American authorities have indicted the owner of crypto trading platform AurumXchange, alleging he funneled funds linked to the infamous Silk Road marketplace.
Maximiliano Pilipis, a 53-year-old Indiana resident, helped facilitate over $30 million between 2009 and 2013, a portion of which came from “accounts held on Silk Road,” the United States Department of Justice said in an Oct. 28 statement.
Silk Road was the first modern darknet marketplace that launched in 2011 as an online black market. The FBI shut it down in 2013, arresting founder Ross Ulbricht, who is now serving a life sentence for money laundering, drug distribution, and other charges.
Over 100,000 transactions were conducted on AurumXchange, which the DOJ claims operated without a license. During the roughly 4 years of operation, Pilipis managed to accrue over 10,000 Bitcoin in fees, which would have netted him around $1.2 million based on Bitcoin prices at the time.
According to a previous report, the exchange was registered in Dominica and operated under a money-transmitting business called Aurum Capital Holding. Funds acquired from the operation were split across multiple wallet addresses to “launder and conceal” the proceeds, with some transactions directed towards darknet marketplaces.
A portion of the funds was used for real estate investments in Arcadia and Noblesville, Indiana, and the profits generated from these investments were not reported on a tax return.
The criminal investigative branch of the Internal Revenue seized close to $10 million from Morgan Stanley accounts controlled by Pilipis in January 2024, claiming that he “knew that the property involved in the transactions represented the proceeds of some form of unlawful activity.”
Later that month, a federal grand jury indicted Pilipis on one count of money laundering. Following an expanded DOJ investigation, the grand jury recently returned a superseding indictment, adding five more counts of money laundering and two counts of willfully failing to file a tax return.
Upon conviction, Pilipis would be looking at a prison sentence of up to 10 years and fines up to $250,000.
Crackdown on crypto money laundering
Cryptocurrency exchanges have drawn intense scrutiny worldwide due to their potential involvement in money laundering activities. Last month, Swedish authorities coined the term “professional money launderers” to label certain exchanges that facilitated such activities.
Meanwhile, regulatory authorities have ramped up enforcement efforts to curb illicit fund flows through these platforms. Several major crypto exchanges have faced accusations or investigations related to money laundering over the years including the likes of Binance, KuCoin, OKEx, and BitMEX among others.
Recently the Federal Criminal Police Office in Germany and the Central Office for Combating Internet Crime shut down 47 crypto exchanges for allowing transactions without implementing proper anti-money laundering measures.