In a significant development, the United States Justice Department has recently unsealed charges against two individuals, Alexey Bilyuchenko and Aleksandr Verner. This is for their alleged involvement in the infamous Mt. Gox hack. The hack, which resulted in the theft of approximately 647,000 Bitcoin (worth $400 million at the time), caused the former Bitcoin exchange to file for bankruptcy.
The Alleged Hack and Bitcoin Theft
The prosecution asserts that Bilyuchenko (43 years old) and Verner (29 years old) conspired to execute a hack on the Mt. Gox exchange servers. This subsequently enabled them to gain control over the platform. The hack is said to have taken place over a span of more than a year, starting in September 2011 and continuing until at least May 2014.
During this period, the accused individuals purportedly initiated transfers of BTC from Mt. Gox to their own accounts, draining the majority of customers’ Bitcoin holdings. It is important to note that the stolen Bitcoin amounted to 647,000. This was a substantial portion of the exchange’s total cryptocurrency assets.
After successfully obtaining possession of the stolen Bitcoin, Bilyuchenko and Verner allegedly attempted to sell it. They did this through another exchange they controlled. To facilitate the sale, they entered into a fraudulent contract with a Bitcoin brokerage firm based in New York.
The brokerage firm was unaware of the origin of the Bitcoin. They purchased the stolen BTC from the hackers by transferring funds to offshore bank accounts.
While the announcement by the Justice Department does not explicitly name the exchange used in the fraudulent deal, it refers to it as “Exchange-1.” As per the prosecutors’ claims, the two men received approximately $6.6 million from this transaction.
Additional Charges against Bilyuchenko
Apart from his alleged involvement in the Mt. Gox hack, Bilyuchenko also faces charges related to operating the BTC-e exchange. BTC-e, which operated from 2011 to 2017, was shut down due to money laundering allegations. The charges against Bilyuchenko involve conspiring to operate this illicit exchange.
Mt. Gox, once a prominent cryptocurrency exchange, encountered severe financial turmoil following the hack. The exchange filed for bankruptcy in March 2014, citing the stolen Bitcoin as the primary cause for its insolvency.
This incident marked a significant setback for the cryptocurrency community and highlighted the vulnerabilities within the industry.
On the other hand, BTC-e was a cryptocurrency exchange that operated during the same period as the Mt. Gox hack. In 2017, the FBI liquidated some of the exchange’s cryptocurrency, claiming that the funds were tied to money laundering activities.
Alexander Vinnik, the founder of BTC-e, is currently serving a prison sentence for his involvement with the exchange. Recently, Vinnik’s attorney attempted to secure his release through a prisoner swap with the Russian Federation.
Read More:
Ethereum And Bitcoin Community Gather In Prague Amidst U.S. Regulatory Measures
BitGo’s Potential Acquisition of Prime Trust: A Transformation in Digital Asset Services