Suspect of Mt Gox Hack and Money Laundering Is Alleged BTC-E Admin Arrested in Greece
Mt Gox founder and former CEO Mark Karpeles, a 32-year-old French-born, recently went to trial in Japan on bitcoin embezzlement charges at the Tokyo District Court. Karpeles denied the charges of embezzling a total of ¥341 million in customers’ funds between September and December 2013 into an account in his name. He stated, in Japanese: “I swear to God I am not guilty.”
Whether the community believed his words wasn’t clear but, in an unexpected turn of events, it looks like the Mt Gox hacker and/or subsequent money launderer has not only been identified, but arrested in Greece, meaning Karpeles could have been telling the truth. The suspect is 38-year-old Russian national Alexander Vinnik.
Vinnik was arrested for running a $4 billion money laundering operation, and is suspected of being an admin at bitcoin exchange BTC-e, as reports suggested the website he was using to launder money was founded in 2011, just like the exchange that suspiciously went down prior to his arrest.
Reports suggest documents sent to Greek authorities revealed that Vinnik was in possession of a large sum of bitcoins stolen from Mt Gox. Per the DailyThess (translated):
Characteristically, according to the documents sent to the Greek authorities on the bitcoins exchange platform behind which the 38-year-old Russian is hiding, a large part of the “stolen” removed from Mt. Gox (…) According to documents that reached [authorities] 306,853 bitcoins stolen after the attack on Mt. Gox entered BTC-e purses.
Vinnik’s Connection to Mt Gox
Soon after news of his arrest started circulating, various Twitter users started quoting sources that stated Vinnik hacked Mt Gox. Mark Karpeles himself tweeted out that Vinnik was the thief, and although some users met the tweet with disbelief, others started spreading the word:
Bitcoin security specialists WizSecurity, who have been investigating the case for years, quickly tweeted out that an announcement was coming, and the community went abuzz.
Shortly after, the announcement came . Per WizSec:
We won’t beat around the bush with it: Vinnik is our chief suspect for involvement in the Mt Gox theft (or the laundering of the proceeds thereof).
The announcement is to be spread throughout various posts, but Mt Gox’s connection to Vinnik has already been laid out. In September 2011 Mt Gox’s hot wallet private keys were stolen and the hacker got access to a sizeable amount of bitcoins, as well as those deposited to “any of the addresses contained”. Over time, according to WizSec, the hacker stole bitcoins and sent them to addresses controlled by Vinnik.
By mid-2013, the number of stolen bitcoins was of about 630,000. By now the hack’s nature caused Mt Gox’s systems to mistakenly confuse the thieves’ actions as deposits, causing them to credit various accounts with large sums of BTC, further complicating Mt Gox’s situation. No user reported the large amount credited to his account.
Out of the bitcoins that entered Alexander Vinnik’s wallets, about 300,000 ended up on BTC-e. These were, presumably, laundered as stated in previous reports. WizSec states some of these went directly to internal storage and not customer deposit addresses, which meant Vinnik had a relationship with BTC-e.
Vinnik was apparently involved in other thefts. The announcement reads:
The stolen Mt Gox coins were not the only stolen coins handled by Vinnik; coins stolen from Bitcoinica, Bitfloor and several other thefts from back in 2011 and 2012 were all laundered through the same wallets.
Other coins were deposited to various exchanges, including Mt Gox. This helped investigators, who were able to link exchanges’ accounts to his online persona “VME”. Further hinting on a relationship between Vinnik and BTC-e, the exchange had in the past vowed for him, stating: “[we] know VME very well”.
WizSec finished its announcement clarifying that the investigation turned up evidence that Vinnik is a Mt Gox money launderer, not the hacker. News of his arrest also seem to indicate that he is guilty of running a money laundering operation, as reported by CCN.com.
To be clear, this investigation turned up evidence to identify Vinnik not as a hacker/thief but as a money launderer; his arrest news also suggests this is what he is being suspected for. He may have merely bought cheap coins from thieves and offered a laundering service.
As the security specialists point out, in case Vinnik wasn’t the hacker, then he certainly was working for those who did hack Mt Gox. In that case, he is a crucial piece of the puzzle in finally closing the Mt Gox case and finding out what truly happened.
Featured image from Shutterstock.
