[ad_1]
Detained while on vacation in Greece in 2017, Russian citizen Alexander Vinnik fought extradition to the United States and France for three years. Those appeals were dismissed and the 41-year-old was tried in France, where he was convicted of money laundering through a cryptocurrency exchange Bitcoin. However, his legal troubles are far from over. The United States still wants to extradite him on serious criminal charges, while $ 140 million is frozen in New Zealand bank accounts. Reports by Jared Savage.
A Russian “computer genius” with $ 140 million in frozen bank funds in New Zealand has been convicted of money laundering in France.
Alexander Vinnik was arrested while on vacation in Greece in 2017 and extradited to France this year, where he was tried for laundering millions of euros for cybercriminals and extortion for hacking attacks.
Prosecutors alleged that the 41-year-old was the creator of the infamous Locky ransomware; where emails disguised as invoices, once opened, activated malware that shut down the user’s computer.
A message appeared on the hacked computer with instructions to pay a ransom in Bitcoin cryptocurrency to regain control of the machine.
Vinnik was accused of earning 135 million euros from the scam. While Vinnik was cleared by the French court of being the mastermind behind the Locky attacks, according to foreign media reports, he was found guilty of laundering extorted money from ransomware hackers.
The laundering was done through BTC-e, one of the largest and most widely used cryptocurrency exchanges in the world.
Described by his legal team as a “computer genius” being hunted because he posed a threat to the international banking system, Vinnik says he was a BTC-e employee and not the one in charge.
But his convictions in France will increase the chances that the $ 140 million in funds held by New Zealand police investigators, as revealed by the Herald in June, will be seized as proceeds of crime.
Vinnik was sentenced to five years in prison in France, and now faces the possibility of being extradited to the United States on additional charges related to BTC-e, where at least $ 4 billion worth of Bitcoin was traded with “high levels of anonymity. “.
While the Bitcoin exchange is completely legitimate, US Justice Department prosecutors allege that Vinnik created a customer base for BTC-e that was “heavily reliant on criminals” by not requiring users to validate. their identity, obscure and anonymize the transactions and the source. of funds and lacked processes to combat money laundering.
As such, the extradition order alleges that Vinnik was in charge of BTC-e, which received the criminal proceeds of hacking from cybercriminals, ransomware scams, identity theft schemes, corrupt public officials, tax fraud and social networks. drugs
According to the unsealed US indictment, BTC-e had a base of operations in the Seychelles and its web domains are registered for shell companies in, among other places, Singapore, the British Virgin Islands, and New Zealand.
Company Office records show that Vinnik registered a company, WME Capital Management Ltd, at a North Shore address in 2008. It was delisted in 2012 as the Business Office thought it had ceased operations.
The initials “WME” also appear on the US indictment, as Vinnik allegedly operated the “WME” account on BTC-e.
The web domains for the Bitcoin exchange were registered for several other companies registered in New Zealand, which have been cooperating with the police Asset Recovery Unit to recover alleged criminal proceeds linked to Vinnik.
Around $ 140 million in offshore bank accounts controlled by a New Zealand registered company have been returned to New Zealand, where funds have been restricted under the Criminal Assets Recovery Act.
“The New Zealand Police have worked closely with the US Internal Revenue Service to address this very serious crime,” Police Commissioner Andy Coster said in June.
“These funds are likely to reflect the gains made from the victimization of thousands, if not hundreds of thousands, of people around the world as a result of cybercrime and organized crime.”
Coster said that given the global nature of money laundering, there was always a risk that New Zealand companies would inadvertently get involved.
“However, this restraint shows that New Zealand is not, and will not be, a safe haven for the illicit profits generated by crime in other parts of the world.
“The global criminal community needs to understand New Zealand’s financial system, and companies established here are not places to try to hide illicit income.
“This restraining order also demonstrates that the New Zealand Police are actively conducting investigations with our international partners and that we have the experience to investigate money laundering at the most serious level.”
The $ 140 million in restricted bank funds is by far the largest case ever taken under the Criminal Assets (Recovery) Act, nearly double the $ 70 million frozen in bank accounts linked to a wealthy Chinese-Canadian mogul. .
Cases taken under the law are determined by the civil level of evidence, the “balance of probabilities,” rather than the much higher criminal evidentiary threshold of “beyond reasonable doubt.”
To grant the restraining order, a Superior Court judge must be satisfied that there are “reasonable grounds” for someone to have benefited from “significant criminal activity.”
A Superior Court judge will determine whether the seized property is ultimately confiscated from the Crown, either through a trial or a possible settlement agreement.
The New Zealand Police case will be based on evidence collected by the United States, including the allegation that Vinnik received funding from the notorious Mt Gox hack or hack.
One of the first digital exchanges, the Japan-based Mt Gox, eventually collapsed, in part, due to losses from the hack in which several hundred million US dollars worth of bitcoins were stolen.
More than half of the stolen bitcoin was sent to three separate but linked BTC-e accounts, including one allegedly controlled by Vinnik.
The Vinnik trial is the latest example of how the police put their powers to the test under the Criminal Assets (Recovery) Act, which came into effect in 2009.
In the past, the law has been used more frequently to seize the wealth accumulated by gangs and drug traffickers, but it has reached new territory in recent years.
There have been a number of cases involving fraud or alleged tax evasion, alleged piracy of movies and cryptocurrencies, foreign corruption, and even a death in the workplace.
