Bitcoin probe freezes $140m

Police have frozen $140 million in bank funds linked to a Russian in the largest ever restraint of funds in New Zealand police history.

The money was controlled by a New Zealand registered company and has been frozen as part of a global investigation into a Bitcoin exchange run by Alexander Vinnik who is alleged to have laundered billions of dollars for criminal syndicates.

In a statement, Police Commissioner Andrew Coster said Vinnik previously operated cryptocurrency exchange BTC-e.

Coster alleged that criminals and cyber criminals laundered proceeds derived from a range of criminal activities including computer hacking, ransomware attacks, theft, fraud, corruption and drug crime through BTC-e, which operated from the United States.

Vinnik was arrested on moneylaundering allegations in Greece in 2017 and has since been extradited to France where he remains in custody.

Vinnik was arrested in Greece on an extradition warrant from United States authorities accusing him of facilitating money laundering, identity theft, drug trafficking and computer hacking.

The 37-year-old was alleged to have operated BTC-e, one of the world’s largest and most widely used cryptocurrency exchanges, where at least $4 billion in Bitcoin was traded with “high levels of anonymity”.

According to the unsealed US indictment, BTC-e had a base of operations in the Seychelles Islands and its web domains are registered to shell companies in, among other places, Singapore, the British Virgin Islands, and New Zealand.

Companies Office records show Vinnik registered a business, WME Capital Management Ltd, to a North Shore address in 2008. It was removed from the register in 2012, as the Companies Office thought it had ceased operating. The initials “WME” appear in the US indictment, as Vinnik allegedly operated the “WME” account at BTC-e.

Web domains for the Bitcoin exchange were registered to several other companies registered in New Zealand, which have been cooperating with the police Asset Recovery Unit to recover alleged criminal proceeds linked to Vinnik.

Around $140m in offshore bank accounts have been clawed back to New Zealand, where the assets have been restrained under the Criminal Proceeds Recovery Act.