WEX Co-founder Jailed Over Embezzlement of Customer Funds

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  • WEX co-founder Aleksey Bilyuchenko has been jailed for three and a half years and fined $33 million for embezzling the funds on the exchange
  • Bilyuchenko claimed that he had been forced to hand over $450 million in customer funds to Russian secret service agents
  • The Russian is wanted by the US for hacking MtGox in 2011

The co-founder of the defunct WEX exchange, Aleksey Bilyuchenko, was recently jailed for three and a half years for embezzling hundreds of millions of dollars in cryptocurrencies when the exchange collapsed in 2018. Bilyuchenko, who helped operate the criminal exchange BTC-e until it was seized by U.S. authorities in 2017, was also fined 3.1 billion rubles ($33 million). Bilyuchenko was identified this year as one of the hackers of MtGox in 2011 which helped kill the exchange.

Bilyuchenko Claimed Russian Security Agents Took the Money

Bilyuchenko co-founded WEX after the seizure of BTC-e in 2017, building the site from a backup of BTC-e’s database he had retained. The site started well, but the crypto market crash of 2018 saw usage and profits plummet and in December it was taken offline. More concerningly, $450 million worth of cryptocurrencies on its books vanished without a trace. 

Bilyuchenko was naturally suspected, but when customers in Russia and Khazakstan began to file police reports, suspicion fell instead on the man that Bilyuchenko had put in the hot seat: CEO Dmitry Vasiliev. When Bilyuchenko was summoned to testify as part of the investigation into Vasiliev he told an incredible story: in April 2018 one of his financial backers, Konstantin Malofeyev, set a trap in which Russian security service operatives coerced Bilyuchenko into handing over all the WEX holdings on grounds of national security. 

Only afterwards had Bilyuchenko found out that they were imposters hired by Malofeyev. 

Airfield Arrest

Bilyuchenko was not arrested, with the authorities instead zeroing in on Vasiliev, but it didn’t take them long to realize that something about Bilyuchenko’s story didn’t add up, and he was arrested in March 2022 at a private Moscow airfield on charges of misappropriating the WEX funds.

Arresting officers discovered 190 million Russian roubles ($1.7 million) in cash in two suitcases in his possession while officers searching residences belonging to Bilyuchenko and his alleged accomplices seized another 50 million roubles ($425,000), $1 million and €70,000 in cash as well as computer equipment, hardware crypto wallets, luxury goods and documents.

Bilyuchenko was charged with embezzlement and found guilty, which meant he faced up to a decade in prison. In an interesting move, he appealed to Russian President Vladimir Putin and Defense Minister Sergei Shoigu for leniency. Whether this had an impact or not is not known, but the three-and-a-half-year sentence he received is certainly on the lighter side for his offence.

While he was awaiting sentencing this summer, Bilyuchenko was one of two men identified as the hackers of the MtGox exchange in 2011 that saw 650,000 bitcoins stolen from the exchange. As a result, he is now on the FBI’s most wanted list, ensuring that he will almost certainly never leave Russia.