Nearly half of the stolen coins from the Japanese cryptocurrency exchange Mt. Gox ended up with one of its rivals based in the UK, BBC reported.
The now defunct cryptocurrency exchange BTC-e, which was run by the London-based Always Efficient LLP, helped to launder 650,000 stolen bitcoins worth GBP 4.5 billion, an investigation by BBC Radio 4 found.
The Tokyo-based Mt. Gox bitcoin exchange failed in February 2014. The exchange was the biggest at the time, handling around 70 percent of all Bitcoin about a year earlier.
The collapse of the prominent bitcoin exchange wiped thousands of clients’ as well as its own holdings of around 850,000 bitcoins, then worth nearly $500 million, owing to theft that went unnoticed for several years.
Later, Mt Gox said it recovered 200,000 Bitcoins.
Mt Gox CEO Mark Karpeles apologized to investors and said he is co-operating with investigators, BBC Radio 4 report said.
Started in 2011, BTC-e was notorious as a hub for cyber crime and helped to launder money, including ransom, received from cyber attacks. The operator of the exchange, Always Efficient LLP, is run anonymously.
UK law requires companies to publish the names of “persons with significant control” or “PWSC”.
The Companies House service of the UK government shows that Always Efficient does not have anyone listed as PWSC as of now.
An Alexander Buyanov, based in Moscow, ceased to be a PWSC of the firm in July 2017. According to the BBC, a Russian journalist traced the name to a DJ in a Moscow nightclub who claimed to know nothing about the firm.
The BBC report cited the FBI as saying that a Russian national Alexander Vinnik was the man behind the BTC-e. He was arrested in Greece in July 2017 and now detained in Thessaloniki.
The US Justice Department is seeking his extradition and he faces 21 counts of money laundering and other financial crimes in the US. Russia is also seeking Vinnik’s extradition.
Vinnik denies being an operator of BTC-e, which in turn has rejected the claim that he was an employee of the site.
The Greek Supreme Count cleared the extradition of Vinnik to the US in December 2017. The Justice ministry is yet to take a final decision between the two extradition requests.
In September 2017, BTC-e had rebranded itself as WEX to launch a new bitcoin exchange platform after it was raided and fined by US authorities in July. The new website was strikingly similar to the old one and even migrated all the BTC-e’s users.
WEX, however, said that it did not cooperate with Always Efficient LLP. The website also claimed to comply with anti-money laundering and know-your-customer rules.
Karpeles was also arrested for money embezzlement that was unrelated to the Mt Gox theft, the report added.
Thanks to the strong appreciation of Bitcoin, Mt Gox creditors who lost their stash, could still turn a profit, the report said.
Nobuaki Kobayashi, a Tokyo attorney who is the bankruptcy trustee for Mt. Gox and known as a “Bitcoin whale”, said on Wednesday that he sold about $400 million worth of Bitcoin and Bitcoin Cash since late September.
The sale happened as Kobayashi raises cash to distribute among Mt. Gox’s creditors. The lawyer still has $1.9 billion worth of tokens and will consider selling those too.