UK company linked to laundered Bitcoin billions

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Reuters

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The Mt Gox Bitcoin exchange theft is the largest in the crypto-currency’s history

A UK company has been linked to the laundering of 650,000 stolen Bitcoins worth £4.5bn, 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’s not clear who is in control of the London-based firm Always Efficient LLP.

Mt Gox operator Mark Karpeles apologised to investors and said he was co-operating with the investigation.

The FBI has charged a Russian national with laundering the stolen Bitcoins.

Mt Gox matched up those who wanted to buy the crypto-currency with dollars, pounds and other international denominations with those wanting to sell Bitcoins, and handled 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 it turned its focus to crypto-currencies, it appeared to be a huge success story.

Almost half of Bitcoin trading is done in Japanese yen, and there’s even a Japanese girl group, the Virtual Currency Girls, which reflects Japan’s growing craze for virtual money.

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Geoff White/ BBC

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The Virtual Currency Girls

But a group of amateur investigators, WizSec, found that hackers had targeted Mt Gox.

They had systematically pilfered users’ accounts, hiding their tracks from Mt Gox operators for years.

And in 2014, the site’s chief executive, Mark Karpeles, made the horrifying discovery that hundreds of thousands of coins were missing.

When customers found themselves unable to withdraw funds, the site collapsed.

Speaking for the first time about the collapse to BBC Radio 4’s File on Four programme, Mr Karpeles said: “It felt like… when you fall from a building and you see the ground getting closer, and you feel like you are about to die.”

He said the site had rapidly grown beyond his expectations.

“Mt Gox went from interesting project to being, I would say, a daily nightmare of dealing with banks, governments, people I never knew existed.”

How the coins had gone missing was initially a mystery.

But now investigators say almost half the stolen coins from Mt Gox ended up at rival exchange BTC-e.

‘Cyber-crime hub’

The FBI says BTC-e was a hub for cyber-crime and helped to launder money from hacks, including ransomware attacks of the kind that hit the NHS and other organisations last year.

But trying to find out who operates BTC-e isn’t easy. The exchange claimed to be operated by a British company called Always Efficient LLP.

Always Efficient’s registered office is in east London, but the address is shared by several other firms, some of which are thought to be involved in money laundering.

Duncan Hames, of anti-corruption group Transparency International, said it’s likely to be a shell company.

“People laundering money will set up a network of companies to create layers between the original crime and their attempts to then integrate the proceeds of their crime into the economy,” he said.

“They simply enable a series of transactions to take place to create this distance and to obscure the trail of the proceeds of crime.”

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Geoff White/ BBC

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French Bitcoin exchange operator Mark Karpeles said he felt like he was ‘about to die’ when his company was hacked

In an attempt to regulate these so-called shell companies, new rules introduced in June 2016 now stipulate that companies must publish a list of “persons with significant control” (PWSC).

Always Efficient doesn’t 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 claims he “knew nothing” of the business.

Companies House told the BBC it had a dedicated team dealing with PWSCs, and took action when irregularities were identified.

‘Real risk’ to UK

The FBI says the man behind BTC-e is another Russian national, Alexander Vinnik.

Documents seen by the BBC detail how the stolen Mt Gox money was laundered through various accounts, usernames and email addresses allegedly controlled by Mr Vinnik.

Mr Vinnik was arrested while on holiday in Greece in July 2017, and is currently being detained in…

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