Bitcoins of zero tolerance: digital currency in criminal world

Bitcoins of zero tolerance: digital currency in criminal world

Crimes related to cryptocurrency are a relatively new phenomenon in the world of cybercrime.⁠

Given the absence of a single standard for the regulation of the digital currency, each country independently determines whether operations with bitcoins or any other virtual banknotes are violation of local laws. The main form of illegal use of crypto currency is money laundering for illegal activities.


Anthony Murgio (Photo: Brendan McDermid / Reuters)

In July 2015, in Florida, the FBI arrested US citizens Yuri Lebedev and Anthony Murgio on charges of an unlicensed bitcoin exchange administration. According to the bureau, Lebedev and Murgio created the exchange, where users could exchange bitcoins for real money, in 2013, but did not register a stock exchange in the Ministry of Finance, which is contrary to the law. Anthony Murgio was sentenced to 5.5 years in prison. Lebedev was found guilty of hiding the activities of the exchange from the regulators in March 2017, he awaits the verdict.


Alexander Vinnik (in the center) (Photo: Sakis Mitrolidis / AFP)

At the end of July 2016 in Greece, at the request of the US Justice Department, Russian Alexander Vinnik was detained - the key person in the organization of one of the oldest exchanges BTC-e. A press release on the website of the US Justice Department says that he is suspected of providing illegal financial services and money laundering. According to police, allegedly headed by a Russian criminal organization legalized up to $4 billion since 2011.

By his actions, according to law enforcement agencies of the United States, Vinnik contributed to drug trafficking, the theft of personal data, and also helped to legalize the illegal proceeds of criminal groups around the world. The prosecution calls Vinnik the owner and operator of numerous BTC-e accounts, including administrator accounts, and also as a beneficiary of the offshore Canton Business Corporation, which is managing the exchange.

According to the prosecution, the proceeds from hacker attacks and thefts from crypto-exchange exchanges were passed through the alleged administrative accounts of BTC-e, allegedly connected with Vinnik. Vinnik is also accused of having received funds from hacking bitcoins exchange Mt. Gox, and also legalized them through various online services, including exchanges BTC-e and Tradehill. Investigators note that the BTC-e exchange has been involved in hacker attacks using extortion viruses many times. The domain of was included in the register of domain names containing information, the distribution of which is prohibited in Russia, in November 2015; access to the site is limited. Under the laws of Greece, he may be in custody pending trial in the extradition case for up to two months. Vinnik is kept in the prison of Thessaloniki.

In January 2016, the European Police (Europol) reported that in December 2015, one of the key members of the DD4BC extortion group and another suspect were arrested. The names of the detainees were not mentioned, but it was reported that the group's leaders lived in Bosnia and Herzegovina. The report also said that the detention occurred as a result of a joint operation of law enforcement agencies of Austria, Bosnia and Herzegovina, Germany and the United Kingdom. DD4BC is a cybercrime group that demanded redemption from the victims in 2014, and in case of non-payment it carried out DDoS attacks. The size of the repurchase was 25-50 bitcoins. The main victims of the group were representatives of the gambling business and payment services.


In January 2016, the Netherlands police detained ten people on suspicion of laundering up to $22 million of criminal proceeds from the sale of drugs on the Internet with the help of bitcoins. The criminals were singled out due to their accounts often received significant amounts of money, after which they were cashed through ATMs. The investigation was conducted in cooperation with law enforcement agencies of the United States, Australia, Lithuania and Morocco.


In February 2014, Pascal Reid and Michel Espinoza were detained on suspicion of money laundering with the help of bitcoins in the US state of Florida. According to the local prosecutor, Florida was the first state to file such charges. Reid was sentenced to probation - he pleaded guilty: as part of the deal with the investigation, he was supposed to ‘educate’ law enforcement agencies about crypto currency. Espinoza was accused of illegally transferring and laundering bitcoins amounting to $1500. In July 2016, the court ruled that bitcoin is not a monetary unit, and the Espinoza’s charge of laundering was quashed. In 2017, lawmakers proposed adding the concept of ‘virtual currency’ in the legislative act on money laundering.



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