New Insights into Mt. Gox Bitcoin Heist Surface After Court Records Release

Freshly unveiled court records are exposing how the administrators of the closed-down bitcoin exchange, Alexander Verner and Alexey Bilyuchenko, embezzled and concealed bitcoin from Mt. Gox, the notoriously breached bitcoin exchange.

This recently publicized information offers unprecedented insights into the colossal volume of bitcoin swindled from Mt. Gox, starting from a catastrophic hack in 2011. These revelations open a unique window into the investigative efforts of U.S. law enforcement into two pioneering bitcoin corporations – Mt. Gox and BTC-e.

The Beginning of The Heist

Post its inception in 2010, Mt. Gox fell victim to a hack orchestrated by Verner, Bilyuchenko, and unnamed associates. This cyber assault saw the perpetrators gain access to sensitive user data, transactions records, and crucially, the private keys for the exchange’s cryptocurrency in 2011. The fallout was so extensive that by 2014, Mt. Gox declared bankruptcy, having lost the majority of its crypto assets.

Illicit Transfer of Funds

The court records released this week detail how from 2011 to 2014, the illicit group channeled an astonishing 647,000 bitcoins out of Mt. Gox’s wallets. A significant portion of these, totaling 300,000 bitcoins, found their way to BTC-e, another crypto exchange that has since been dissolved.

BTC-e’s alleged operator, Alexander Vinnik, also a Russian national, was taken into custody in Greece and later extradited to the U.S. to respond to charges related to computer infringements, hacking incidents, ransomware scams, identity theft schemes, corrupt public officials, and narcotics distribution rings.

The Downfall

The downfall of BTC-e came in 2017, with the FBI shutting it down. Bilyuchenko, the exchange’s administrator, was reportedly arrested in Russia in 2019. His testimony, as referenced in the book by Russian investigative journalist Andrey Zakharov, stated that Verner was in charge of BTC-e’s technical development. However, the present locations of both Bilyuchenko and Verner remain unknown.

The stolen bitcoin was transferred from Mt. Gox to BTC-e, TradeHill (another bitcoin exchange that ceased operations in 2013), and the personal accounts of Verner and Bilyuchenko at Mt. Gox. To liquidate the stolen bitcoin, they utilized U.S. companies, although specific entities have not been named in the indictment.

Exchanges and Shell Companies

Further light is shed by a Department of Homeland Security (DHS) report, highlighting transactions between BTC-e and two early, now-defunct bitcoin companies, BitInstant and Memory Dealers. The co-conspirators received $2.5 million from these entities into the bank account of a shell company tied to BTC-e, the Canton Business Corporation, registered in Seychelles.

Despite the substantial development, the locations of Bilyuchenko and Verner remain a mystery. Meanwhile, BTC-e’s Vinnik hopes for a prisoner swap that may allow him to return to Russia after nearly five years in detention. With the unsealing of court documents, it seems that the intricate story of BTC-e and Mt. Gox is far from over.