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US Charges Russians With Hacking Cryptocurrency Exchange

Two Russian nationals are charged in the US with hacking a cryptocurrency exchange and conspiring to launder the proceeds.

Two Russian nationals have been charged in the US with hacking the now-defunct cryptocurrency exchange Mt. Gox and conspiring to launder the proceeds.

The individuals, Alexey Bilyuchenko, 43, and Aleksandr Verner, 29, allegedly attempted to launder 647,000 Bitcoins from their hack of Mt. Gox.

According to court documents, the two and other co-conspirators hacked Mt. Gox, the largest Bitcoin exchange at the time, in September 2011. Launched in 2010, Mt. Gox was handling over 70% of Bitcoin transactions.

The Japan-based exchange service shut down operations in February 2014 and filed for bankruptcy protection, after the theft of cryptocurrency was publicly disclosed. Initially, the company estimated the loss of roughly 850,000 Bitcoins, but 200,000 Bitcoins were retrieved from an old wallet shortly after.

On Friday, the US unsealed an indictment alleging that Bilyuchenko and Verner were among the individuals responsible for the hack, and that they laundered at least 300,000 of the stolen Bitcoins.

One of the schemes they used for the laundering, the indictment says, was a fraudulent advertising contract with a New York-based Bitcoin brokerage service.

The service allegedly transferred more than $6.6 million into various offshore bank accounts, at the request of the Bilyuchenko, Verner, and their co-conspirators.

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In a second indictment unsealed on Friday, Bilyuchenko and another Russian national, Alexander Vinnik, are charged with operating the illicit cryptocurrency exchange BTC-e from 2011 until 2017, when it was shut down by law enforcement.

According to the indictment, BTC-e served more than one million users globally, processing billions of dollars’ worth of transactions. The exchange allegedly received criminal proceeds from numerous hacks, ransomware attacks, and identity theft schemes.

Vinnik, who was sentenced in France in 2020, is currently serving prison time in relation to his involvement in operating the exchange. He was charged in the US in 2017.

Related: US Announces Takedown of Card-Checking Service, Charges Against Russian Operator

Related: US Charges 20-Year-Old Head of Hacker Site BreachForums

Related: US Charges Two Men Over Use of Hacked Law Enforcement Database for Doxing

Written By

Ionut Arghire is an international correspondent for SecurityWeek.

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