US charges WEX’s ‘Red Admin’ with Mt. Gox hack

The system administrator of the WEX cryptocurrency exchange Aleksey Bilyuchenko (Ivanov) and BTC-e developer Alexander Werner were charged with conspiracy to launder about 647,000 BTC obtained from the Mt. Gox hack in 2011. The U.S. Department of Justice said this.

According to the indictment by the U.S. Attorney’s Office for the Southern District of New York, around September 2011 Bilyuchenko, Werner, and their associates allegedly gained unauthorized access to the Japanese server where Mt. Gox clients’ wallets were stored. From that period through May 2014 they withdrew from the exchange at least 647,000 BTC to addresses controlled by them on two trading platforms.

To launder the funds, around April 2012 the defendants allegedly entered into a fraudulent advertising-services contract with a New York-based bitcoin broker. The prosecutor’s office believes that with its help they executed a series of large transfers totaling about $6.6 million to offshore accounts, including those controlled by shell companies.

“In exchange for providing services, the New York-based bitcoin broker allegedly obtained some kind of ‘credit’ on the BTC-e cryptocurrency exchange, which was created using funds stolen from Mt. Gox. Through it, Bilyuchenko and his associates laundered more than 300,000 BTC,” the department said.

In addition, the U.S. Attorney’s Office for the Northern District of California charged Bilyuchenko in conspiracy with the the alleged co-owner of BTC-e Alexander Vinnik to run the platform from 2011 until its closure in 2017.

The department said the exchange did not have a money-services licence, was used to launder funds, and processed “billions of dollars” of illicit proceeds for hackers, ransomware operators, scammers, drug traffickers and corrupt government officials.

In March 2022 Aleksey Bilyuchenko was detained in the Moscow region on charges of embezzling assets of the WEX bitcoin exchange. Authorities seized around 190 million rubles and sent him to the Matrosskaya Tishina prison.

In April 2023, the Russian Interior Ministry completed its preliminary investigation into his criminal case, during which Bilyuchenko fully complied with the terms of the pre-trial cooperation agreement and reimbursed the damages, providing information about his bank accounts.

Subsequently, the case materials were transferred to the Zaeltsovsky District Court of Novosibirsk.