According to incoming reports, the United States Department of Justice (DOJ) has accused two Russian citizens with hacking and triggering the collapse of Mt. Gox, one of the world’s largest and most prominent crypto exchanges. When the theft was uncovered, Mt. Gox filed for bankruptcy and was compelled to liquidate in 2014.
DOJ alleges that Mt. Gox fell victim to Russian hackers
Mt. Gox was a Tokyo-based crypto exchange that operated between 2010 and 2014. It was responsible for more than 70% of Bitcoin transactions at its peak. In that time, it acted as what Binance is in current times. There had been speculation that Russian hackers were behind the heist. Today those rumors have been confirmed.
The DoJ charged Alexey Bilyuchenko, 43, and Aleksandr Verner, 29, in an unsealed indictment with hacking the exchange and conspiring to launder approximately 647,000 bitcoins worth approximately $17.2 billion today. According to a news statement issued by the DOJ on Friday, the two “gained unauthorized access” to Mt. Gox’s wallets in September 2011.
From 2011 to 2017, the DoJ charged Bilyuchenko with conspiring with Alexander Vinnik to operate the “illicit exchange” BTC-e. In 2017, U.S. law enforcement shut down BTC-e, and in 2022, Vinnik was extradited from Greece to the United States for allegedly operating BTC-e and laundering money.
Both are charged with conspiracy to launder money, and Bilyuchenko is additionally charged with operating an unlicensed money services business. Both the Southern District of New York and the Northern District of California of the DoJ filed cases related to the Mt. Gox breach.
DOJ Assistant Attorney Kenneth Polite referred to the unsealing as a significant milestone in a statement. He stated:
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 cybercriminals worldwide.
Kenneth Polite
Mt. Gox and the Russian’s cost of doing business
The DOJ also alleged that Bilyuchenko, Verner, and other unnamed conspirators used an unnamed New York-based bitcoin brokerage service to launder funds, ultimately transferring more than $6.6 million into “overseas bank accounts.”
The DOJ alleged that the exchange aided in laundering over 300,000 bitcoins. The documents also alleged that the perpetrators sent the funds to both BTC-e and TradeHill, two defunct cryptocurrency exchanges.
For years, Bilyuchenko and his co-conspirators allegedly operated a digital currency exchange that enabled criminals around the world – including computer hackers, ransomware actors, narcotics rings, and corrupt public officials – to launder billions of dollars.
U.S. Attorney Ismail J. Ramsey for the Northern District of California
Media outlets reported in March that BTC-e funds were moving on the blockchain. A crypto wallet received approximately 3,299 bitcoin from BTC-e’s wallet in November 2022, the first transaction sent by the exchange wallet since 2017. Approximately 10,000 bitcoin were sent to two unidentified recipients six years ago.
The DOJ filing does not specify whether Bilyuchenko and Verner were the intended recipients.
