A wallet belonging to BTC-e has transferred 10,000 BTC to various wallets and exchanges. BTC-e was linked with the 2014 hack of the world’s first Bitcoin exchange, Mt. Gox. The exchange declared bankruptcy and shut down after being drained of 744,408 BTC.
A wallet linked to BTC-e exchange has conducted its largest transaction since 2018 by sending 10,000 BTC worth $165 million to various exchanges and personal wallets. The bitcoin exchange was linked to the 2014 hack of Mt. Gox, the world’s first Bitcoin exchange.
According to a report by blockchain analysis firm Chainalysis, the transaction conducted on November 23rd was the largest withdrawal made by the BTC-e wallet since April 2018. On October 26th, BTC-e and its successor WEX both first sent small amounts of BTC to Webmoney, a Russian electronic payments service, before making a test payment on November 11th, followed by transferring another 100 BTC on November 21st. From the total amount of Bitcoin that was transferred out, 9,950 is still believed to be located in personal wallets, while the rest is thought to be sent through intermediaries to four deposit addresses on two exchanges in order to be cashed out. The 10,000 BTC held by the wallet was untouched for seven years.
Ki Young Ju, CEO of on-chain analytics firm CryptoQuant, tracked 65 BTC that was transferred to HitBTC. The exchange has since been requested by CryptoQuant to suspend the deposit wallet for suspicious activity.
In 2014, Tokyo-based Bitcoin exchange Mt. Gox was exploited in an attack that resulted in 744,408 BTC (over $1 trillion at current rate) being stolen from the platform. The exchange, once responsible for more than 70% of all Bitcoin transactions, filed for bankruptcy and was permanently shut down shortly after. In a report released in 2017, blockchain security firm WizSecurity alleged BTC-e and its operator Alexander Vinnik, a Russian national, to be directly involved in stealing the BTC and user funds from Mt. Gox. The Federal Bureau of Investigation (FBI) then moved ahead and shut down the exchange’s website and seized all funds under allegations of money laundering and stealing Bitcoin. In July 2017, Alexander Vinnik, operator of the exchange which had servers in the United States, was arrested by authorities in Greece at the request of the U.S. Department of Justice. Authorities claim that Vinnik has been laundering $4 billion in cash through a Bitcoin platform since 2011.
Vinnik, who denies his involvement in the case, faced extradition claims from Russia, France, and the United States. In January 2020, he was extradited to France and sentenced to five years in prison for money laundering. Seven months later the alleged operator of BTC-e was extradited to the U.S. under allegations of computer intrusions and hacking incidents, ransomware scams, identity theft schemes, corrupt public officials, and narcotics distribution rings. The BTC-e operator is currently facing jail time in Santa Rita Jail in California.
Soon after the FBI shut down its operations, a clone of BTC-e was started under the name WEX. The new exchange owned by CEO Dmitri Vasilev was operational for a year and then one day suddenly froze all customer withdrawals and shut down. Chainalysis claims that at the time of shutdown, BTC-e and WEX held substantial amounts of Bitcoin in its reserves. In April 2018, the exchange transferred over 30,000 BTC from its service wallet.
WEX drained millions of dollars worth of crypto assets from customer wallets after ceasing operations. This led to further investigations being conducted into the company in Russia. Vasilev was arrested in Italy, Poland and Croatia over the years at the request of Russian authorities, but has been let go every time. He later admitted that all user funds on WEX were under the control of an anonymous admin. In 2019, Alexei Bilyuchenko came out saying that he was the WEX admin. According to a report by BBC, Bilyuchenko, who is currently serving a sentence in the Matrosskaya Tishina prison in Moscow, said that he was forced to send all the frozen assets from WEX to two unidentified officers of Russia’s Federal Security Service (FSB).
The Mt.Gox hack has puzzled authorities and crypto investors alike for years. The whereabouts of all the stolen funds remain unknown.