US Files Lawsuit Against Bitcoin Exchange That Helped Launder Ransomware Profits (zdnet.com) 70
The U.S. Department of Justice has filed a civil lawsuit seeking to recover more than $100 million from a notorious cryptocurrency exchange that has helped cyber-criminals launder stolen funds, such as those obtained from ransomware payments, dark web drug marketplaces, and funds from hacked cryptocurrency exchanges. ZDNet reports: In a lawsuit filed on Friday, July 26, the U.S. wants to recover $88,596,314 from the accounts of the now-defunct BTC-e cryptocurrency exchange, and an additional $12 million from Alexander "Mr. Bitcoin" Vinnick, BTC-e's founder and CEO. The sum represents a fine that was imposed by the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) in 2017 when the FBI shut down the BTC-e portal, and Greek authorities arrested Vinnick. For the past two years, the DOJ has been trying to extradite Vinnick to the U.S. to face charges, but with no success. The DOJ's civil lawsuit is an alternative legal method to make sure the U.S. Treasury FinCEN recovers its due fine in the case U.S. authorities opened in 2017.
Those fines were imposed because BTC-e violated the Bank Secrecy Act (BSA). First by not registering with U.S. authorities as a Money Services Business (MSB), even if it catered to U.S. consumers. Second, for failing to implement an anti-money laundering (AML) program in accordance with U.S. and many other international standards. And third, for failing to file any suspicious activity report (SAR) for the numerous shady transactions that have happened on its platform. When authorities charged Vinnick and shut down BTC-e on July 26, 2017, the DOJ said that the platform, which claimed on its website to have handled over $7 billion worth of Bitcoin in its lifetime, had laundered criminal proceeds of more than $4 billion, representing more than half of the funds that have ever gone through its accounts. After the BTC-e shutdown, it was revealed at the Black Hat USA 2017 security conference that 95% of all ransomware ransom payments that had been made up until that point had been cashed out and converted into fiat currency through Vinnik's BTC-e portal.
Those fines were imposed because BTC-e violated the Bank Secrecy Act (BSA). First by not registering with U.S. authorities as a Money Services Business (MSB), even if it catered to U.S. consumers. Second, for failing to implement an anti-money laundering (AML) program in accordance with U.S. and many other international standards. And third, for failing to file any suspicious activity report (SAR) for the numerous shady transactions that have happened on its platform. When authorities charged Vinnick and shut down BTC-e on July 26, 2017, the DOJ said that the platform, which claimed on its website to have handled over $7 billion worth of Bitcoin in its lifetime, had laundered criminal proceeds of more than $4 billion, representing more than half of the funds that have ever gone through its accounts. After the BTC-e shutdown, it was revealed at the Black Hat USA 2017 security conference that 95% of all ransomware ransom payments that had been made up until that point had been cashed out and converted into fiat currency through Vinnik's BTC-e portal.
AML is, ironically, good for bitcoin (Score:3)
I'm sort of two minds about AML. one the one hand the notion of quasi-anonymizing method of payment is very intriguing. Just it's existence gives a relaxing feeling that maybe there's ways to hide from government's heavy gaze. Not that I need that but it's nice to think idealistic thoughts and hope it gives us some protection from governement control. The creeping controls of China, Iran, and even the US give one a slight worry about the future.
But the otherside of AML that is is anti-crimminal emterprise is also good for me and practicallly probably more realistically beneficial to me on a dailybasis. Not just for my own personal safety from crimminals but the anti-corruption aspects prevent the corrosive effects of cummulative graft and corruption of soieties.
It seems to me the government had two ways to deal with the bit coin problem. Kill bitcoin or kill the money laudering using it. So it's kinda nice that the decided to let bitcoin live and emphasize the AML aspect instead.
THus if you like Bitcoin you maywant to see AML as not a threat to it but it's ultimate saviour from being banned. It Does erode the anonymity of bitcoin but that seems to be the essential trade off one has to make to do AML in the first place.
Re: (Score:3, Insightful)
Re: (Score:2)
Money laundering, ransomware and illegal drugs are why bitcoin exists.
The solution to ransomware is better security and backups. The solution to illegal drugs is legalization. The solution to money laundering is to stop pretending that private transactions are a crime.
Re: (Score:2)
The solution to illegal drugs is either legislation (give up completely) or capital punishment for their use (remove the consumers).
Re: (Score:2)
Re: (Score:2)
Re: (Score:2)
In order to solve the ransomware problem you'd need to kill every independent bitcoin (and other anonymous e-coin) exchange.
Re: (Score:1)
Re: (Score:2)
BitCoin was never intended to be anonymous I do not think. Just the opposite, the giant spreadsheet of every transaction is more than public, it is required that it be shared.
Only through creative use of the bitcoin protocol, through dozens of different wallets, can you hope to hide your transactions, and even that is not possible any longer as ledger analysis can now easily sort through and find the wallet relationships.
It is security through obscurity at best and we all know how reliable that is.
if you ar
Re: (Score:2)
It is anonymous at the last mile: the connection between your userID and your real-world identity is secret. Of course if you have stuff sent to a delivery address the vendor knows that much. But it isn't necessarily embedded into the bit coin record. Paying cash usually discloses your human form but not necessarily your name. So both are somewhat anonymous. Not perfectly so. Quasi Anonymous.
A start (Score:2, Troll)
The banks that launder the drug money are next, I assume?
Re: (Score:2)
20 years ago the governments of the world proudly put out of business a giant Asian bank. Then hemmed and hawed when millions found their life savings wiped out and why didn't the governments plan better for this before going for a notch on their belt?
how can you launder something that isn't money (Score:2, Interesting)
The US government said that Bitcoin was not a currency and was property instead: https://www.theguardian.com/technology/2014/mar/31/bitcoin-legally-property-irs-currency
Re: (Score:2)
In the US, the Constitution gives Congress the exclusive power to coin money, so yes, bitcoin can only be used for transactions if it is a commodity, and trading things for things is legal and precedes even the invention of money.
Congress wouldn't stick its fumble fingers into this for fear of wrecking massive profits by voters.
You owe on it when you sell it for cash.
Re: (Score:2)
In the US, the Constitution gives Congress the exclusive power to coin money...
(1) The power to coin money is not exclusive to Congress, just prohibited to the States. The States didn't create Bitcoin. Prior to Bitcoin there already existed any number of private community currencies which are not in violation of this rule. (2) "Coining money" is the process of stamping out physical coins. Not all money takes the form of coins. Bitcoins are not actual coins and so rules related to coining money would not apply regardless of whether Bitcoin is considered "money" or a "currency".
The IRS
Re: (Score:2)
The US government said that Bitcoin was not a currency and was property instead: https://www.theguardian.com/te... [theguardian.com]
You launder money by using dirty money to buy assets, and then sell the assets to get clean money. In this case the asset was bitcoin. There's no contradiction.
Re: (Score:2)
Re: (Score:2)
money laundering is done all the time with assets.
And artists and the art world are deeply grateful to the criminal world for this. :-)
Re: (Score:2)
that is how Money Laundering works - you exchange dirty money for something else, then exchange that for money
Dirty money pays for Bitcoin which they absorb and payout with money to the hackers - Bitcoin is the valuable property
Re: (Score:2)
How does this actually work? (Score:2)
I thought that the exchanges were there mainly to just register the trades, to prevent double spend.
The sale and purchase of the coins was point to point.
Re: (Score:2)
Not at all. The prevention of double spends is handled on a technological level. Slowly - it's the reason a transaction can take hours to confirm sometimes.
The exchanges are just businesses - like standard currency exchanges, but slightly shadier. You can buy bitcoins for conventional currency, or vice versa. Most of them will also handle your wallet for you, because it saves the effort or running your own bitcoin daemon.
Re: (Score:2)
Re: (Score:2)
If they dealt with US customers in the US, then they have to obey US laws or not do business in the US. There is nothing unusual about this.
Re: (Score:2)
And laundering money from crimes against people inside the US violates US law and can also be pursued. Crime in a country, orchestrated from outside, can still be charged, and is what extradition is for.
Re: (Score:1)
Here's a question then. Let's say I set up a business. I'm not based in the US and neither are the computers I use. I fully comply with the laws of the country in which I have incorporated my business, which has a customer website - like most - accessible from almost everywhere in the world.
Why, ethically, morally or legally, should it be the case that the moment a single US citizen - completely of their own free will - decides to use my service, I should now automatically be forced to comply with US laws?
T
Re: (Score:2)
Re: (Score:1)
it's long since time to start tearing up any extradition treaty signed with the US. The US government / populace has gone haywire, and cannot be trusted.
Foreign courts and law enforcement can say "no" (Score:2)
Why, ethically, morally or legally, should it be the case that the moment a single US citizen - completely of their own free will - decides to use my service, I should now automatically be forced to comply with US laws?
You are not. Your local laws are forcing compliance with US laws if the US laws are compatible with yours and the matter is non-trivial.
The US does not get to enforce US law in a foreign country. If it wants to arrest a person it has to have the foreign country arrest and extradite the person. If it wants to seize assets it has to have the foreign country seize the assets and turn them over. If it wants a contract enforced it has to ask a foreign court to enforce it.
The courts and law enforcement agen
pleasee.... (Score:1)