BTC-e

The Justice Department claims Alexey Bilyuchenko and Aleksandr Verner took control of a Mt. Gox server and stole 647,000 Bitcoin from the exchange.

The United States Justice Department has unsealed charges against two men it says are responsible for the $400 million hack of former Bitcoin (BTC) exchange Mt. Gox. According to the announcement, 43-year-old Alexey Bilyuchenko and 29 year old Aleksandr Verner allegedly conspired to launder 647,000 BTC they stole from Mt. Gox through a hack of the exchange’s servers. 

Bilyuchenko is also charged with conspiring to operate the BTC-e exchange, which was shut down in 2017 due to money laundering allegations.

The DOJ unsealed charges related to the 2011 hack of the cryptocurrency exchange Mt. Gox and the operation of the illicit cryptocurrency exchange BTC-e.

Alexey Bilyuchenko, 43, and Aleksandr Verner, 29, both Russian nationals, are charged with conspiring to launder approximately…

— db (@tier10k) June 9, 2023

Prosecutors claim the hack occurred over a period of more than a year, from September 2011 until at least May 2014. During this time, the two men allegedly gained control of a Mt. Gox server located in Japan. They then proceeded to periodically make transfers of BTC from Mt. Gox to themselves, until the “vast majority” of customers’ BTC had been drained from the exchange.

After gaining possession of these Bitcoin, the men attempted to sell them through another exchange they controlled. To facilitate these sales, the two men entered into an allegedly fraudulent contract with a Bitcoin brokerage firm located in New York. The brokerage firm purchased the stolen BTC from the hackers by sending wire transfers to various offshore bank accounts. The Bitcoins themselves were left in the possession of the hackers’ exchange, but were credited to the brokerage firm’s account within it.

The announcement does not say whether BTC-e was the exchange used in the fraudulent deal, instead referring to the exchange used as “Exchange-1.” Prosecutors claim that the pair received approximately $6.6 million from the deal.

Related: Mt. Gox repayment registrations close: Here’s what’s next

Mt. Gox was one of the first major cryptocurrency exchanges. It filed for bankruptcy in March 2014 after claiming the hack pushed it into insolvency.

BTC-e operated from 2011 to 2017. In 2017, the FBI liquidated some of its cryptocurrency, claiming that the funds were earned through money laundering. BTC-e’s founder, Alexander Vinnik, is currently serving prison time for his connection with the exchange. In May, Vinnik's attorney attempted to get him released as part of a prisoner swap with the Russian Federation.