BTC-e and its founder charged in 21-count indictment over hack of Mt. Gox

https://www.justice.gov/usao-ndca/pr/russian-national-and-bitcoin-exchange-charged-21-count-indictment-operating-alleged

by ryanlol • 9 years ago

458 243 9 years ago

justice.gov

ryanlol7• 9 years ago

There's been no mentions of coin seizures anywhere as far as I can tell. Usually you'd see some boasting about that.

Perhaps these guys were actually smart about their cold storage?

JohnJamesRambo• 9 years ago

He wasn't too smart, he redeposited some of the coins in Mt. Gox and that's how they identified him!

artursapek2• 9 years ago

https://xkcd.com/538/

brokenmachine• 9 years ago

I love xkcd, but I'm getting sick of seeing that one.

benwilber0• 9 years ago

Page 6 article 20 says they operated their servers in the United States. If that's true then I'm pretty sure they've already been seized. They were probably on aws

quickthrower24• 9 years ago

That could just be the web farm. The clearing might be done from Russia.

ryanlol7• 9 years ago

That shouldn't give the feds any more than their hotwallet.

idonotknowwhy3• 9 years ago

In which case, maybe they also have a copy of the private keys in Russia, and can move the funds somewhere safe.

Moter8• 9 years ago

Considering the btc-e Twitter says they are going to re-open the site in 5-10 days, the coins were probably not seized.

gruez• 9 years ago

Russian National And Bitcoin Exchange

So nothing will happen to the site or its owner, other than maybe they won't be able to transfer out USD.

ryanlol7• 9 years ago

They've already had the Greek cops go pick up the said Russian National.

wgjordan• 9 years ago

So nothing will happen to the site or its owner

"Defendant Alexander Vinnik Was Arrested in Greece to Face Charges in the United States; Bitcoin Exchange Alleged to Have Received Deposits Valued at Over $4 Billion" - article subtitle

sillysaurus3• 9 years ago

Even though you were mistaken in this case, it's only because Vinnik stepped out of Russia. If he had stayed, he'd have been mostly untouchable. No extradition treaty exists between Russia and the US; not so for Greece.

mirimir3• 9 years ago

Interesting. Bitcoin stolen from Sheep Marketplace also ended up in a BTC-E account.

https://www.reddit.com/r/SheepMarketplace/comments/1t0ueq/sh...

https://www.theguardian.com/technology/2013/dec/09/recoverin...

meowface• 9 years ago

I wonder how much BTC-e knew about these money sources. Were they a general "don't ask, don't tell" laundering operation that just so happened to be used by these people because it was their best laundering option, or were they directly involved in some of the hacks?

olalonde3• 9 years ago

What are the odds that whoever was running BTC-e also happened to be involved in any of those hacks? It's definitely a case of "don't ask, don't tell" and perhaps, making that policy known.

mirimir3• 9 years ago

Well, BTC-e did have an "anything goes" reputation.[0]

0) http://invezz.com/analysis/forex/147-btc-e-anonymity-reigns-...

aarongolliver2• 9 years ago

The website still says "down for unscheduled maintenance"

agorabinary• 9 years ago

The takedown of this large virtual currency exchange

I haven't kept up to date on exchange volume. Was btc-e still a popular exchange (up until this takedown of course)?

ryanlol7• 9 years ago

https://data.bitcoinity.org/markets/volume/30d?c=e&t=b

BTC-e was still pretty big.

subroutine• 9 years ago

When they say that "Bitcoin Exchange Alleged to Have Received Deposits Valued at Over $4 Billion", does that really mean $4 Billion USD? How is that exchange value established?

lettergram• 9 years ago

I still don't understand, the U.S. is charging a Russian with a white collar crime?

The crime was committed outside the U.S., he didn't come to the U.S., the servers weren't in the U.S., Mt.Gox was based out of Japan, and Greek police arrested him.

I've seen this enough to know this is common, but what is going on with this world?

ptenk2• 9 years ago

BTC-E didn't specifically bar US customer from trading there, so the indictment is on the grounds that their services were offered to US citizens, therefore liable to US Law.

kloncks• 9 years ago

iirc they rejected deposits from any American bank accounts and specifically said they won't work with German or US residents or citizens.

1stranger• 9 years ago

As for defendant BTC-e, the indictment alleges that, despite doing substantial business in the United States, BTC-e was not registered as a money services business with the U.S. Department of the Treasury, had no anti-money laundering process, no system for appropriate “know your customer” or “KYC” verification, and no anti-money laundering program as required by federal law.

It's not just about Mt. Gox.

justinjlynn2• 9 years ago

MLATs (mutual legal assistance treaties), extradition agreements, and powerful people with powerful relationships willing to go the extra distance to fuck someone's shit up.

tgtweak• 9 years ago

Let's not forget many mtgox customers were in the US.

King-Aaron• 9 years ago

Team America: World Police

dboreham• 9 years ago

Because all money transits through US banks? (to a first approximation)

PeterisP5• 9 years ago

Pretty much all dollars do; similarly to how a transfer of Euros (even if it's from Nigeria to China) is likely to go through EU.

jonknee2• 9 years ago

If you participate in crimes with US persons or entities you should stay in a country that does not extradite to the US...

Pyxl101• 9 years ago

International stateless crime needs to be prosecuted somewhere. He was indicted in the US because the US decided to go after him for crimes against US citizens, and other jurisdictions like Greece that have extradition warrants with the US decided to participate.

kijin2• 9 years ago

As soon as you touch USD, you're fair game for US authorities. It's like a shrink wrap license.

vkou• 9 years ago

The crime was committed outside the U.S., he didn't come to the U.S., the servers weren't in the U.S., Mt.Gox was based out of Japan, and Greek police arrested him.

No, but he either robbed, or laundered money for people who robbed US citizens (MTGOX customers.)

ubernostrum3• 9 years ago

As others have noted, the US didn't just make up jurisdiction here or declare that they can prosecute anything anywhere -- the charges include an allegation that he transferred stolen BTC to a US-based company. That creates a crime the US has jurisdiction to prosecute.

It really is time for people to stop being gobsmacked at the idea that once you get entangled with an entity in a particular country, anything you do to or with that entity which violates the country's laws is fair game for them to extradite and prosecute you over. Shouting, "But I didn't do it in your country, I did it on the internet!" does not get people out of that.

Also, given just how much global network infrastructure passes through the US, and the near-impossibility of productively cashing out of most criminal schemes without involving a US institution, people should stop being surprised that their clever attempts to commit the perfect stateless crime are neither clever nor stateless.

Nursie3• 9 years ago

I still find it bizarre though - they may never have left their bedroom and suddenly we have a country on another continent getting involved.

always_good3• 9 years ago

You haven't really explained or justified anything. "Them's the rules!!!"

What if Thailand wanted to extradite you because you joked about their king on HN?

You would just laugh, not make a point about "well, what do you expect when you challenge a nation's royal sovereignty? Have some respect on the internet! Thailand takes this very seriously."

drexlspivey• 9 years ago

His arrest was coordinated by the FBI. I doubt he would be arrested at all if not for the FBI.

strathmeyer• 9 years ago

Ask your lawyer before committing too many international crimes.

openmosix2• 9 years ago

The question for me is: why US? He is a Russian citizen, the company is based in Bulgaria, servers in Russia, legal HQ in Cyprus and all the services operated from Seychelles - arrested in Greece. The MtGox hack affected a Japanese company. I'm not debating the nature of the crimes, etc - I am just wondering, when does it become a US case?

I can get the "there were US customers" - but why not Europe? Or Japan? Or Russia? Or Australia? I'm sure BTC-e had customers from all over the world (and money laundry is pretty much a crime everywhere).

So, when does it become "you have broken the US law and you are under arrest"?. Does it work the other way around too? If you start a gay social network in US, can Russia come in (the first time you are flying in one of the Russia's partners territories) and say "you are breaking Russian gay laws, you are under arrest"?

RandVal301422• 9 years ago

If you start a gay social network in US, can Russia come in (the first time you are flying in one of the Russia's partners territories) and say "you are breaking Russian gay laws, you are under arrest"?

Yes.

toomuchtodo• 9 years ago

People often don't realize that if you fly through US airspace after violating certain US laws as non-citizens, you will be apprehended through an emergency layover coordinated with the carrier. That's a contributor to why US federal three letter agencies constantly ingest passenger manifests.

sigmar• 9 years ago

Countries charge foreign nationals of crimes all the time. The fact that this is surprising to many people in these comments is horrifying.

smitherfield• 9 years ago

You're right, despite being downvoted, although such an arrest would almost certainly become a major diplomatic incident.

OTOH someone who broke a Russian law we don't find objectionable (and who isn't connected or famous) would be unlikely to get much assistance from the embassy beyond basic legal advice and help hiring a lawyer.

stepik7773• 9 years ago

Russia mostly prefers to block websites instead of prosecuting their creators. E.g. btc-e.com (but not btc-e.nz) was blocked in Russia but they didn't care about its owners.

ajross2• 9 years ago

The "why" is just "because the DoJ made a case before Europe or Japan". The "how" is just extradition. Greece was willing to extradite him to the US to face these charges. The US would do the same with Greece, though not with Russia as we lack an extradition treaty with Russia (and probably not to face a charge that would be a clear first amendment violation anyway).

olalonde3• 9 years ago

I don't mean to be argumentative but surely no [BTC-e] US customer was a "victim" of any money laundering that may have been going on?

Edit: Since my question wasn't clear, the emphasis was on customer, as in: "customers of a business that also engages in money laundering aren't usually considered victims of that money laundering."

tgarma1234• 9 years ago

I mean seriously. These ponzi schemes all involve american buys propping up the money and it is an absolute miracle that the US government is willing to invest time and money in creating a system of justice that at the very minimum punishes clear breaches of trust in this system. The only alternative is that any money invested in this technology at all is wasted on Russian fraudsters. I mean honestly is everything just pure bullshit in this world or what?

usaphp• 9 years ago

Russian gay laws

What are those?

openmosix2• 9 years ago

https://en.wikipedia.org/wiki/LGBT_rights_in_Russia#Propagan...

Hermel• 9 years ago

In many countries, it is illegal for lawyers to charge a percentage of the obtained damages. But in the US, a lawyer can propose: "I'll help you suing this bastard for free if I get half of the awarded damages." This incentivizes US lawyers to be more confrontational and to seek higher damages than anywhere else.

Edit, found this: "FinCEN today assessed a $110 million civil money penalty against BTC-e for willfully violating U.S. anti-money laundering (AML) laws. Alexander Vinnik was assessed $12 million for his role in the violations." In the US, government agencies can keep such fines for themselves, providing them with a nice incentive to go after such cases.

bb6112• 9 years ago

It's not clear what exactly the outcome is in this case, but in many civil cases the US Treasury uses the penalties to repay the original injured parties. It generally doesn't cover all their losses.

splintercell• 9 years ago

But in the US, a lawyer can propose: "I'll help you suing this bastard for free if I get half of the awarded damages." This incentivizes US lawyers to be more confrontational and to seek higher damages than anywhere else.

But it also gives poor people a chance to sue someone big, because their lawyer isnt asking for a fixed fee.

jcranmer• 9 years ago

The concept involved here is extraterritorial jurisdiction--the US claims the right to enforce its laws on its citizens abroad in some circumstances. The most notorious uses in the US are FATCA (basically forcing foreign banks that do business with US citizen to hand information over to the US) and the FCPA (allowing anyone with pretty much tangential relationship to the US to be sued for bribery). It's telling that the FIFA corruption scandal was brought, not by any EU courts, but by the US federal prosecutors.

In these sort of situations, the main thing that tends to apply is not the ability to get a judgement in court but the ability to get that judgement enforced. So if, say, Fiji were to make up a law and convict, say, Donald Trump under it, no one would care--Fiji would have no practical way to enforce that judgement. But the US can generally get its judgements enforced, even outside the US.

In the specific case of the financial world, the size and importance of the US financial markets gives the US unparalleled power to enforce judgements. The US could not only lock you out of dealing with USD transactions directly, they could also direct banks that do business in the US to not do business with you.

khuey5• 9 years ago

None of that unparalleled power is needed in this case. Greece and the US have an extradition treaty, the crimes alleged by the US are serious, dual criminality exists, they're not political offenses, the guy isn't facing the death penalty, and he's not even a Greek citizen. This is a by-the-book extradition.

jordanbaucke• 9 years ago

@jcranmer agreed. US financial markets (breadth/depth) / US law influence over multi-jurisdicational banking entities, ensures that US law can/will be enforced by almost all players.

Should the authorities in a particular jurisdiction fail to enforce financial crimes, indicting a bank or sanctioning an individual in that region can effectively block all counter-parties from doing business with them (as they are now doing business with a sanctioned or indicted party).

It's hard to explain in laymens terms without sounding like some kind of "Illuminati-nut" (for lack of a better term) ):

And also requires a better understanding of interbank standards and practices, money/current-markets, SWIFT, etc.

modeless4• 9 years ago

Look at the actual charges in the indictment. All the BTC-e stuff is not what he's charged with. He's charged with transferring stolen Mt Gox Bitcoins to Tradehill, a San Francisco based exchange (now defunct). That's the US connection that will seal his extradition.

They also allege that BTC-e is (at least partially) hosted in the US and does business with many US companies, which is likely true. But that's not what they charged him with. Maybe that will come later after he's extradited and they have a chance to go through the evidence they no doubt collected when they arrested him.

On an unrelated note, it looks like the traceability of Bitcoin transactions played a major role in this. It turns out that Bitcoin is really not a great way to launder money, unless you want a record of your money laundering archived forever, redundantly, on a distributed system of computers around the world! I expect future crypto-locker viruses to switch to Monero instead of Bitcoin now that they can no longer cash out through BTC-e. Subsequently I expect to see Monero delisted from any exchange that follows KYC after some pressure from law enforcement.

khuey5• 9 years ago

Yes, the blockchain is a fantastic resource for Feds prosecuting financial crimes. In order to get away with these things you need to have flawless opsec, because the moment they can connect one thing to you everything quickly unravels.

comex• 9 years ago

For one of charges in the indictment, "Operation of an Unlicensed Money Transmitting Business" (18 USC § 1960), they allege that BTC-e satisfied two conditions, either of which alone would have been sufficient to prove the charge. One of the conditions is knowingly transmitting funds derived from a criminal offense, but the other one is just "fail[ing] to comply with the money transmitting business registration requirements set forth in [31 USC § 5330]". So I'd say the BTC-e stuff is indeed part of "what he's charged with", albeit not the main focus.

kobeya5• 9 years ago

As an actual cryptographer who has looked into it, I wouldn't put too much faith in Monero's fungibiliry. The story is not as good as the PR would have you believe, and is really not all that different from Bitcoin with CoinJoin.

simias• 9 years ago

We don't really know what steps they took to launder the money though, do we? Maybe they were dumb and directly moved the coins from a known hack address to Tradehill.

If you're a bit patient and are willing to get your money only a small amount at a time I don't see why you wouldn't be able to launder even a significant amount of bitcoins. Use coin mixers, convert back and forth with other crypto-currencies (including Monero if you want), split and merge the coins, mix that with actual transactions to 3rd party accounts (gambling sites, donations, whatever)... Eventually people will lose track, or at the very least you'll have plausible deniability that the coins changed hands at some point.

Cthulhu_• 9 years ago

Only way to launder BTC - break the history chain, so to speak - is to first pull it out of the network - which requires either an exchange, or like a street deal (cash for BTC). Exchanges require identification so either there's a dodgy one that doesn't ask for that, or you get a mule.

Anyway, then you have cash money, you buy BTC back. Or keep the cash, I mean I wouldn't want to keep BTC if I had stolen it. It's pretty much worthless on its own - as proven by pretty much all media always going about $4 billion instead of 600K+ BTC.

Jabanga3• 9 years ago

Subsequently I expect to see Monero delisted from any exchange that follows KYC after some pressure from law enforcement.

This would be a very dangerous precedent for the cause of privacy. It's the financial equivalent of banning encrypted communication.

zeven7• 9 years ago

Subsequently I expect to see Monero delisted from any exchange that follows KYC after some pressure from law enforcement.

This won't happen. KYC will still remain, but privacy is an important feature that many legitimate businesses want in crypto for completely legal and good reasons. Many of the businesses in the EEA are interested in Ethereum gaining privacy features, and Ethereum plans to add zkSNARKS. At that point it's not just Monereo, ZCash, etc that the exchanges would have to ban but Ethereum as well. It'll be a losing battle for law enforcement.

umanwizard• 9 years ago

Russia "can" do whatever it wants to you while you're in its territory, because it's a sovereign state.

Any "international law" that would stop this is toothless.

juandazapata• 9 years ago

He used the US banking system to launder money. That's exactly the same reason why European FIFA executives and Brazilian Odebretch executives were arrested as well.

csomar2• 9 years ago

The US has this "thinking" that the world is just their backyard. It is not really in the law, strictly speaking. But if you have been watching the news, they strongly interfere with countries for their own (or their politicians) benefit.

For example, they hit Libya with missiles right when Al-Gaddafi sent troupes to defend from future-ISIS militants.

So yes, the US will get involved in stuff that matters to it.

The question for me is: why US?

Because if you know the US is coming and dropping bombs, who the hell wants to fight it? Even Russia is abstaining hard to prevent the nuclear war possibility though the US have been doing all it can to start it.

hectorr12• 9 years ago

You're not wrong, but also dismiss some tough moral choices. I'd argue that attacking Libya was against U.S. strategic interests. Since 9/11 Gaddafi had substantially improved relations with the west. He gave up his nuclear program and was basically acting as Europe's bouncer. Since he fell the migrant crisis has exploded. North Korea and Iran learned that despite all promises otherwise, the only way to ensure regime survival is nukes.

So why did the U.S. intervene? Gaddafi was going to ruthlessly slaughter everyone in Benghazi. He said so, and had the tanks to do it rolling across the desert. It turns out that the U.S. military is really good at killing tanks in the desert (esp in a low air defense threat environment), so the White House and DoD knew that they would have blood on their hands if they stood by and watched. Also, unlike Syria, Gaddafi had no strategic allies to complicate things. That is, other than us.

And now we get to suffer the long term consequences of preventing that genocide by stabbing a new friend in the back. We saved lives in Benghazi and toppled a ruthless dictator. We also fueled the rise of ISIS, and helped pave the way for nuclear confrontations in Korea and the Middle East.

stillhere• 9 years ago

They even put government agents from other countries on their most wanted websites: https://www.fbi.gov/wanted/cyber/igor-anatolyevich-sushchin

I'd like to see them try to extradite this guy. LOL!

bradleyjg• 9 years ago

The best way to think about this is in terms of the laws of the country you are in.

We might be a outraged that Otto Warmbier was treated so harshly (killed really) by North Korea for allegedly stealing a propaganda poster, but at the end of the day we understand that he went to North Korea and in North Korea, North Korean laws apply.

The next step is to ask about actions that took place outside the country you are in but are illegal under that countries laws. So if, for example, Seth Rogen who famously made a movie making fun of Kim Jung-Un were to travel to North Korea we would not at all be surprised if we were arrested and sentenced to a very harsh punishment.

Finally, consider that extradition laws are just like any other domestic laws. The treaty between Greece and the United States means that for the purpose of a lot of criminal laws, physically entering Greece is the same as physically entering the United States.

In this case it was ultimately Greece that decided that what Vinnik did was sufficient to take away his freedom. He subjected himself Greece's judgment by going to Greece. If he had stayed in Russia he probably would not have been extradited.

Going to another country is something many of us take lightly, but it can be a really big deal.

onestone• 9 years ago

Why is it always assumed that the "company" was based in Bulgaria? Which "company" is it? As a Bulgarian myself I've seen that mentioned several times in the past, even on reputable sites, but never seen any actual evidence.

P.S. An investigation from 2 days ago also fails to find any Bulgarian connection to BTC-e: https://bivol.bg/en/no-bulgarian-connection-found-so-far-in-...

ue_• 9 years ago

Interesting, I have been using BTC-E for a while, I had no idea this sort of thing happened. Was it knowingly assisted by someone at BTC-E, or did BTC-E just act as a dumb machine?

BTC-E was one of the eastiest ways for me to change BTC and LTC in day trading. Are there comparable websites with small fees? I'm not interested in buying with fiat money.

pizza• 9 years ago

The admin moved > 600K bitcoins from Mt Gox

jonknee2• 9 years ago

Was it knowingly assisted by someone at BTC-E, or did BTC-E just act as a dumb machine?

The defendant is who run/ran BTC-E, so it's alleged to have come from the very top. The reasons why you found it so easy are probably related to why the US sees it as a criminal enterprise:

According to the indictment, since its inception, Vinnik and others developed a customer base for BTC-e that was heavily reliant on criminals, including by not requiring users to validate their identity, obscuring and anonymizing transactions and source of funds, and by lacking any anti-money laundering processes.

It continues:

The indictment alleges BTC-e was operated to facilitate transactions for cybercriminals worldwide and received the criminal proceeds of numerous computer intrusions and hacking incidents, ransomware scams, identity theft schemes, corrupt public officials, and narcotics distribution rings. Thus, the indictment alleges, BTC-e was used to facilitate crimes ranging from computer hacking, to fraud, identity theft, tax refund fraud schemes, public corruption, and drug trafficking. The investigation has revealed that BTC-e received more than $4 billion worth of bitcoin over the course of its operation.

floatboth• 9 years ago

If you're "not interested in buying with fiat money" there's no reason to use an exchange that supports it. You can just use e.g. https://shapeshift.io

Dolores122• 9 years ago

1) Arresting btc-e admin made all US customers to lose their balances on btc-e exchange. I highly doubt btc-e will come back online.

2) If you run online exchanger and have a single US customer, then you have to register your operation in USA. I find it ridiculously stupid.

ccrush2• 9 years ago

It gets better: while criminal charges for illegal banking practices are part of United States Code (title 18 covers crimes), the banking REGULATIONS that one must adhere to are codified at the State level. This means you must apply for 50 or so different licenses in order to legally do business as a Money Transfer Agent and Money Services Busimess in the United States. Although it seems overly burdensome and deliberately conceived to hinder practicing this line of business, the truth is that it creates an environment where consumers of the products and services offered by these businesses are better protected from fraud, as well as fostering an ecosystem of diverse business practices which leads to an advanced rate of innovation. It's a strange system, but it works very well. The downside is that it takes about $30M in cash to start one of these businesses just to fulfill regulatory requirements vis-à-vis the licensing, deposit, and audit requirements.

bb6112• 9 years ago

You can cover >25% of the US population in just the top 3 states (CA, TX, NY).

The system isn't that strange, almost every business in the US is primarily regulated by the states. What's strange is that most Americans don't realize this.

gst• 9 years ago

1) Arresting btc-e admin made all US customers to lose their balances on btc-e exchange. I highly doubt btc-e will come back online.

I wouldn't be too sure about the US having control over the BTC-e wallets. Their Ethereum hot wallet[1] (with around $100M funds in it) has been untouched since the website has gone down. I'd assume that there's more than one person at BTC-e having access to those funds. Assuming the US government has access to the keys - why didn't they move the funds somewhere else in order to secure them?

[1] https://etherscan.io/address/0x91337a300e0361bddb2e377dd4e88...

sgroppino• 9 years ago

Re #2, I wonder if the IRS will start asking US citizens to declare eCurrency accounts in FBAR anytime soon.

mullen• 9 years ago

Do you have to declare your gold or silver in foreign banks? If not, then I don't see why you would for eCurrency/eAssets. Assets are just assets no matter the form.

devrandomguy• 9 years ago

What if you just ban all Americans? /duck

realusername• 9 years ago

that's indeed what lots of banks are currently doing at the moment.

joosters4• 9 years ago

Why would they lose their balances? Any decent company holds customer funds in a separate account from their own. I'm sure BTC-e cared enough about their customers that they did this! :)

wpietri2• 9 years ago

If you run online exchanger and have a single US customer, then you have to register your operation in USA. I find it ridiculously stupid.

When you don't know much about something, it can often look stupid.

This isn't new or complex, though. If you do business across a border, governments on either sides of the border may take an interest in the transaction. If you don't like that, don't do business across a border. "Online" isn't a special magic transdimensional place. It's just a web of connections between existing places.

always_good3• 9 years ago

    > When you don't know much about something,
    > it can often look stupid.

This is just a rude remark. Do you think it's appropriate if I said "Heh, cute, wpietri, but many things are only defensible when you don't understand them."

Also, "if you don't like it, don't do it!" is not a commentary on the issue.

disillusioned• 9 years ago

An interesting comment validated here, from 7 years ago:

https://news.ycombinator.com/item?id=1533033

quickthrower24• 9 years ago

That comment is very general though. Exchanging bitcoins for cash, gold, diamonds for example would be harder to trace.

hellbanner3• 9 years ago

Exchanging BTC for cash, gold or diamonds is much more difficult ( and there's a higher perceived danger ). How would you go about trading your BTC for diamonds?

Btc-to-diamonds.website ? If it's online, it's tracked by 5 eyes Tor? 5-eyes is even more interested Craigslist? Great, go meet a stranger in a parking lot and gamble that you don't get robbed.

The comment is general but it's right. As it & other posters in this thread have pointed out - existing power structures control the world. The internet does not exist in an imaginary "stateless" vacuum.

flatfilefan• 9 years ago

People are trying to resolve this problem in a similar way the bitcoin itself functions: https://github.com/bitsquare/bitsquare

mrb• 9 years ago

BTC-E has been seen by the Bitcoin community as "shady" for years. People have always recommend others to avoid using it. It was rumored to be an easy place to sell stolen Bitcoins. It has always offered strangely convoluted pathways to transfer fiat to financial institutions (see http://bitcoinworldwide.net/how-to-deposit-money-into-btc-e). I'm glad BTC-E finally got taken down. I am not surprised it was involved in illegal activities. One less shady Bitcoin company.

Now the top 12 or so volume-ranked Bitcoin exchanges listed at https://cryptowat.ch are perfectly legitimate trustworthy companies. The ones I'm not sure about are CEX.IO and Luno (not saying they aren't trustworthy, I just don't know them that well) and, well, Bitsquare which as a decentralized exchange is bound to have some shady participants.

Dolores122• 9 years ago

Any cryptocoin exchanger is involved in criminal activity, because criminals have to sell their stolen coins as fast as possible. And you find out that you were a part of criminal activity only afterwards...

stepik7773• 9 years ago

If you want to exchange cryptocurrency for USD then sure, those other exchanges are better. But not everyone wants USD.

strgrd• 9 years ago

It has always offered strangely convoluted pathways to transfer fiat to financial institutions

Your link is not evidence of "strange convolution." The reason there are so many steps/screenshots is because the payment service is in Russian, and the guide is designed for non-Russian speakers.

Most people never dealt with fiat on BTC-e, and would use someone like Coinbase to fund the purchase of coins, and trade exclusively in crypto on BTC-e.

Now the top 12 or so volume-ranked Bitcoin exchanges listed at https://cryptowat.ch are perfectly legitimate trustworthy companies.

BTC-e was number six on that list...

mikob2• 9 years ago

Although I don't understand the US's involvement in this -- a man breaking the rules is being put to justice, and I'm very glad. I'm also impressed by the feds work in the cryptocurrency space. In recent years the fed has really started to reverse the trope of the government not being technologically adept. There are too many that become wealthy through illicit means and it's good news that something effective is being done about it.

always_good3• 9 years ago

Although I don't understand the US's involvement in this -- a man breaking the rules is being put to justice, and I'm very glad.

This is a terrifying comment.

Not much different than a Thai person saying the same about a German rotting in their jail because he offended their king on Twitter. "Justice!"

mikeyouse• 9 years ago

Because insulting someone and stealing millions of dollars are equal somehow?

idonotknowwhy3• 9 years ago

Not much different than a Thai person saying the same about a German rotting in their jail because he offended their king on Twitter. "Justice!"

I agree. Good luck trying to explain that to idiots like mikeyouse (commented just before me) who miss the point entirely lol.

idonotknowwhy3• 9 years ago

Tell that to the innocent customers who've had their funds (bitcoin and altcoins) frozen.

bigbrooklyn• 9 years ago

Justice playing whac-a-mole

https://en.wikipedia.org/wiki/Liberty_Reserve

grandalf3• 9 years ago

This illustrates how the DOJ is years behind when it comes to understanding cryptocurrency technology and markets.

It won't take long for one of the cryptocurrencies with private transactions to rise in dominance, since this sort of crackdown imposes costs and uncertainty on all participants.

If the goal of the DOJ was to fight crime, the most effective approach would have been simply to infiltrate mixers and trace money flows relevant to investigations, something BTC is perfect for.

Instead, this move sends a strong signal to the cryptocurrency community that hardening measures are needed.

For instance: http://zerocoin.org/

MichaelGG7• 9 years ago

Pretty sure that won't matter. Monero will hinder blockchain analysis, but if you're wiring out millions they can just demand you prove the legitimacy. "I got untraceable coins" is on the level of excuse as "I got this sack full of cash".

So long they prevent people from cashing out big time, then they're on the same level as cash (see, needing to deposit boxes of cash with HSBC).

grandalf3• 9 years ago

Good point. I think it will take a fairly significant transition away from fiat currencies before that situation is eliminated...

But one of the incentives of getting rid of cash is to transform the money into something that can be efficiently sent over a large distance, which is something cryptocurrencies already do.

RachelF• 9 years ago

An interesting analysis of the evidence here:

Breaking open the MtGox case, part 1 http://blog.wizsec.jp/2017/07/breaking-open-mtgox-1.html

SwellJoe3• 9 years ago

So, does that mean I can't get the BTC I deposited in BTC-e ages ago? I somehow didn't even know any of this was going down. (I have no idea how much it was...maybe a quarter of a coin, which is a reasonable amount of money today.)

dest• 9 years ago

You may get it back in the future, if they open again… or not. Sorry for your loss

It is reasonably well-known that it is dangerous to leave money on exchanges. BTC is only yours when it's in a wallet with a private key that is known to you, and no third party.

quickthrower24• 9 years ago

I've got 1 btc there that I convertes to Etherium just hours before they went down. Was waiting for my wallet to sync before transferring out. So even a few hours in an exchange is dangerous. Used btc for years so trusted them but got unlucky.

SwellJoe3• 9 years ago

I've lost more in my own local wallets due to losing both of the USB flash drives that contained the keys (as ridiculous as it sounds, I think my girlfriend's cat stole one of them).

Realistically, I've come to think cryptocurrency just isn't for me; it's too damned easy to lose. I also forgot my passphrase for some other BTC (I think I remember it, but it doesn't work, so, there those went). It's not huge sums; 1 BTC here (which was only worth about $300 when I "lost" it), a half BTC there, but the only BTC I still have access to is the half of one I have at Coinbase.

I may yet find one of those flash drives, or figure out what my passphrase actually is for the others. But, what I have found for sure is that BTC is too hard to keep safe (mostly from myself).

daddyo• 9 years ago

Some rumors that the admin of the servers was not arrested, but took the site down, to reconsider security and relocate servers, before starting up again.

That's why BTC-e does not show a giant FBI logo with a notice.

baby• 9 years ago

I am so happy right now that I moved my litecoins from btc-e to a personal wallet. I've learned my lesson.

techaddict009• 9 years ago

Question is who has the control over BTC-e's crypto? Will they be returned to users?

joering2• 9 years ago

The will be auctioned since they were forfeiture by Feds, like this:

http://thehill.com/policy/technology/290745-feds-to-auction-...

atmosx• 9 years ago

I would like to know how he was arrested in Greece. Was there an Interpol warrant or something or they just made a phonecall and the Greek authorities promptly put the guy on a ship to US?

stepik7773• 9 years ago

They are boasting about how they caught the guy who robbed Mt. Gox but they just did the same - a lot of people just lost access to their money on BTC-e. They are not all criminals, BTC-e was a convenient way to exchange bitcoins to/from rubles and was used by many people in Russia who were interested in cryptocurrencies.

sjreese• 9 years ago

Where is the FBI in this? It was a FBI black op against silk road -> follow the money! Who was silk road's bank < Mt Gox - Who bankrupt Mt Gox < FBI Who had access to Trademill database < FBI Who authorized the attack on BitCoin after saying don't use it's not safe < FBI Today the seizure of all BitCoin in BTC-e is done by the FBI - Hopefully the number of FBI SA's going to jail over this Black Op will be limited. But, their greed is transnational to hide their seizure of overseas assets.. that is, What was seized and who accounted for it! Think DrugWar - we will be looking for SA's living beyond their means as with silk road

BTC-e and its founder charged in 21-count indictment over hack of Mt. Gox

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