- Two of the gang that hacked Mt.Gox in 2011 were identified last week
- Alexey Bilyuchenko and Aleksandr Verner were named as hackers, with money laundering charges laid against their names
- Here’s what we know of the charges and the background
Last Friday, two Russian nationals, Alexey Bilyuchenko, and Aleksandr Verner, were indicted by US authorities on charges of laundering almost 650,000 bitcoin stolen from Mt.Gox between 2011 and 2014. They were also identified as being part of the group that carried out the hack but they were not charged on this matter, with the indictments having been sealed since 2017.
Here’s what we know about the indictments and what it means for victims.
Russian Involvement Confirmed
Ever since the arrest of Alexander Vinnik in July 2017 and the realisation that the majority of the stolen Mt.Gox bitcoin had been laundered through BTC-e, a Russian operation was almost certain. BTC-e was co-founded by Vinnik and Bilyuchenko, and the bitcoin, when sold, was funnelled out to shell companies owned by BTC-e, while 10,000 bitcoin recently moved by a BTC-e wallet, which included Mt.Gox bitcoin, was sent to exchanges in eastern Europe.
No Hacking Charges
The Department of Justice (DoJ) makes it clear that it believes Bilyuchenko and Verner carried out the hack on Mt.Gox’s hot wallet in September 2011, but it has only charged them with laundering the money (Bilyuchenko has also been additionally charged with operating BTC-e along with Vinnik). This could be because of a lack of evidence, but they definitely believe they have unmasked the hackers, unlike Vinnik who was never named as a hacker.
Little Chance of Arrest
Despite identifying the pair, the DoJ knows it has little chance of actually getting its hands on them. US authorities observed Vinnik for over a year undercover and had to wait until he holidayed in Europe before being able to capture him. In contrast, Bilyuchenko and Verner now know they are wanted men, and so will probably never risk leaving Russia, certainly not for somewhere that has an extradition agreement with the US.
Bilyuchenko’s Lucky Escape
Bilyuchenko was in fact holidaying at the same time as Vinnik when the latter was arrested, with the BTC-e co-founders deciding they wanted a break. However, they decided to stay apart from each other for security reasons, with Bilyuchenko staying in Crete and Vinnik staying in Greece. Bilyuchenko wasn’t actually sought by US authorities at the time but he would likely have been picked up too, so this was a smart move.
When Vinnik’s mother found out that her son had been arrested she called Bilyuchenko to warn him. Panicking that the authorities might be coming after him too, Bilyuchenko took his laptop to the coast near his hotel, smashed it to pieces against the rocks, threw it into the sea and caught the first flight back to Moscow. He then set up WEX cryptocurrency exchange, which shut down in 2018, trapping $450 million in user funds. Bilyuchenko is currently on trial over the alleged misappropriation of these funds, making a US arrest even more unlikely.
Charges Were Brought in 2017
One of the more staggering things about this case is that the charges were brought in December 2017 following a grand jury indictment but have only just been unsealed. It’s not clear why authorities waited this long, but it could have something to do with the extradition of Vinnik which took place in August last year. Perhaps he provided investigators with further information which is aiding their arrest or money collection efforts.
The charges call for all assets belonging to the pair to be frozen, but even if any assets are held they will be the property of the US government rather than being returned to Mt.Gox victims. This includes any bitcoin that may be left, although at this stage it is thought that almost all the bitcoin has been sold.
