US Department of Justice Indicts Two Russians
2011 Hacking... World's Largest Exchange Bankruptcy
Two Russians who hacked the world's largest cryptocurrency exchange over a decade ago and stole hundreds of thousands of bitcoins have been caught by U.S. law enforcement authorities.
On the 9th (local time), the U.S. Department of Justice announced that it had indicted two Russian nationals, Aleksei Bilyuchenko (43) and Aleksandr Verner (29), on charges including hacking the Japanese cryptocurrency exchange 'Mt Gox' in 2011 and stealing hundreds of thousands of bitcoins.
They are accused of hacking Mt Gox's servers in September 2011 along with other accomplices and stealing approximately 647,000 bitcoins. At the time, this was worth about $400 million (approximately 516.4 billion KRW), and at current market value, it amounts to $17.2 billion (22.2 trillion KRW).
Among them, Bilyuchenko reportedly used the stolen funds to finance the establishment of the bitcoin exchange BTC-e. According to the U.S. Department of Justice, this exchange was used by cybercriminals worldwide?including hackers, ransomware scammers, drug cartels, and corrupt officials?for laundering illegal proceeds.
Aleksandr Vinnik, who operated BTC-e alongside Bilyuchenko, was arrested in Greece in 2017 on charges of laundering over $4 billion in criminal funds and served five years in prison in France, which had jurisdiction over the case. Vinnik faced more than 20 charges from U.S. investigators at the time and was extradited to the United States in August 2022.
The U.S. Department of Justice stated, "By stealing a massive amount of cryptocurrency, Mt Gox ultimately became insolvent," and added, "We will continue to punish criminals in the cryptocurrency ecosystem."
Founded in 2010 and headquartered in Tokyo, the cryptocurrency exchange Mt Gox once grew to become the world's largest, recording a 70% share of bitcoin trading volume.
However, in February 2014, it was revealed that Mt Gox had been hacked and lost about 850,000 bitcoins worth approximately 500 billion KRW, leading to the conclusion that recovery was realistically impossible, and the company filed for bankruptcy. Investors worldwide who had invested in the exchange suffered losses.
After nine years of negotiations with creditors, Mt Gox plans to repay the creditors this year with about 140,000 bitcoins, 143,000 Bitcoin Cash (BCH), and $500 million.
This incident widely raised awareness that virtual assets are not immune to hacking, prompting the introduction of cryptocurrency-related regulatory laws worldwide.
Following Mt Gox's bankruptcy, the Japanese Financial Services Agency admitted, "To put it bluntly, there were many shortcomings," and began addressing institutional deficiencies. They established regulations for cryptocurrency sales and exchanges and legally recognized self-regulatory organizations, thereby incorporating cryptocurrencies into the regulatory framework while strengthening regulations to protect consumers.
However, in January 2018, Japan's largest cryptocurrency exchange, Tokyo-based Coincheck, was hacked again, resulting in the illegal leakage and disappearance of NEM cryptocurrency worth 58 billion yen (approximately 56.48 billion KRW), delivering a shock. This was the largest scale loss surpassing that of Mt Gox.
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