Bitcoin From Defunct BTC-e on the Move Again: Report

Someone is trying to cash out bitcoin from an exchange the U.S. shut down in 2017.

AccessTimeIconMar 24, 2023 at 7:00 p.m. UTC
Updated Mar 24, 2023 at 7:13 p.m. UTC

The long-dormant bitcoin stash from the defunct BTC-e crypto exchange has been moving on the blockchain for the past two weeks, an anonymous member of a Russian Telegram channel noticed on Thursday.

The wallet received 3,299 BTC from the known wallet of BTC-e in November 2022, in the first transaction the BTC-e wallet sent since 2017. Back then the wallet sent 10,000 bitcoin ($165 million) to two unidentified recipients. On March 14 one of the receiving wallets started moving funds again, eventually sending small parts to exchanges and over-the counter (OTC) trading desks, presumably to cash out the bitcoin.

Blockchain analytics firm Crystal Blockchain confirmed to Russian-language crypto website Forklog that smaller parts of those 3,299 BTC have been sent to exchanges KuCoin and MEXC, as well as to an OTC desk named BTC2pm.

According to the on-chain data, around 2.75 BTC landed on KuCoin in two transactions via a number of intermediary wallets, and 1 BTC went to MEXC.

CoinDesk requested comments from KuCoin and MEXC but had not heard back by press time.

BTC-e trail

U.S. law enforcement agencies shut down BTC-e in 2017 and arrested its alleged operator, Russian national Alexander Vinnik, at a resort near Thessaloniki, Greece. The U.S. Department of Justice accused him of money laundering and other crimes.

After a stint in a Greek prison, then a trial in France Vinnik was finally extradited to the U.S. in August to face indictment for “computer intrusions and hacking incidents, ransomware scams, identity theft schemes, corrupt public officials and narcotics distribution rings.” He is now at the Santa Rita Jail in Dublin, California, according to the court case docket.

Soon after BTC-e stopped operations, its successor, WEX, appealed to the BTC-e users, offering to resume trading from their accounts and also to get refunds for their lost funds. However, WEX shut down, too, a year later, the victim of internal conflict and in-fighting. WEX wallets were drained of millions of dollars worth of crypto, CoinDesk reported at the time.

In 2019, another Russian national, Alexei Bilyuchenko, confessed to being the admin of WEX in control of all the funds, but said he was forced to transfer all the money to two unidentified officers of Russia's Federal Security Service (FSB) who detained him and extorted the money, according to the criminal case materials obtained by BBC.

Bilyuchenko is currently in Matrosskaya Tishina prison in Moscow, according to former WEX users.

Edited by Jeanhee Kim.


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Anna Baydakova

Anna Baydakova was CoinDesk's investigative reporter with a special focus on Eastern Europe and Russia. Anna owns BTC and an NFT.

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