Department of Justice Charges Exchange Operator for Silk Road Transactions

The DoJ alleges that AurumXchange processed millions of dollars worth of Bitcoin transactions tied to the darknet marketplace. In a statement, the DoJ alleged that Maximiliano Pilipis operated AurumXchange and that US$30 million in funds passed through the exchange across over 100,000 transactions. They state a portion of these were connected to users of Silk Road. 

Silk Road was a popular online black market that operated between 2011-2013. It functioned as a Tor hidden service, where online users were able to browse it anonymously and securely without traffic monitoring. Buyers and sellers on Silk Road paid for all transactions with bitcoins (BTC), because of its anonymity features. Silk Road’s private ownership meant it became a popular platform to sell drugs and weapons. 

In October 2013, the Federal Bureau of Investigation (FBI) shut down the Silk Road website and arrested Ross Ulbricht, the creator of the marketplace. In 2015, Ulbricht was convicted in federal court for multiple charges related to operating Silk Road and was given two life sentences without parole. He remains in jail today.

Source: FBI

It is alleged that Pillipis ran his exchange without a license between 2009-2013. The DoJ says by not registering Pillipis neglected federal registration and reporting requirements including having to file details with the federal government. He also did not implement any Know-Your-Customer (KYC), thus violating Anti-Money Laundering (AML) and counter-terrorism financing (CTF) regulations.

The DoJ says Pillipis laundered and transferred the Bitcoin and other assets held in order to conceal his actions.

“Combatting the criminal misuse of cryptocurrencies and other digital assets is a critical priority for the Department of Justice,” said Zachary A. Myers, United States Attorney for the Southern District of Indiana. “Together with our partners in federal law enforcement, we will continue to work to investigate and prosecute offenders who exploit digital assets to fuel drug trafficking and other offenses, and those who unlawfully facilitate the transfer and laundering of the proceeds of crime.”