A wallet that held a significant portion of Bitcoin once belonging to the former BTC-E, one of the oldest and most controversial Bitcoin exchanges, made its biggest transfer since 2018, splitting 10,000 BTC across two wallets on Weds., Nov. 23rd. According to blockchain forensics by Chainalysis, 9,950 of the BTC is still kept in personal wallets, while the remaining 50 has been transferred to “two large exchanges.” The total amount moved represents close to $165 million at today’s prices.
Based out of Bulgaria and often referred to as a “rogue exchange,” BTC-E is most famous for its role in helping to launder funds stolen in the 2014 hack of MtGOX. The exchange is also known for accepting proceeds from various darknet markets, hacks, and ransomware attacks. It is estimated that approximately $4 billion in illicit BTC flowed through the exchange in its six years of operation, which included 95% of all ransomware payments made during this period.
The founder and owner of BTC-E, Alexander Vinnik, was arrested while vacationing in Greece on July 25, 2017, at the behest of US authorities, who levied an $110 million penalty against his exchange. This led to the immediate closure of BTC-E, which had been in operation since 2011. After remaining incarcerated in Greece for 2.5 years, Vinnik was extradited to France where he was convicted of money laundering charges. After returning to Greece, he was extradited to the United States in August of this year to face charges of money laundering and operating an unlicensed money service business.
According to an investigation by Russian news site Lenta.ru, the original Russian Anonymous Marketplace (RAMP) – predecessor and rival of Hydra – had kept a portion of their organization’s funds on BTC-E, along with approx. $60 million in vendor deposits. After Vinnik’s arrest, a significant portion of these funds were confiscated, putting RAMP in a financial black hole from which they could not recover. The shutdown of BTC-E is thought to be the final blow to RAMP, which was one of Russia’s first darknet markets, as it had already been crippled through ongoing cyber-warfare with Hydra.
In addition to receiving funds from RAMP, BTC-E was also the go-to exchange for a vendor who managed to find a withdrawal exploit in Sheep Marketplace, another early darknet market that launched in March 2013. About 5,400 BTC were stolen off the market in Dec. 2013 – valued at about $6 million at the time – some of which made their way to a BTC-E deposit wallet. Its operations ceased and its website was taken offline later that month.
Vinnik has steadfastly maintained his innocence on all charges against him since his 2017 arrest.