Decline of the BTC-e Crypto Empire: CEO Detained for Money Laundering

[Teacher]

Alexander Klimenko appeared in court in San Francisco.

In the United States, charges have been brought against a citizen of Belarus and Cyprus named Alexander Klimenko for his participation in an international operation to launder money obtained through cybercrime.

According to the US Department of Justice (DoJ), Klimenko controlled the illegal digital currency exchange BTC-e, the technology services company Soft-FX and the financial company FX Open.

The prosecution alleges that through these firms, Klimenko facilitated transactions related to various types of cybercrime, including ransomware, identity theft, drug trafficking, fraud and hacking.

BTC-e, a cryptocurrency trading platform, was seized by US law enforcement agencies in 2017 after the arrest of its founder Alexander Vinnik in Greece. The US Department of Justice said that the platform was used to launder funds stolen as a result of the hacking of the Japanese cryptocurrency exchange Mt. Gox, as well as for payments as part of operations using the Locky, Cerber, NotPetya, WannaCry and Spora ransomware viruses.

The platform had a significant presence in the United States, but was not registered as a money service, did not require verification of the identity of customers, and did not have anti-money laundering mechanisms.

"BTC-e allegedly facilitated transactions by cybercriminals around the world and received illegal proceeds from numerous computer intrusions and hacking incidents, ransomware scams, identity theft schemes, corrupt government officials, and drug distribution networks," the Justice Ministry said.

The now 42-year-old Klimenko managed BTC-e from 2011 to July 2017 before Vinnik's arrest and subsequent closure of the site. According to recent reports, Klimenko managed and maintained servers in the United States that support the operation of BTC-e through his company Soft-EX.

The man was arrested at the request of the United States in Latvia on December 21, 2023, and made his first court appearance in San Francisco on February 1. Officially, Klimenko is charged with conspiracy to launder money and conduct an illegal money business, for which he faces a maximum penalty of 25 years in prison.

 

[Man]

The demand to terminate the proceedings in the "incomprehensible" BTC-e case was received by the US court.

Alexander Klimenko, who has citizenship of Belarus and Cyprus, accused of involvement in the activities of the BTC-e cryptocurrency exchange and conspiracy to commit money laundering, demands in a US court to terminate the proceedings in the "incomprehensible" case.

Klymenko insists on the termination of proceedings in the case on the grounds that he was not properly notified of the charges brought against him, and asks otherwise to issue an order to the prosecutor's office, to oblige it to give appropriate explanations.

In addition, Klimenko claims that the Federal Court for the Northern District of California is an inappropriate place to hear the case (lack of venue), while count 2 of the indictment should be excluded due to lack of jurisdiction.

"The indictment against Mr. Klymenko includes various statements related to a company called BTC-e, but it lacks the necessary information regarding Mr. Klymenko himself. Broadly speaking, according to the indictment, Mr. Klymenko is accused of operating an unlicensed money handling business (namely, BTC-e) and conspiracy to commit money laundering for six years. In the indictment, these charges, including a lengthy description of the BTC-e digital cryptocurrency exchange and how it allegedly worked, are laid out in seven pages. And although the indictment cites excerpts from legislative acts (§§ 1960 and 1956(h)), and in one place it is mentioned that Mr. Klimenko "controlled" BTC-e together with Alexander Vinnik, it does not indicate how, when and in what capacity he did it," says the petition, which was sent to the court and reviewed by RAPSI.

As noted in the document, the only thing that the prosecutor's office states with confidence is that BTC-e rented servers from SoftFX, a company "supported" by Klymenko.

"Given such limited information in the indictment, Mr. Klymenko does not understand what he should defend himself against. The defense cannot sufficiently prepare for defense in court in such a large-scale case due to the naked indictment, in which there is practically nothing about Mr. Klimenko or SoftFX", the lawyers explain.

Klimenko, who has citizenship of Belarus and Cyprus, was arrested in Latvia in December 2023 at the request of the American authorities and transferred to the United States, where he was charged.