BTC-E Only Controls 55% of Customer Funds, Faces FinCEN Civil Monetary Penalties

Ever since the BTC-E exchange shut down unexpectedly, there have been very few updates. The alleged operator of the exchange is still in custody. A new document regarding the company has been issued by FinCEN, which does not bode all that well for Alexander Vinnik or the company. Additionally, some information regarding BTC-E was sent to the UK police. Plus, they barely control half of all customer funds. 


[UPDATE] BTC-E provided another update explaining how they only control 55% of customer funds at this time. They aren’t able to work under the BTC-E brand either due to the FinCEN civil money penalties. The company will repay customers eventually, but they are negotiating with investors to do so. For now, the 55% of funds will require balances to be recalculated and customers will take a hair cut in the form of BTE tokens. This is similar to how Bitfinex solved their hack, as one BTE is worth 1 USD. Any BTC balance will be subject to receiving repayments in seven different cryptocurencies, including Bitcoin, Ltiecoin, Ether, and Dash. It is unclear how long it will take to repay this debt, though.

The arrest of Alexander Vinnik has caused quite a bit of confusion. He is the alleged operator of the BTC-E exchange, although that connection is still somewhat unproven. That being said, the Financial Crimes Enforcement Network -or FiNCEN- thinks they have enough evidence to assess civil money penalties against BTC-E and Alexander Vinnik. That is a major development which can turn out in a positive or negative manner for the people still hoping to get their money back.

A document found on the FinCEN website shows there are some violations pursuant to the Bank Secrecy Act. Since FinCEN has the authority to impose civil money penalties on money service businesses and individuals involved in such operations, things are not looking good. Both Vinnik and BTC-E have been indicted in the Northern District of California for money laundering, conspiracy to commit money laundering, unlawful monetary transactions, and running an unlicensed money transmitting business.

According to the document, BTC-E and Vinnik willfully violated MSB registration requirements from November 5, 2011 onward. Additionally, they never implemented an effective AML program, nor did they detect suspicious transfers. This latter past would explain why nearly 95% of all ransomware proceeds have been laundered through this platform successfully. This can only be possible without having the necessary checks in place or due to knowingly allowing such transactions to occur in the first place.

That is not the only recent BTC-E news to make headlines these days. A lot of information regarding this exchange was sent to the UK police. Some of that information includes the names of individuals who are allegedly connected to the exchange. Sergey Mayzus is one of those individuals, but he claims there are no ties between himself and the exchange platform. This all stems forth from a group of exchange customers who want to recover their missing funds by taking things to court if needed.

This information resides on the BTC-E Claims GitHub page and points the finger at Sergey Mayzus and his companies -OKPay and Mayzus Financial Services- as being involved in the BTC-E fiasco. That does not appear to be the case, as Mayzus claims he nor his companies are related to the BTC-E, its employees, or its owners. It is possible they had some clients who may be linked to BTC-E, but that connection was never established for any specific purpose. All of the accounts associated with the exchange have been blocked, though.

This is not the last we have heard about BTC-E and the people looking to get their money back. There is still a lot of uncertainty associated with this exchange and where the money will end up. The latest claim states how BTC-E operators successfully control all of the wallets linked to the platform, but there are some people who still doubt that statement, for obvious reasons. We can only hope affected users get their money back sooner rather than later, but that has yet to be determined.

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