New Zealand's Asset Recovery Unit froze NZ$140 million ($90 million USD) in offshore bank accounts as part of a sprawling investigation into BTC-e, a defunct Bitcoin exchange that prosecutors say Alex
New Zealand's Asset Recovery Unit froze NZ$140 million ($90 million USD) in offshore bank accounts as part of a sprawling investigation into BTC-e, a defunct Bitcoin exchange that prosecutors say Alexander Vinnik operated to move billions through hidden channels for organized crime networks.
Greek police arrested Vinnik, a Russian national, in Greece in 2017 while he vacationed, at the request of US authorities. He faces charges including money laundering, identity theft, drug trafficking, and computer hacking. After three years fighting extradition, he maintains his innocence. His lawyers call him a "computer genius" being targeted as a threat to traditional banking.
Users moved at least $4 billion in Bitcoin through BTC-e, which the US Department of Justice says operated with high levels of anonymity and attracted criminals as a core part of the customer base.
Vinnik built the platform without identity checks and without safeguards against money laundering, allowing him to anonymize the source of funds moving through the exchange.
The Justice Department alleges Vinnik channeled proceeds from ransomware operations, identity theft rings, cybercriminals, corrupt government officials, tax evaders, and drug syndicates through the platform.
Police Commissioner Andrew Coster said his agency worked with the US Internal Revenue Service to address the violation. "New Zealand Police has worked closely with the Internal Revenue Service of the United States to address this very serious offending," he said.
"These funds are likely to reflect the profit gained from the victimization of thousands, if not hundreds of thousands, of people globally as a result of cyber-crime and organized crime," Coster added.
Authorities traced the frozen funds to New Zealand accounts and seized them under the Criminal Proceeds' Recovery Act. The case proceeds as a civil matter requiring a High Court judge to establish "reasonable grounds" that someone profited from "significant criminal activity." The NZ$140 million restraint marks the largest in New Zealand police history.
"The global nature of the crime always posed a risk of involving companies based in the country. However, this restraint demonstrates that New Zealand is not, and will not be, a safe haven for the illicit proceeds generated from crime in other parts of the world," Coster said.
