Ben Strack

The deadline for repayments related to funds lost in the Mt. Gox exchange hack has been pushed back yet again.



Initially set for the end of this October, a letter released on Thursday announced a one-year extension to the repayment schedule.



The once-popular Japanese exchange suffered multiple hacks between September 2011 and May 2014, leading to the loss of roughly 850,000 bitcoins belonging to customers and the company. Following the hack, Mt. Gox filed for bankruptcy and began liquidation proceedings in 2014.&nbsp;



The deadline extension to Oct. 31, 2024 is due in part to “the time required for rehabilitation creditors to provide the necessary information,” the <a href="https://www.mtgox.com/img/pdf/20230921_announcement_en.pdf">notice</a> states.&nbsp;



The rehabilitation trustee — named as attorney Nobuaki Kobayashi in the letter — must then “confirm such information and engage in discussions and share information with banks, fund transfer service providers, and designated cryptocurrency exchanges…involved in the repayments,” it adds.



The Tokyo District Court permitted the Mt. Gox trustee to push the deadline by a year for the base, early lump-sum and intermediate repayment, according to the letter.&nbsp;



Some waiting on repayments could still receive them in the near term, however.



According to the letter, those who have submitted the required information to the rehabilitation trustee could potentially receive their repayments by the end of this year. However, this timeline is “subject to change depending on the circumstances.”&nbsp;&nbsp;



Hedge fund firm Off The Chain Capital began acquiring Mt. Gox bankruptcy claims in 2019, <a href="https://blockworks.co/news/off-the-chain-capital-mt-gox">CEO Brian Estes told Blockworks in July</a>. Such claims accounted for about 25% of the company’s Off The Chain LP fund portfolio at the time, he noted.



“We expect distribution by the end of the year since we have been in the queue for several months,” Estes told Blockworks in an email Thursday.



The deadline extension comes after the US Department of Justice in June <a href="https://blockworks.co/news/doj-unseals-mt-gox-charges">brought charges against Alexey Bilyuchenko and Aleksandr Verner</a> in relation to the Mt. Gox hack. The two, along with unnamed co-conspirators, allegedly conspired to launder roughly 647,000 bitcoins, <a href="https://www.justice.gov/opa/pr/russian-nationals-charged-hacking-one-cryptocurrency-exchange-and-illicitly-operating-another">according</a> to the DOJ.&nbsp;



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Mt. Gox repayments postponed another year — at least for some

Katherine Ross

US charges against two Russian nationals tied to the 2011 hack of Mt. Gox, the then-massive bitcoin exchange, were unsealed on Friday.&nbsp;



The Department of Justice named Alexey Bilyuchenko and Aleksandr Verner with conspiracy to commit money laundering. Bilyuchenko was also charged in another investigation from the Northern District of California, which alleged that Bilyuchenko worked with Alexander Vinnik.&nbsp;



Bilyuchenko was charged with an additional count of money laundering conspiracy, as well as operating an unlicensed money services business.&nbsp;



Assistant Attorney General Kenneth Polite <a href="https://www.justice.gov/opa/pr/russian-nationals-charged-hacking-one-cryptocurrency-exchange-and-illicitly-operating-another">said</a> that the charges mark an “important milestone” in prosecutors’ dual “major cryptocurrency investigations.”&nbsp;



“As alleged in the indictments, starting in 2011, Bilyuchenko and Verner stole a massive amount of cryptocurrency from Mt. Gox, contributing to the exchange’s ultimate insolvency,” Polite said. “Armed with the ill-gotten gains from Mt. Gox, Bilyuchenko allegedly went on to help set up the notorious BTC-e virtual currency exchange, which laundered funds for cyber criminals worldwide.”&nbsp;



The Mt. Gox hack, which began in September 2011 and lasted through May 2014, resulted in the loss of approximately 647,000 bitcoins (<a href="https://blockworks.co/price/btc">BTC</a>). It went down as the largest ever disappearance of bitcoin in both bitcoin and dollar terms at the time, a designation that lasted for years.&nbsp;&nbsp;



Bilyuchenko and Verner, as well as additional unnamed co-conspirators, were behind the theft from Mt. Gox, prosecutors said.&nbsp;



“According to court documents unsealed in the Southern District of New York (SDNY), in or about September 2011, Bilyuchenko, Verner, and their co-conspirators allegedly gained unauthorized access to the server holding the cryptocurrency wallets for Mt. Gox,” the DOJ’s statement said.&nbsp;



Prosecutors said that “between in or about March 2012 and in or about April 2013, the New York Bitcoin Broker allegedly transferred more than approximately $6.6 million to overseas bank accounts controlled by Bilyuchenko, Verner, and their co-conspirators.”



“In exchange for the wire transfers, the New York Bitcoin Broker allegedly received “credit” on Exchange-1, through which Bilyuchenko, Verner, and their co-conspirators allegedly laundered more than 300,000 of the bitcoins stolen from Mt. Gox,” the release continued.



The claims additionally tie Bilyuchenko to bitcoin launderer Vinnik to operate BTC-e from 2011 to 2017.



Vinnik was <a href="https://blockworks.co/news/bitcoin-launderer-prisoner-swap">charged with a 21-count indictment</a> in 2017, which alleged he had laundered over $4 billion in bitcoin through BTC-e.&nbsp;



Last August, <a href="https://blockworks.co/news/alleged-bitcoin-launderer-extradited-to-us-after-5-years-in-jail">he was extradited </a>to the US to face charges.



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DOJ unseals Mt. Gox charges against 2 Russian nationals

Shalini Nagarajan

As the dust from a chaotic year settles, global exchange Binance is enjoying more dominance than ever, commanding as much as 92% of <a href="https://www.blockworksresearch.com/assets/btc" target="_blank" rel="noreferrer noopener">bitcoin</a> spot volume.



That’s according to an end-of-year study by Arcane Research. The firm also found Binance made up 66% of crypto perp volume and 61% of BTC derivatives volume by the end of 2022.



“There are no other evident ‘winners’ of 2022 other than Binance when it comes to the crypto market structure and market dominance,” Arcane Research said.



Arcane said it would have to go back all the way to <a href="https://www.investopedia.com/terms/m/mt-gox.asp">Mt. Gox’s</a> heyday — one decade ago — to establish a period where a single exchange dominated BTC spot volumes like Binance. 



Mt. Gox, one of the earliest bitcoin exchanges, <a href="https://www.wsj.com/articles/BL-263B-352" target="_blank" rel="noreferrer noopener">reportedly</a> handled as much as 70% of all bitcoin trading in 2013. The platform would dramatically implode the following year, leaving users out of pocket by 850,000 BTC ($500 million then, $14.3 billion today).



“However, the comparison to Mt. Gox stops there. While trading volumes are currently largely concentrated on Binance, BTC reserves are not,” Arcane said. 



Binance’s bitcoin balance makes up only around 25% of all BTC held on exchanges, the firm found, translating to less systemic risks today than the Mt. Gox era.



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="362" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png" alt="" class="wp-image-43264" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-13.47.56-1024x362.png?w=80 80w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Source: Arcane Research</figcaption></figure>



Binance <a href="https://blockworks.co/news/binance-us-zero-fee-bitcoin-trading-may-trigger-fee-war-for-exchangesng-10435147c55d4a40b64fcbf43cb46329" target="_blank" rel="noreferrer noopener">launched zero-fee trading</a> for BTC spot pairs in July last year, a move attributed with solidifying its dominance — especially leading into FTX’s collapse in November. 



Arcane predicted that Binance would revert and start charging BTC trading fees once more, which would normalize its market share.



Arcane addressed whether the reported spot volumes can be trusted. Crypto trading volumes can be notoriously difficult to truly measure <a href="https://tokeninsight.medium.com/nearly-50-of-exchanges-show-less-than-half-of-the-claimed-real-trading-volume-wash-trading-8ff214a0e24e" target="_blank" rel="noreferrer noopener">considering</a> the <a href="https://twitter.com/cz_binance/status/1545451961222324225" target="_blank" rel="noreferrer noopener">prevalence</a> of <a href="https://www.nber.org/system/files/working_papers/w30783/w30783.pdf" target="_blank" rel="noreferrer noopener">wash trading</a>. 



“While the organic nature of some of this volume may be negotiable, it’s non-negotiable that this has consolidated Binance’s dominance over BTC spot markets,” Arcane said.



Other factors contributing to Binance’s success were its growing branded stablecoin BUSD, its native token <a href="https://www.blockworksresearch.com/assets/bnb" target="_blank" rel="noreferrer noopener">BNB</a> (which outperformed BTC and <a href="https://www.blockworksresearch.com/assets/eth" target="_blank" rel="noreferrer noopener">ETH</a>) and its steady staff headcount compared to its peers.



Binance did however take risks with some big investments last year, including <a href="https://blockworks.co/news/what-does-binances-investment-in-twitter-mean-for-the-social-networks-future" target="_blank" rel="noreferrer noopener">$500 million</a> in Elon Musk’s Twitter deal, <a href="https://www.forbes.com/sites/forbespr/2022/02/10/forbes-announces-200-million-strategic-investment-from-binance/?sh=6e0c497b57e2" target="_blank" rel="noreferrer noopener">$200 million</a> in Forbes and <a href="https://blockworks.co/news/binance-us-agrees-to-purchase-voyager-for-at-least-1b" target="_blank" rel="noreferrer noopener">$1 billion</a> for crypto lender Voyager’s assets.



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="262" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png" alt="" class="wp-image-43265" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/01/Screen-Shot-2023-01-04-at-14.07.16-1024x262.png?w=80 80w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Source: Arcane Research</figcaption></figure>



Binance’s outsized market share only compounds the importance of its ability to process withdrawals. Jitters arose last month after Binance registered <a href="https://blockworks.co/news/fud-or-fact-binance-rumors-analyzed" target="_blank" rel="noreferrer noopener">$1.9 billion of withdrawals</a> in 24 hours, leading the exchange to temporarily cease withdrawals of stablecoin USDC.



That was the <a href="https://twitter.com/nansen_ai/status/1602618067598442503" target="_blank" rel="noreferrer noopener">largest exchange daily outflow</a> over a 24-hour period since June, according to Nansen. Binance CEO Changpeng Zhao deemed the withdrawals “business as usual.”



Arcane expects Binance’s dominance in the spot market will wane in 2023 while the dominance of BUSD will rise. It also reckons its share of crypto perp open interest will remain this year.



A Binance spokesperson reacted to Arcane’s report with another Zhao quote: “Binance is focused on the things that matter the most: building and staying user-focused.&#8221;



David Canellis contributed reporting.



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Binance Dominance Harks Back To Mt. Gox Heyday: Arcane

<div id="highlights-block_62ece8f513e8b" class="highlights">
 <ul>
 <li>The US charged Vinnik and defunct crypto exchange BTC-e in 2017 over illegal profits</li>
 <li>He&#8217;s alleged to have played a role in laundering bitcoin stolen in the Mt. Gox hack</li>
 </ul>
 
</div>



Alleged bitcoin launderer Alexander Vinnik has been extradited to the US, some five years after his initial indictment.



Vinnik, a Russian national, was the alleged operator of defunct cryptocurrency exchange BTC-e. He left Greece on Thursday after facing arrest in several countries.



“Alexander was transferred from Paris to Athens yesterday in the early afternoon,” his French lawyer Frédéric Bélot told Blockworks in an emailed statement on Friday. “Then he was transferred from Athens to Boston (to refuel) and he arrived in San Francisco during the night.”



The lawyer added that he would continue to defend Vinnik alongside American counsel. Vinnik faces up to 55 years in US prison.



<a href="https://edition.cnn.com/2022/08/04/politics/russian-bitcoin-extradited-us/index.html" target="_blank" rel="noreferrer noopener">CNN</a>, which first reported the development, said Vinnik is expected to appear in court in the Northern District of California. The report didn’t mention a date of appearance.



Vinnik was <a href="https://www.justice.gov/usao-ndca/pr/russian-national-and-bitcoin-exchange-charged-21-count-indictment-operating-alleged" target="_blank" rel="noreferrer noopener">charged</a> in 2017 for operating an unlicensed money service business and alleged money laundering. The Department of Justice accused him of a long list of crimes including stealing identities, enabling drug trafficking and helping to launder criminal proceeds.&nbsp;



He was <a href="https://www.occrp.org/en/daily/13495-france-sentences-russian-crypto-launderer-to-five-years-jail" target="_blank" rel="noreferrer noopener">arrested</a> in Greece at the US’ request that year while on a family vacation. The US, France and Russia have battled over his extradition ever since.



France was successful in 2020, where Vinnik faced five years in prison for alleged money laundering. More recently, the US <a href="https://www.coindesk.com/business/2022/07/22/us-calls-off-extradition-request-for-btc-e-operator-alexander-vinnik/" target="_blank" rel="noreferrer noopener">reportedly</a> called off its own extradition request. But his lawyer suggested that was a distraction trick aimed at expediting the process through Greece — where Vinnik was initially arrested.



<h3 class="wp-block-heading">Vinnik believes he&#8217;s not a bitcoin launderer</h3>



Vinnik, via BTC-e, is said to have handled some of the <a href="https://www.theverge.com/2017/7/29/16060344/btce-bitcoin-exchange-takedown-mt-gox-theft-law-enforcement" target="_blank" rel="noreferrer noopener">530,000 bitcoin</a> (around $9 million back then, nearly $13 billion today) stolen from Mt. Gox, where he allegedly served as the platform&#8217;s administrator. 



He told <a href="https://russian.rt.com/world/article/427168-vinnik-bitcoin-rossiya-ssha-interviyu" target="_blank" rel="noreferrer noopener">Russia Today</a> in 2017 that he didn’t consider himself guilty. According to him, the US had no right to judge a Russian citizen.



His wife told the same outlet she was convinced the US was after him for his “<a href="https://www.rt.com/news/402462-vinnik-wife-interview-extradition/" target="_blank" rel="noreferrer noopener">intellectual abilities</a>,” and denied he ever ran BTC-e.



BTC-e was founded in 2011 and allowed trading between the US dollar, Russian ruble, some European currencies, bitcoin, litecoin and ether. 



The exchange, which shut shop in 2017 after a 21-count indictment, received over $4 billion in bitcoin during its operation, according to the US Department of Justice.&nbsp;



The Financial Crimes Enforcement Network imposed a $110 million fine on BTC-e and a $12 million fine against Vinnik for their role in the violations in 2017.



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