A UK company has been linked to the recycling of 650,000 stolen bitcoins to the value of â‚¬ 4.5 billion, a BBC Radio 4 investigation has found.
The coins were taken by hackers, from Tokyo-based Bitcoin exchange Mt Gox, leaving tens of thousands of customers out of pocket.
It is not clear who is responsible for the London-based firm Always Efficient LLP.
Mt Gox operator Mark karpeles apologised to investors and said that it was co-operating with the investigation.
The FBI has charged a Russian national with money laundering stolen bitcoins.
Mt Gox combined with those who wanted to buy the crypto-currency in dollars, pounds sterling and international designations with those that want to sell bitcoin, and processed an estimated 70% of the world’s Bitcoin trade.
The exchange was originally set up to trade cards from a game set in a world of wizards, spells and monsters. When he turned his attention to crypto-currencies, seemed to be a huge success.
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Almost half of all Bitcoin trading is done in Japanese yen, and there is also a Japanese girl group, the Virtual Currency Girls, which reflects Japan’s growing mania for virtual money.
Geoff White/ BBC
But a group of amateur sleuths, WizSec, discovered that hackers had targeted Mt Gox.
They had systematically taken the accounts of users, to hide their tracks by Mt Gox operators for years.
And in 2014, the site’s ceo, Mark karpeles, made the terrible discovery that hundreds of thousands of coins missing.
When customers are found to be able to withdraw funds, the site collapsed.
Speaking for the first time about the collapse of BBC Radio 4 File on Four programme, Mr karpeles said: “I felt like… when you fall from a building and you see the ground approaching, and you feel as if you’re about to die.”
He said that the site had grown beyond his expectations.
“Mt Gox is gone from interesting project to be, I would say, a daily nightmare of dealing with the banks, the governments, the people that you never knew existed.”
As the coins had gone missing initially, it was a mystery.
But now the investigators say that almost half of the stolen coins from Mt Gox ended up in the rival exchange BTC-e. The “Cyber-crime hub’
The FBI says that BTC-e was a hub for cyber-crime, and helped launder money from the hack, including ransomware attacks that has hit the NHS and other organisations last year.
But trying to find out who operates BTC-e is not easy. The exchange said it will be managed by a British company called Efficient, LLP.
Always Efficient, the venue is in east London, but the address is shared by many other studies, some of which are thought to be involved in money laundering.
Duncan Hames, the anti-corruption group Transparency International, said that it is likely to be a shell company.
“The people of laundering money for the establishment of a network of companies to create layers between the original crime and their attempts to integrate the proceeds of their crime into the economy,” he said.
“Simply activate a series of steps to create this distance and to obscure the trail of the proceeds of crime.”
Geoff White/ BBC
In an attempt to regulate these so-called shell companies, the new rules introduced in June 2016, will now establish that companies must publish a list of “people with significant control” (PWSC).
Always Efficient does not currently have a PWSC. The person most recently listed, Alexander Buyanov, is a DJ in a Moscow nightclub.
According to Andrei Zakharov, a Russian journalist who tracked him down, Mr. Buyanov said it “knew nothing” of the business.
Companies House has told the BBC that he had a dedicated team to deal with PWSCs, and took action when irregularities have been identified.The “real risk” for the UNITED kingdom
The FBI says the man behind the BTC-e is another Russian national, Alexander Vinnik.
Documents seen by the BBC detailing how the theft of Mt Gox money has been laundered through various accounts, user names and email addresses allegedly owned by Mr Vinnik.
Mr. Vinnik has been arrested while he was on vacation in Greece in July 2017, and is currently held in the centre of Thessaloniki.
The Justice Department wants to extradite him to face 21 counts of money laundering and other financial crimes.
Mr Zakharov said: “they were on the beach, and his wife was swimming, and when he turned he saw a lot of people with sunglasses next to her husband, and he was arrested.”
Russia has also filed an extradition request for Mr. Vinnik on minor, unrelated charges.
The Greek government is now in the process of deciding between the two requests.
Through his lawyer, Mr. Vinnick told the BBC he denies having any connection Always Efficient.
He added: “BTC-e is only a web platform for the purchase and sale of Bitcoin – not the exchange. As such can not be held responsible for the source of the money used to buy Bitcoin, not more than a bureau du change can be held responsible for the exchange of a theft of $100 note in pounds sterling.”
A National Crime Agency (NCA) spokesman said he did not “on a regular basis confirm or deny the investigation”, but has recognised “the real risks for the UNITED kingdom, and the UNITED kingdom, the financial sector, from large and complex money laundering.”
He added: “the Fight against money laundering is a priority for the NCA, and we have a number of national and international level, the operations of enforcement against the criminals involved, working in close collaboration with the partners in the application of the law and of financial regulation.”
Mark karpeles has been arrested and accused of embezzlement relating to payment of the value of â‚¬ 1.7 m. He says that these were legitimate claims signed by an accountant.
He is also accused of manipulation of the data. He denies all the charges, none of which is related to the loss of 650,000 bitcoins.
He told the BBC he was doing everything possible to return the funds to customers and added: “I’m very sorry that when I was in charge things happened the way they did.”‘Unprecedented’ increase in
Mt Gox is not the only Bitcoin the currency of exchange to be violated. Also the Virtual Currency Girls have lost money as a result of the recent Bitcoin exchange theft.
In the Japanese bankruptcy law, the remaining 200,000 Mt Gox bitcoins are valued at cost of Â£300 each, the price that held when the exchange collapsed in 2014.
Since then, the value has increased by approximately Â£7,000 each.
Many investors are now pushing to see their Mt Gox bitcoins refunded at the current price, and a decision is expected within the next few months.
Then, regardless of the outcome in Mr. Vinnik case, Mt Gox creditors, who lost could still turn a profit, thanks to Bitcoin’s unprecedented increase.
File 4: The Missing Bitcoin Billion is on BBC Radio 4, Sunday 11 March at 20:00 GMT and on the iPlayer.