FTC, and DOJ want visibility into those.

        • Re: (Score:3)

          by Zemran ( 3101 )
          There are criminals that know as little about it as you do. The blockchain is public, anyone can look at it and the police can see where money goes in and where money comes out. Bitcoin is not secret. https://darkwebnews.com/bitcoi... [darkwebnews.com]

      • The fact that there's a finite number of coins lead to a gold rush and speculation bubbles instead of a stable growth,

        How would a cryptocurrency work without a limit on the number of units in circulation? Real currencies are managed by central banks, whose job it is to maintain a reasonable ratio of unit value to what the currency trades for. Private currencies work only if the unit is expressed as a specific tradable commodity, like gold, and because cryptocurrencies are not externally managed at all, they work only if the money supply is algorithmically limited.

        Real currencies are ideally managed to grow at the same rate

        • Re: (Score:2)

          by Hentes ( 2461350 )

          You set the proof of work so that the amount of work required grows as fast as Moore's law.

        • "How would a cryptocurrency work without a limit on the number of units in circulation?"

          Central banks don't use voodoo to determine whether or not to raise rates. They use fairly simple math wrapped up in a lot of subjective nonsense that is only there to leave lots of lots of wiggle room for manipulation to serve personal agendas.

          But there is no reason you couldn't use an algorithm to keep transactions fluid and even assign credit scores to bitcoin addresses and distribute new coin through the credit syste
    • "We tried it and all it's brought us is pain for everyone including and especially those that didn't play the game."

      What pain? Bypassing things governments don't approve of that could generate money to launder is part of the point and isn't pain for actual people.

    • Re: (Score:2)

      by Zemran ( 3101 )
      Ransomware does not work with crypto currencies so I fail to see the analogy. All legitimate exchanges will close the account of such criminals and in the recent famous wave of malware people could not pay the ransoms because the accounts were closed. All this sort of stupidity will do is push it underground and stop reasonable people from being able to benefit from the latest secure currency. As illegitimate exchanges spring up the ransomware makers etc. will be the main beneficiaries of such laws. The

  • is BitCoin real now? (Score:5, Funny)

    by turkeydance ( 1266624 ) on Thursday July 27, 2017 @08:35PM (#54895781)
    because if he took "real" money and exchanged it for "nothing" then he defrauded drug kingpins and they will work faster than the Feds.

    • Not money, an asset (Score:4, Insightful)

      by perpenso ( 1613749 ) on Thursday July 27, 2017 @09:33PM (#54895983)

      is BitCoin real now? because if he took "real" money and exchanged it for "nothing" then he defrauded drug kingpins and they will work faster than the Feds.

      According to the US gov, its an asset not money. You can buy, sell and trade assets. Buying/selling bitcoins is sort of like stock, you have to note the value when purchased and sold, report the capital gain or loss. So when you buy that cup of coffee with bitcoin be sure to note the value of those coins when purchased/received, the value spent at, and report the gain/loss to the IRS. Actually, your bitcoin client software should be able to do all that for you. I'm sure BTC-e servers are only down while they implement such support for US clients. :-)

      FWIW, the argument that bitcoin is an asset not a currency is rational. Its currently too volatile to be a store of value. Although they are a convenient way to transfer money. Buy, transfer, and sell; never hold unless you are a speculator.

      Bitcoin is currently only a competitor to PayPal, not the dollar or euro.

      • "Bitcoin is currently only a competitor to PayPal, not the dollar or euro."

        Fair enough. I still maintain that is a function of the size of the market more than anything. The smaller market makes the impact of speculators more evident. Dollars and Euros have much bigger markets so it takes a lot more to move them an appreciable amount. Also, the value of your dollars relative to euros might have moved enough to buy your kid a car for graduation last night due to speculators but you probably wouldn't know bec

        • The ultimate killer feature is that bitcoin can't be counterfeited or manipulated by a central authority.

          Yes, it can. 51% Attack, Majority Hash Rate Attack.

          "To date, Ghash.io has twice come dangerously close to obtaining 51% of the bitcoin network's hashing power. The popular pool was able to gain 42% of the network in January, and, just last week, the pool reached a worrying 50%. In theory, obtaining a majority of network power could potentially enable massive double spending and the ability to prevent transaction confirmations, among other potentially nefarious acts. However, despite widespread concern

      • Re: (Score:2)

        by Zemran ( 3101 )
        I would say that bitcoin is a very real competitor to PayPal but also a competitor to Visa and Mastercard. For me the more the government regulate these people the more attractive bitcoin becomes. A lot of my customers are Russian and the current crazy shit means that getting paid is a problem so I love bitcoin and am moving over. At the moment it is a good time to take the plunge if you want to speculate. Of course it is a risk so do not bet more than you can afford to lose. There has just been a fork

        • BTC true believer here.

          I don't see BTC as a real competitor to Paypal, Visa, or Mastercard for one big reasons. The transaction confirmation time _sucks_ and is unpredictable.

          I bought some kit with BTC from Overstock and it took hours to confirm in the blockchain even though I put a fat fee on it. That's rubbish compared to a PayPal or CC transaction that is "slow" if it takes 30 seconds.

          The network needs to dramatically increase the block rate if it's going to compete in that space. To me the static 10-

          • If its an online purchase where the goods are to be delivered does waiting for the desired number of verifications matter?

            • Yes, the transaction time matters. There are cutoffs times for shipping, and a three hour payment delay can easily make a day of difference on when you get your kit. You might not "feel" that with wait-a-week shipping, but you definitely feel it with next-day and two-day deals.

              If you want to use your BTC for day to day transactions it's worse. Remember the 10,000 BTC pizza? Do you want to wait hours for your pizza transaction to confirm?

  • The lesson we learn today (Score:1)

    by Anonymous Coward
    Is that if you do any business that touches the US, you can be picked up willy-nilly on most of the planet. The lesson learnt today is not to do any business with the US.

    • Re:The lesson we learn today (Score:5, Funny)

      by dasgoober ( 2882045 ) on Thursday July 27, 2017 @09:12PM (#54895901)

      The Lesson: Do your crime in Russia and stay in Russia.

      It's a big country, don't they have nice beaches ?

      • Re: (Score:2)

        by rtb61 ( 674572 )

        Do lots of crime all over the place and you become a competitor with the banks and they don't tolerate competition. They are going to have to be super tight on security, this dude is a potential criminal investigation gold mine. Turn over 4 billion in criminal currency (in today's value rather than the original value, nice pump up their boys) and you have a hook into and a record of quite a lot of crime and criminals. I dare say many countries would like to get a hold of this guy and I don't understand why

      • The Lesson: Do your crime in Russia and stay in Russia.

        It's a big country, don't they have nice beaches ?

        I think you're kidding, but the answer is actually "Not really". They have Sochi and that's about it. Sochi is a crummy small town that nobody would pay attention to had Putin not developed some kind of rapport for it and elevated it far above its status. It's not the main reason that Russia wanted Crimea back, but I'd say that at least a small component of that land grab was that it has basically served as Russia's version of Florida for quite a long time now. Prior to the takeover a significant porti

      • It's a big country, don't they have nice beaches ?

        They do now, since 2014.

      • The nice beaches are in Crimea.

        Really, they are. :)

    • Re: (Score:1)

      by Anonymous Coward

      According to the summary, he operated businesses in San Francisco. That's more than touching the US

  • Clarification please (Score:4, Insightful)

    by sit1963nz ( 934837 ) on Friday July 28, 2017 @12:14AM (#54896579)
    How can a US Jury indict someone ?

    Surely even in the US indict mean "arrest and charge", so I am not sure how a jury can be involved.

    In a trial, yeah sure have a jury, but before a trial ???
  • I lost 45 BTC at Tradehill when they got shut down and narrowly avoided getting hit by the MTGox shutdown. I just last week took my remaining funds out of BTC-E too! Fool me once, shame on you, Fool me twice, just kidding that will never happen and I hope this asshole gets executed.

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