Alexander Vinnick, the Russian who created and operated the now-defunct bitcoin exchange service BTC-e, has been sentenced to five years in prison, a court in Paris has found Vinnick guilty of money laundering and ordered him to pay a fine of 100,000 euros ($121,000). Vinnick, who was arrested in Greece in 2017 under an international arrest warrant issued by the U.S. Department of Justice, was extradited to France earlier this year.
The DOJ accused Vinnick of running BTC-e as a front for a massive money laundering operation that received stolen funds from cyberattacks. Security firm Wizsec previously linked its private BTC-e account to funds stolen from Mt. Gox. If you’ll recall, in 2014, about $480 million in bitcoins disappeared from the exchange service because of what Gox CEO Mark Karpeles called “a weakness in the system. “.
Since the exchange’s inception in 2011, the U.S. Department of Justice has charged Vinnick with 17 counts of money laundering, amounting to $4 billion. At the same time, French prosecutors accused him of “extortion, conspiracy, and damage to automated data processing systems. French authorities believe he helped create the ransomware “Locky,” which was distributed via email and was used between 2016 and 2018 to “extort” money. It was used to attack French businesses and organizations. At least 20 entities in the country eventually paid a ransom in Bitcoin to free their networks.
Vinnik, for his part, argued in court that he was simply a technical operator carrying out instructions from the BTC-e directors. While the court still ended up convicting him on money laundering charges, it wasn’t the worst case scenario for Vinnick. According to ZDNet, French prosecutors could only prove one of the 14 charges against him, and it wasn’t one of the charges involving Locky. This means that he was able to avoid a ten-year prison sentence and a fine of 750,000 euros, which prosecutors were demanding.
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