The Justice Department unsealed charges Friday naming two Russian nationals as conspirators in laundering approximately 647,000 in bitcoin stolen more than a decade ago in a hack of the now-defunct cryptocurrency exchange Mt. Gox.
Alexey Bilyuchenko, 43, and Aleksandr Verner, 29, allegedly gained unauthorized access in 2011 to a server holding wallets belonging to the exchange and continued to launder funds through 2017. At the time, Mt. Gox was the largest cryptocurrency exchange in existence, handling a majority of bitcoin transactions globally.
The theft — valued at some $450 million — was the biggest ever suffered by the cryptocurrency industry at that point and led to Mt. Gox’s bankruptcy in 2014.
“Alexey Bilyuchenko and Aleksandr Verner thought they could outsmart the law by using sophisticated hacks to steal and launder massive amounts of cryptocurrency, a novel technology at the time, but the charges unsealed demonstrate our ability to tenaciously pursue these alleged criminals, no matter how complex their schemes, until they are brought to justice,” Damian Williams, the U.S. attorney for the Southern District of New York, said in a statement.
As part of the money laundering scheme, prosecutors allege that Bilyuchenko and Verner entered into a fraudulent contract with a bitcoin brokerage service in the Southern District of New York to liquidate and transfer more than $6.6 million to overseas bank accounts.
Prosecutors allege that Bilyuchenko used proceeds from Mt. Gox to conspire with Russian national Alexander Vinnik to operate BTC-e, one of the world’s largest cryptocurrency exchanges and a key money laundering hub for cybercriminals. Vinnik was arrested in Greece in 2017 on a 21-count indictment related to BTC-e, which allegedly helped launder more than $4 billion in criminal proceeds.
Between 2011 to 2017 BTC-e served more than one million users worldwide and received criminal proceeds of “numerous computer intrusions and hacking incidents, ransomware events, identity theft schemes, corrupt public officials, and narcotics distribution rings,” according to the U.S. Justice Department.
Vinnik was extradited to the United States in August and has recently lobbied to be a part of a prisoner swap between Russia and the United States that might include the imprisoned U.S. journalist Evan Gershkovich.
On Friday, the Northern District of California also charged Bilyuchenko with money laundering conspiracy and operating an unlicensed money services business that prosecutors allege was used to enable criminal activity, including ransomware attacks and malicious hacking.
“Bilyuchenko and his co-conspirators will learn that the Department of Justice has long arms and an even longer memory for crimes that harm our communities,” Ismail J. Ramsey, the U.S. attorney for the Northern District of California said in a statement.