New Zealand freezes $90 million in BTC-e money laundering case

The ongoing case claims the owner of BTC-e permitted the platform to be used for money laundering.

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Law enforcement in New Zealand has seized $140 million NZD ($90 million USD) as part of a case against Alexander Vinnik, the alleged former operator of BTC-e.

Vinnik, claimed to be BTC-e's founder and CEO, has been sought by law enforcement in the US, France, and Russia on charges of money laundering. New Zealand has now become involved following the discovery of a company registered in the country, Canton Business Corporation. 

Caton, which New Zealand says is owned by Vinnik, has now had $165.4 million in cash and bank accounts frozen, alongside close to $63 million in assets and property. Local law enforcement called the seizure "the largest restraint of funds in New Zealand Police history."

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BTC-e is a now-defunct cryptocurrency exchange which was closed down by the US Department of Justice (DoJ) in 2017. Prosecutors claim that over the course of its lifetime, the exchange was used to launder over $4 billion -- and researchers estimate that at its peak, the platform was used to wash up to 95% of ransomware blackmail payments generated by criminals. 

New Zealand Police Commissioner Andrew Coster said the platform effectively acted as a service for laundering criminal proceeds generated through computer hacking, ransomware, theft, fraud, corruption, and drug crime. 

"These funds are likely to reflect the profit gained from the victimization of thousands, if not hundreds of thousands, of people globally as a result of cybercrime and organized crime," commented Coster. 

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Coster added that the New Zealand police force is working with international partners including the US Internal Revenue Service (IRS) and an investigation is ongoing. An application to the High Court has been made for the forfeiture of the funds taken from Caton. 

BTC-e operated from the United States. The DoJ has launched a civil lawsuit against Vinnik for failing to register as a Money Services Business (MSB), for not creating an anti-money laundering (AML) program, and for failing to report suspicious activities. In total, the lawsuit seeks $88,596,314 from BTC-e accounts and $12 million from Vinnik. 

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In addition, law enforcement wants the former owner to answer for allegedly allowing criminal groups to conduct money laundering via BTC-e, which may have included the theft of funds from the Mt. Gox cryptocurrency exchange.  

Russia accuses Vinnik of fraud, but this charge is far lighter as it only relates to $11,000. Russia is Vinnik's home country.

The tug-of-war resulted in Vinnik being arrested by Greek authorities and being extradited to France after 30 months of detention. Now held in France, extradition requests by the US and Russia are pending. 

Vinnik's lawyers say that their client has been subject to human rights abuses during the proceeds. All wrongdoing has been denied.  

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