BTC-e Fined by FinCEN



BTC-e fined for violation of US AML laws
  • Prosecution against BTC-E Canton Business Corporation for “willfully violating U.S. anti-money laundering (AML) laws”
  • Penalty USD$110,003,314 of which USD$12 million penalty against Alexander Vinnik one of the operators of BTC-e
Specific acts of money laundering
  • BTC-e accused of processing 300,000 of the bitcoins stolen from Mt Gox
  • “FinCEN has also identified at least $3 million of facilitated transactions tied to ransomware attacks such as “Cryptolocker” and “Locky””
  • “BTC-e failed to obtain required information from customers beyond a username, a password, and an e-mail address”
  • “BTC-e’s customer service representatives offered advice” on getting money from dark markets
  • It is notable that the accusations relate primarily to bitcoin. This suggests that the evidence may have been collected using bitcoin blockchain analytics tools.
FinCEN commenced this action with a strong deterrence in mind
  • “This action should be a strong deterrent to anyone who thinks that they can facilitate ransomware, dark net drug sales, or conduct other illicit activity using encrypted virtual currency.  Treasury’s FinCEN team and our law enforcement partners will work with foreign counterparts across the globe to appropriately oversee virtual currency exchangers and administrators who attempt to subvert U.S. law and avoid complying with U.S. AML safeguards.”
Registration requirement for foreign exchanges
  • Regardless of its ownership or location, the company was required to comply with U.S. AML laws and regulations as a foreign-located MSB including AML program, MSB registration, suspicious activity reporting, and recordkeeping requirements.
  • This is a clear indication that unregistered exchanges outside of the US may be prosecuted for not being registered with FinCEN.