US DOJ Charges Crypto Exchange Operator With Money Laundering

The United States Department of Justice (DOJ) has charged Maximiliano Pilipis, the operator of the crypto exchange AurumXchange, with money laundering for allegedly processing millions of dollars linked to the darknet marketplace Silk Road.

The DOJ claimed that during his time managing AurumXchange, which operated from 2009 until 2013, Pilipis facilitated over $30 million in transactions across approximately 100,000 operations, including funds originating from Silk Road accounts.

For context, Silk Road was a marketplace on the Tor network operated by Ross Ulbricht from 2011 until the FBI shut it down in 2013. The platform became infamous for enabling users to buy and sell products anonymously, making it a major center for drug trafficking.

Unlicensed Operation of the Exchange

The indictment alleges that Pilipis conducted his exchange without a license during its entire operation, even as the Silk Road was shut down in 2013. He reportedly earned millions in transaction fees, including 10,000 Bitcoin (BTC) valued at about $1.2 million at that time.

After AurumXchange ceased operations, the DOJ claims Pilipis attempted to launder and hide the proceeds from his illegal activities by splitting and transferring his BTC and other assets. He allegedly converted his cryptocurrency into U.S. dollars, which he used to invest in real estate in Arcadia and Noblesville, Indiana.

Authorities claim Pilipis earned hundreds of thousands of dollars from his investments in 2019 and 2020 but did not file tax returns for those years. They also allege he ignored federal requirements for crypto exchanges by failing to register with the US Treasury Department and report his exchange activities to the government.

Additionally, Pilipis allegedly did not comply with Know Your Customer (KYC) regulations, further violating Anti-Money Laundering (AML) and counter-terrorism financing (CTF) laws.

Potential Penalties

A federal grand jury has returned a superseding indictment against him, charging Pilipis with five counts of money laundering and two counts of willfully failing to file tax returns. If convicted, he faces up to 10 years in prison and a maximum fine of $250,000. However, his sentence will be determined based on statutory guidelines and other factors, which could lead to a reduced penalty.