- Mt Gox hackers were arrested by the US Department of Justice
- The hackers stole at least 647,000 BTC in a theft that occurred for years
The United States Department of Justice [DoJ] announced the arrest of two Russians for hacking the then-biggest Bitcoin [BTC] exchange – Mt Gox. The authorities have identified the hackers as Alexey Bilyuchenko and Aleksandr Verner. The case alleges that both individuals “gained unauthorized access to the server holding the cryptocurrency wallets for Mt Gox.”
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Notably, the incident, which began around September 2011, saw the accused transfer Mt Gox’s BTC to an address controlled by them and their co-conspirators. Moreover, the accused continued to deploy this tactic at least until May 2014, resulting in 647,000 BTCs being stolen. And, these coins majorly belonged to customers. Currently, these Bitcoins are worth over $17 billion and would have been valued at more than $44 billion during BTC’s all-time high.
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Notably, the once-biggest Bitcoin exchange declared bankruptcy in February 2014. The exchange, which controlled over 7% of BTC transactions at its peak, took this drastic step because of undetected theft that had been going on since 2011. The incident resulted in the arrest of its CEO Mark Karpeles and was subsequently sent to prison for his negligence. Moreover, Mt Gox’s bankruptcy proceedings rehabilitation plan is still ongoing. Furthermore, it would mark its one-decade anniversary next year.
The press release by the DoJ read,
“Bilyuchenko, Verner, and their co-conspirators laundered the bulk of the bitcoins stolen from Mt. Gox principally through bitcoin addresses associated with accounts Bilyuchenko, Verner, and their co-conspirators controlled at two other online bitcoin exchanges (“Exchange-1” and “Exchange-2”), as well as a particular user account on Mt. Gox itself.”
Laundering the stolen BTCs
In order to launder the stolen BTCs, the accused entered into an advertising contract with a New York-based Bitcoin Broker. Notably, the US DoJ has not named the brokerage service provider. The accused then demanded the owner of the Bitcoin Broker service send a large amount of money to offshore accounts and shell companies, resulting in the transfer of over $6.6 million. The announcement post further read,
“In exchange for the wire transfers, the New York Bitcoin Broker received “credit” on Exchange-1, through which Bilyuchenko, Verner, and their co-conspirators laundered more than 300,000 of the bitcoins stolen from Mt. Gox […] Mt. Gox ceased operations in 2014 after the theft was revealed.”
Additionally, Bilyuchenko allegedly ran the BTC-e trading platform, primarily used for illegal activities. The exchange operated from 2011 to July 2017, with law enforcement authorities shutting its operations.
Notably, the accused Russian nationals are charged with conspiracy to commit money laundering by the Southern District of New York. And, Bilyuchenko faces an additional charge of operating an unlicensed money service business. The charge carries a maximum sentencing of 20 years in prison, while Bilyuchenko faces a maximum sentence of 25 years.
