Saturday, July 20, 2024

Aleksey Bilyuchenko, a co-founder of Wex, the successor to the notorious Russian cryptocurrency exchange BTC-e, has been sentenced to a relatively short prison term in Russia. Facing charges of money laundering in the United States, Bilyuchenko was tried in his home country as the sole defendant in a case related to the collapse of Wex, which inflicted significant losses on its customers.

Bilyuchenko, one of the founders of the cryptocurrency exchange Wex, which emerged after the demise of Russia’s largest coin trading platform, BTC-e, has been handed a three-and-a-half-year prison sentence and a 500,000-ruble ($5,000) fine for his involvement in its operations. This information was reported by the Russian cryptocurrency news outlet Bits.media, citing a Telegram post by journalist and blogger Irek Murtazin.

The relatively lenient sentence comes in the wake of Bilyuchenko’s admission of guilt in Russia for his role in the collapse of Wex. He had also made a plea to Russian President Vladimir Putin for clemency, a request that was considered along with a milder punishment suggested by the state prosecutor. Ultimately, the judge reduced the sentence even further.

BTC-e, believed to have been a hub for cybercriminals to store, transfer, and launder billions of U.S. dollars in illicit proceeds, was shut down by Western law enforcement agencies in July 2017. Wex, which was established subsequently, went offline in 2018, resulting in customers losing an estimated 16 billion rubles (equivalent to over $167 million today), according to one estimate.

Court documents that were unveiled on June 7, 2023, in the Northern District of California allege that Bilyuchenko collaborated with the alleged operator of BTC-e, Alexander Vinnik, and others to operate the exchange from 2011 until the summer of 2017.

While Vinnik was arrested in Greece during the same year and eventually extradited to the United States in August 2022 to face trial, Bilyuchenko, who remains a fugitive wanted by the FBI, was detained in Russia in March 2022 and became the sole defendant in the Wex case there. He faces charges in the United States related to money laundering conspiracy and operating an unlicensed money services business.

According to Bilyuchenko’s own testimony, which was read by Russian prosecutors during a hearing on September 6, he served as Wex’s system administrator while also controlling substantial sums of money, some of which he distributed to security officials and individuals who promised protection. It was also revealed that the exchange’s owners, reportedly connected to sanctioned Russian billionaire Konstantin Malofeev, incurred losses amounting to 3.17 billion rubles (approximately $33 million).

At the final hearing on September 20, it was disclosed that the defendant had appealed to Russia’s President Vladimir Putin and Defense Minister Sergei Shoigu, requesting release from custody, exemption from punishment, and deployment to the “zone of the special military operation” in Ukraine. Observers speculate that this move could potentially help recover some of the funds for the victims. However, the state prosecution recommended a four-and-a-half-year prison term, which was reduced by Judge Varvara Oganova to three and a half years. Bilyuchenko, who changed his last name to Ivanov and pled guilty prior to the trial, has already spent a year and a half in pre-trial detention. He will also be required to pay a 500,000-ruble fine, as opposed to the 1 million rubles sought by the prosecutors.

The fate of ordinary Wex customers and the recovery of their lost funds remain uncertain. Share your thoughts on this case in the comments section below.

Frequently Asked Questions (FAQs) about Cryptocurrency Exchange Co-Founder Sentencing

Q: Who is Aleksey Bilyuchenko, and what is his connection to the cryptocurrency exchange Wex?

A: Aleksey Bilyuchenko is one of the co-founders of Wex, a cryptocurrency exchange that succeeded the infamous Russian exchange BTC-e. He played a significant role in the operation of Wex, which was established after the shutdown of BTC-e in July 2017.

Q: What charges did Aleksey Bilyuchenko face in the United States?

A: Bilyuchenko faced charges in the United States related to money laundering conspiracy and operating an unlicensed money services business. These charges were connected to his involvement in the operation of the cryptocurrency exchange BTC-e.

Q: Why was Aleksey Bilyuchenko sentenced in Russia?

A: Bilyuchenko was sentenced in Russia due to his role in the collapse of Wex, which had caused substantial losses to its customers. He was the sole defendant in the case related to Wex’s downfall, and his sentencing took place in his homeland.

Q: What was the outcome of Aleksey Bilyuchenko’s trial in Russia?

A: Aleksey Bilyuchenko received a relatively lenient sentence in Russia. He was sentenced to three and a half years in prison and a 500,000-ruble ($5,000) fine for his involvement in Wex’s operations. This sentence was reduced from the initial request for a harsher punishment by the state prosecutor.

Q: What was the fate of BTC-e and Wex, and how did it impact customers?

A: BTC-e, known for allegedly being used by cybercriminals to store, transfer, and launder illicit proceeds, was shut down by Western law enforcement in 2017. Wex, the successor to BTC-e, went offline in 2018, resulting in substantial customer losses, estimated at around 16 billion rubles (over $167 million today).

Q: Did Aleksey Bilyuchenko make any appeals during his trial?

A: Yes, during his trial, Bilyuchenko made an appeal to Russian President Vladimir Putin and Defense Minister Sergei Shoigu. He requested release from custody, exemption from punishment, and deployment to the “zone of the special military operation” in Ukraine. This move raised speculations about his potential role in recovering funds for victims.

Q: What was the role of the exchange’s owners, reportedly affiliated with Konstantin Malofeev?

A: It was revealed that the owners of Wex were reportedly connected to sanctioned Russian billionaire Konstantin Malofeev. They incurred substantial losses amounting to 3.17 billion rubles (around $33 million) in connection with the operation of the exchange.

Q: What is the current status of Aleksey Bilyuchenko’s legal situation?

A: As of the latest information available, Aleksey Bilyuchenko, who changed his last name to Ivanov and pled guilty ahead of the trial, has already served a year and a half in pre-trial detention in Russia. He will serve a three-and-a-half-year prison sentence and pay a 500,000-ruble fine as part of his sentencing.

Q: Is there any indication of whether ordinary Wex customers will recover their lost funds?

A: The fate of ordinary Wex customers and the potential recovery of their lost funds remain uncertain. The situation surrounding the exchange’s collapse and legal proceedings will likely impact the prospects of fund recovery, but it’s currently unclear how and when this might occur.

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2 comments

PoliticalJunkie September 24, 2023 - 11:08 pm

politics mixed in, Putin, Ukraine, what’s the connection? This story’s got it all, quite a thriller!

Reply
EconGuru September 25, 2023 - 5:14 am

btc-e, wex, these names ringin’ a bell, shady stuff goin’ on in crypto world, lots of losses, now a fine, crazy!

Reply

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