BTC-e Domain Seizure by U.S. Law Enforcement Sparks Jurisdiction Questions

On July 28, 2017, the bitcoin-exchange BTC-e domain was seized by six U.S. law enforcement agencies including the Secret Service. Many international bitcoin proponents are questioning why the U.S. is claiming jurisdiction over an exchange registered in another country.

Also Read: BTC-e Operator Indicted and Connected With Missing Mt Gox Funds

BTC-e Domain Seized by U.S. Law Enforcement  

Last week we reported on the U.S. Department of Justice’s (DOJ) charges against the alleged operator of the exchange BTC-e, Alexander Vinnik. The agency has charged Vinnik with nineteen counts of illegal money transmission and money laundering. According to the indictment Vinnik and the bitcoin trading platform, BTC-e helped launder over $4B in illicit funds since 2011. Since Vinnik’s arrest, the website BTC-e has had an “Under Maintenance” static page showing up when visiting the trading platform’s domain.

Bitcoiners worldwide wondered what would happen to the exchange that stopped operating a few days before Vinnik’s detention. According to the DOJ charges, the trading platform faces a fine of $110M, but no one was sure if the site was officially closed. Now visitors of the website see a seizure notice when visiting the domain. The site says the seizure is pursuant to its warrant and was issued by U.S. Homeland Security, the DOJ, the Treasury, the Inspector General, and the nation’s Secret Service.

BTC-e Domain Seized by U.S. Law Enforcement Sparks Jurisdiction Questions
The seizure notice on BTC-e started on July 28, 2017.

‘So Did I Just Get Robbed by the U.S. Government?’

Of course, much of the discussion from bitcoiners across forums and social media was about the U.S. and its jurisdiction over this exchange. Like many other alleged crimes in the past with well-known characters like Kim Dotcom, the U.S. seems to think it can charge any person or organization even though they never operated on U.S. soil. For instance, Alexander Vinnik was a Russian native who spent time in Cyprus but never lived or operated in the U.S. Secondly, the website BTC-e is registered in New Zealand alongside the platform’s shell company Canton Business Corporation.  

Another topic people have been discussing is the amount of funds left on BTC-e by customers who are completely innocent of any wrong doings. At the moment no one knows how much bitcoin was left on the exchange, but already people are complaining about losses on forums. Some of these customers are not from the U.S. and think it’s outrageous the country is acting like the world’s police once again. One bitcoiner explains his frustrations with the U.S. stepping in and closing BTC-e down;

So did I just get robbed by the US Government? Had a large amount of savings in BTC-e and it looks like the U.S. government stole it from me. 100% legal funds. Not even an American.

Ficen: ‘Regardless of its Ownership or Location, the Company is Required to Comply With U.S. Law Enforcement’

BTC-e Domain Seized by U.S. Law Enforcement Sparks Jurisdiction QuestionsSome bitcoiners have said the BTC-e.nz website (New Zealand portal) is working from time to time and users still may have a chance to retrieve funds. However, the domain is often down due to connection issues and also show the same static maintenance page. Further, there is also a Change.org petition asking the DOJ to allow innocent users access to their BTC-e funds.   

The U.S. Treasury Department for Financial Crimes (Ficen) believes it maintains jurisdiction over the domain because many of the transactions on BTC-e’s platform derived from customers located in America.  

“The transactions included funds sent from customers located within the United States to recipients who were also located within the United States,” Ficen explains. “BTC-e also concealed its geographic location and its ownership. Regardless of its ownership or location, the company was required to comply with U.S. AML laws and regulations as a foreign-located MSB including AML program, MSB registration, suspicious activity reporting, and recordkeeping requirements.”

What do you think about the U.S. policing an international exchange and charging its operator with crimes? Do you think U.S. law enforcement has the right to do this? Let us know in the comments below.


Images via Shutterstock, the BTC-e domain, and the film ‘Team America World Police.’


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