Questions about the BTC-e Situation and Possible Connection to Alphabay’s Recent Demise? (Long post)

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Foreword: I am a geek for all things hacker/bitcoin related drama. I think this stuff plays out like a soap opera and it's beautiful. It's due to the simple fact that the BTC community is made up of a diverse set of people: Hackers, Entrepreneurs, Nerds, Drug Dealers, Fraudsters, etc. So I think for historical purposes it is great to note all the events that happen during huge events like this, because should bitcoin take off, this will be stuff of the history books. So if you have any information to share, please do, and let's try to make archives of all information as websites come and go.

 

The recent BTC-e post by wizsec is a very big deal, possibly more than most people here realize. BTC-e was an integral part of the crypto trading industry. However, there is still a lot of missing information that greatly affects the narrative and I would like anyone to chime in with educated opinions.  

 

Let me start with some facts about BTC-e:

  • BTC-e was created in September 2011 according to their bitcointalk announcement thread
  • The administration was anonymous and (AFAIK) Vinnik's name had not come up before. The company was registered in Malta and their bank accounts were in Cyprus. [1]
  • It is well known that BTC-e was the place to send dirty funds for laundering purposes because of their lack of any sort of KYC.
  • They have been the victim of multiple hacks in the past. See this post I wrote yesterday that got very little attention
  • Multiple darknetmarket hacks/exit scams funds made their way to btc-e [2]
  • Wizsec's post claims that Bitcoinica and Bitfloor funds were also laundered through the same wallets that the mtgox coins flowed through.

[1] It was widely assumed it was russian and I don't believe btc-e did anything to hide that fact. I have seen people say Bulgeria also. [This](https://www.reddit.com/r/BitcoinMarkets/comments/2c84bl/does_anyone_know_who_is_the_founder_of_btce/cjcv63w/ post by /u/-Mahn is where I got the info about Malta and Cyprus so might be worth double checking.)

[2] see [this](https://www.reddit.com/r/SheepMarketplace/comments/1rvlft/i_just_chased_him_through_a_bitcoin_tumbler_and/cdt17a8/ and this

 

So I have a couple questions about the role btc-e played in laundering funds in the past and what their involvement with the mtgox hack is.

  • What evidence do we have that Vinnik actually had direct knowledge of the source of the funds he was dealing with? I imagine it's possible that such a large deposit into his exchange would lead him to move them in a manual manner. Obviously he would make a connection on his own due to the size and timing of the deposits, but there is a significant difference between direct involvement and knowledge in the laundering of hacked funds and simply having them show up in your exchange.
  • The timing of alphabay's admin's arrest is suspect because of he was also Russian and I can imagine btc-e being used to launder alphabay's funds.
  • What role did btc-e play in the actual hacking of mtgox and other exchanges? Multiple posts by prominent members of the Bitcoin community state in no uncertain terms that btc-e hacked mtgox. Wizsec simply states involvement in laundering of the hacked funds, which is an important distiction.[3] It's hard to imagine that btc-e was responsible for all the hackings, so I personally suspect btc-e's activity to be limited to laundering. Perhaps the reason the funds ended up in Vinnek's non-excange related addresses is because he traded clean btc-e from btc-e deposits and then used the stolen funds in mass for himself.

[3] [Kyle Torpey](https://twitter.com/kyletorpey/status/890253492190945285 Charlie Shrem coindesk )

I had more questions ealier but I can't remember them at this time, so I'll edit this post as I remember them. If you have any questions you think should be displayed above, post the and I'll edit them in. I appreciate any input on this situation because I find it downright fascinating and I have the feeling it goes deeper than we think.

submitted by /u/winlifeat
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Ticker

1 BTC = $40020.01 USD  (via Coinbase)
1 ETH = $2517.54 USD  (via Coinbase)
1 LTC = $173.32 USD  (via Coinbase)
Quotes delayed up to 2 minutes.

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