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BTC-e Sees Challenges as Allegations Swirl

One of the long running major bitcoin exchanges – BTC-e.com – went offline on July 25 2017. On that date a tweet posted to the BTC-e twitter account @btcecom indicated “Unplanned maintenance in data center, possible problems with access to btc-e #btce
4:26 AM – Jul 25, 2017”.

Today the Russian Times ran the headline “Major Bitcoin trading site in limbo as Greece arrests Russian man on US charges of laundering $4bn”.

Greek law enforcement officials were reported to have stated “Since 2011, the 38-year-old [Vinnik] has been running a criminal organization which administers one of the most important websites of electronic crime in the world,” and that “at least” $4 billion is believed to have been laundered.”

Underneath these unproven allegations the United States District Court for Northern California today unsealed a twenty-two count indictment. The felony indictment filed January 27 2017 names Alexander Vinnik as a defendant. It was sealed because “the government believes that if the defendants are made aware of these documents before they are arrested, they may make efforts to avoid being arrested.”

The second defendant is named in a superceding indictment made January 17 2017 in which “BTC-E A/K/A CANTON BUSINESS CORPORATION” has nineteen counts including alleged “operation of an unlicensed money services business”, “conspiracy to commit money laundering”, and seventeen counts of “money laundering”.

It is not clear what association, if any, there is between the two defendants.

On October 20 2015 in one of the more well known instances of US government involvement in bitcoin proceedings – the Silk Road – US officials were themselves involved in illicit and criminal matters. According to the LATimes.com “Drug Enforcement Administration Agent Carl M. Force … 46, of Baltimore, pleaded guilty to extortion, money laundering and obstruction of justice”.

Earlier another federal agent “Secret Service agent Shaun W. Bridges, 32, admitted this summer to stealing 20,000 bitcoins and liquidating it into $820,000 through a Japanese currency exchange before depositing it into his personal accounts”.

A Japanese group called Wizsec has stated that “After the coins entered Vinnik’s wallets, most were moved to BTC-e and presumably sold off or laundered (BTC-e money codes were a popular choice). In total some 300,000 BTC ended up on BTC-e, while other coins were deposited to other exchanges, including MtGox itself.” The blog posting supplied money flow evidence of their allegations.

The extent of collusion, if any, between the indicted defendants is not known. The BTC-e.com operation has been notoriously close guarded about its operations which indeed is its legal right. Whether or not the indicted Alexander Vinnik has a majority, or minority or no position in the BTC-e exchange is as yet unknown and is pure conjecture.

It appears as if the BTC-e.com website will stay up. There has been no indication of intent to shut it down.

The author has made a number of transactions on BTC-e.com and all were made in an entirely satisfactory manner.

Superficial appearances on BTC-e.com indicate the website has entered an unplanned maintenance period, and it appears there is intent to bring the popular and – up to now – reliable bitcoin exchange back online.

@KittyBitcoin supplies mobile friendly blockchain intelligence on http://kittybitcoin.com. Their favorite color is pink and the bigger the wool ball the better.
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