Operator of Cryptocurrency Exchange Accused of Laundering Money

Cointelegraph reports that the US Department of Justice has indicted Maximiliano Pilipis, founder of the cryptocurrency exchange AurumXchange, on charges of laundering money. The DOJ claims that Pilipis facilitated the processing of illicit funds exceeding $30 million through 100,000 transactions, some of which were tied to the darknet marketplace Silk Road.

Silk Road, created by Ross Ulbricht who was known as Dread Pirate Roberts, operated on the Tor network from 2011 to 2013. It served as an underground marketplace for illicit drug trade. The DOJ has accused Pilipis of managing AurumXchange unlicensed from 2009 to 2013, coinciding with the year Silk Road was taken down by the FBI. During this time, it’s alleged that Pilipis accrued millions in transaction fees, including ownership of 10,000


Bitcoin (BTC)


valued around $1.2 million back then.

Pilipis is charged with operating outside of federal laws, specifically neglecting to register with the US Treasury and failing to comply with financial reporting regulations mandatory for crypto exchanges. Allegations also include the lack of KYC (Know Your Customer) procedures, which is a violation of Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) laws.

Post shutdown of AurumXchange, it is stated that Pilipis split up and redistributed the


Bitcoin


and various assets he amassed, in a scheme to launder and disguise his illicit gain. It’s further alleged that he converted his digital currency holdings into USD for property investments in Arcadia and Noblesville, Indiana, with one of these properties now reportedly being in the bank’s ownership as per real estate records.

Despite his assets generating substantial revenue in 2019 and 2020, Pilipis allegedly did not file tax returns. He now faces a superseding indictment from a federal grand jury which includes five counts of money laundering and two counts of failure to file tax returns. He risks a maximum sentence of ten years in prison along with a possible fine up to $250,000, pending a judge’s discretion influenced by sentencing guidelines and statutory considerations, which might suggest a lesser penalty.