by Joseph Young
The Russian Foreign Ministry has condemned the request of the US government to extradite Alexander Vinnik, who has been charged with money laundering in relation to BTC-E and kept in custody by Greek law enforcement agencies.
In July, in a report entitled “Breaking open the MtGox case,” Japanese cybersecurity firm WizSec revealed the involvement of Alexander Vinnik in laundering up to $4 billion worth of bitcoin from the Mt. Gox and Bitcoinica security breaches, as well as ransomware payments. The Mt. Gox and Bitcoinica breaches were the largest hacks in the history of Bitcoin that have led to over $2.5 billion in losses at the current price of bitcoin.
“After the coins [Bitcoin from Mt. Gox hack] entered Vinnik’s wallets, most were moved to BTC-e and presumably sold off or laundered. In total some 300,000 BTC ended up on BTC-e, while other coins were deposited to other exchanges, including MtGox itself. Some of the funds moved to BTC-e seem to have moved straight to internal storage rather than customer deposit addresses, hinting at a relationship between Vinnik and BTC-e. The stolen MtGox coins were not the only stolen coins handled by Vinnik; coins stolen from Bitcoinica, Bitfloor and several other thefts from back in 2011 and 2012 were all laundered through the same wallets.”
Upon the release of the report of WizSec, which had continuously collaborated with international law enforcement agencies for the past few years in investigating the theft of Mt. Gox and other large-scale Bitcoin exchanges, the Russian entrepreneur was arrested in Greece on July 26.
Immediately after the arrest, the US government and its law enforcement agencies requested the extradition of Vinnik, to investigate into his criminal activities and involvement in laundering $4 billion in the span of five years.
Boris Zilberman, a Russia analyst with the Foundation for the Defense of Democracies, stated that the US government would be focusing the investigation in unraveling other actors in his Bitcoin laundering scheme if the Russian entrepreneur is extradited to the US.
“[Mr. Vinnik‘s] only bargaining chip is to turn over what he knows. And nobody knows what he could say. Was he a purely a lone actor? Does he know the wider chart of people involved across these currency spaces conducting this type of behavior? Can he flip on others?”
Zilberman continued to emphasize that the Russian government is concerned with the extradition of Vinnik to the US because it may fear the leak of additional information in regards to the money laundering case:
“Everyone is worrying about the unknowns. And the murkiest questions is — the $4 billion that he was laundering — who and what were involved? If you’re taking the more conspiratorial viewpoint, you ask, are the Russians afraid of Vinnik turning that information over to the U.S.?”
But, the Russian foreign ministry firmly stated that the extradition of Vinnik is in clear violation of the basics of international law, in that he had no association with any entity, individual, and organization in the US. The foreign ministry further noted that Vinnik should not be extradited to the US.
“We consider the verdict unjust and violating the basics of international law. According to generally accepted legal norms, the Russian request takes precedence [over another country’s] as Vinnik is a citizen of the Russian Federation,” the Foreign Ministry said.