- Mt Gox hackers have been arrested by the US Department of Justice
- The hackers stole at least 647,000 BTC in a years-long theft
The United States Department of Justice [DoJ] announced the arrest of two Russians for hacking the then largest Bitcoin [BTC] exchange – Mt Gox. Authorities have identified the hackers as Alexey Bilyuchenko and Aleksandr Verner. The case alleges that both individuals “gained unauthorized access to the server containing the cryptocurrency wallets for Mt Gox.”
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Most notably, the incident, which began around September 2011, caused the accused to transfer BTC from Mt Gox to an address controlled by them and their co-conspirators. Moreover, the suspect continued to use this tactic at least until May 2014, which resulted in the theft of 647,000 BTCs. And these coins were largely from customers. Currently, these Bitcoins are worth more than $17 billion and would have been valued at more than $44 billion during BTC’s all-time high.
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Notably, the once largest Bitcoin exchange went bankrupt in February 2014. The exchange, which controlled more than 7% of BTC transactions at its peak, took this drastic step due to undetected theft that had been going on since 2011. The incident resulted in the arrest of its CEO Mark Karpeles and was subsequently sent to prison for his negligence. In addition, the bankruptcy proceedings of Mt Gox rehabilitation plan still going on. In addition, it would celebrate its tenth anniversary next year.
The DoJ press release read:
“Bilyuchenko, Verner and their co-conspirators laundered most of the bitcoins stolen from Mt. Gox, primarily through bitcoin addresses linked to accounts Bilyuchenko, Verner and their co-conspirators controlled on two other online bitcoin exchanges (“Exchange-1” and “Exchange-2″), as well as a particular user account on Mt. Gox itself.”
Laundering the stolen BTCs
To launder the stolen BTCs, the suspect entered into an advertising contract with a New York-based Bitcoin broker. Notably, the US DoJ has not named the brokerage service provider. The accused then demanded that the owner of the Bitcoin Broker service send a large amount of money to offshore accounts and shell companies, resulting in the transfer of more than $6.6 million. The announcement message read more,
In exchange for the wire transfers, New York Bitcoin Broker received “credit” on Exchange-1, enabling Bilyuchenko, Verner and their co-conspirators to launder more than 300,000 of the stolen bitcoins from Mt. Gox […] Mt. Gox ceased operations in 2014 after the theft was revealed.
In addition, Bilyuchenko is said to run the BTC-e trading platform, which is mainly used for illegal activities. The exchange was active from 2011 to July 2017, with law enforcement agencies ceasing its activities.
In particular, the accused Russian nationals are charged with conspiracy to commit money laundering by the Southern District of New York. And Bilyuchenko faces additional compensation for running an unlicensed money service business. The charges carry a maximum sentence of 20 years in prison, while Bilyuchenko receives a maximum sentence of 25 years.