On June 9, the U.S. Department of Justice (DoJ) unsealed charges related to the 2011 hack of the cryptocurrency exchange Mt. Gox and the operation of the illicit cryptocurrency exchange BTC-e. The indictments charge two Russians with conspiracy to commit money laundering and with operating an unlicensed money services business.

According to the documents released by the DoJ, Aleksey Bilyuchenko and Aleksandr Verner, both Russian nationals, are charged with stealing and laundering approximately 647,000 bitcoin from Mt. Gox, representing the vast majority of the crypto belonging to the exchange's customers.

Mt. Gox was a Japanese bitcoin exchange launched in 2010, handling over 70% of all bitcoin transactions worldwide by early 2014 when it collapsed. The fall was caused when 750,000 bitcoin went missing. Further investigation led to a conclusion that most or all of the missing bitcoin was stolen straight out of the Mt. Gox hot wallet over a period of time, beginning in late 2011.

Later they laundered the money through different companies, including the newly founded BTC-e crypto exchange. One of the schemes mentioned was a fraudulent  “Advertising Contract” (which was never executed) to provide advertising services to a Bitcoin brokerage service based in New York.

Aleksey Bilyuchenko photo. Source: U.S. Secret Service

We could not find any photo of an Aleksandr Verner except that of an alleged Russian spy who moved to Argentina in 2022.

Another Alexander Verner or possibly the same. 

Aleksey Bilyuchenko was charged with operating BTC-e crypto exchange from 2011 to 2017 together with Aleksandr Vinnik, his partner in the new venture. The latter was arrested in Greece in 2017 and now awaits trial in California. If convicted, Vinnik could face a maximum penalty of 55 years in prison. Bilyuchenko was with Vinnik in Greece but managed to escape the arrest by fleeing to Moscow.

Aleksandr Vinnik. Source: Bloomberg
BTC-e became one of the world’s biggest cryptocurrency exchanges, primarily targeting Russian auditory with servers located in the USA, until it was shut down by the FBI in 2017. Later the exchange was renamed to WEX and, according to some reports, fell under the control of the FSB (The Federal Security Service of the Russian Federation, the main successor of the Soviet KGB) and is now managed by Russian oligarch Konstantin Malofeev.

If convicted of the charges in the BTC-e case indictment, Bilyuchenko faces a maximum penalty of 25 years in prison. In addition to the 20 years he and Verner face for the Mt.Gox case. However, the whereabouts of both suspects is currently unknown.

“This announcement marks an important milestone in two major cryptocurrency investigations. As alleged in the indictments, starting in 2011, Bilyuchenko and Verner stole a massive amount of cryptocurrency from Mt. Gox, contributing to the exchange’s ultimate insolvency. Armed with the ill-gotten gains from Mt. Gox, Bilyuchenko allegedly went on to help set up the notorious BTC-e virtual currency exchange, which laundered funds for cyber criminals worldwide,” - said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division.

The suspects allegedly gained unauthorized access to the server holding the cryptocurrency wallets for Mt. Gox as early as in 2011. This means Verner was 17 years old at the time of the original hack.

The investigation and litigation took almost a decade, and creditors are still waiting for their money. Theoretically, the repayments are expected by October this year. Still, the creditors will receive only a tiny amount of what they’ve lost: $1.7 billion in cash, 141,000 bitcoin, and another 142,000 bitcoin cash (BCH) are to be distributed as part of a civil rehabilitation plan, according to reports. It might sound frustrating, but let’s keep in mind that the price of BTC has significantly increased over the years. Here you can read more about Mt. Gox Saga.

The Mt. Gox fall was the first incident of a major crypto exchange collapsing, and the whole crypto community has been Observing this story with a genuine interest for almost ten years now. We hope that now the situation will develop more rapidly and we won’t have to wait another decade to know the eventual truth.

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