AurumXchange Operator Charged by DOJ in Silk Road Money Laundering Scheme

AurumXchange Operator Charged by DOJ in Silk Road Money Laundering Scheme

The U.S. Department of Justice has formally charged Maximiliano Pilipis the operator of the cryptocurrency exchange AurumXchange with money laundering in connection with transactions tied to the Silk Road darknet marketplace. According to a statement from the DOJ on October 28, Pilipis allegedly processed millions of dollars through AurumXchange with significant amounts linked to accounts associated with Silk Road a platform infamous for facilitating illegal drug sales.

Silk Road which was founded by Ross Ulbricht operating from 2011 to 2013 served as an anonymous marketplace on the Tor network allowing users to engage in illicit activities while preserving their privacy. Pilipis is accused of running AurumXchange without the required licenses from 2009 to 2013 a period overlapping with Silk Road’s operational years. The DOJ claims that over $30 million was processed through AurumXchange across approximately 100000 transactions including 10000 Bitcoin which was valued at around $1.2 million at that time.

Federal prosecutors allege that Pilipis neglected to comply with essential federal regulations required of cryptocurrency exchanges. Specifically he is accused of failing to register AurumXchange with the U.S. Treasury Department and not reporting the exchange’s activities as mandated by law. Furthermore the DOJ asserts that Pilipis did not adhere to Know Your Customer (KYC) protocols violating Anti-Money Laundering (AML) and counter-terrorism financing (CTF) regulations.

After the closure of AurumXchange Pilipis allegedly took steps to conceal his profits by splitting and transferring Bitcoin and other assets. Prosecutors allege he converted cryptocurrency into U.S. dollars utilizing the funds for real estate investments in Arcadia and Noblesville Indiana. Additionally authorities revealed that Pilipis’ assets generated substantial income in 2019 and 2020 but he allegedly failed to file tax returns for those years.

A federal grand jury has charged Pilipis with five counts of money laundering and two counts of willfully failing to file tax returns. If convicted he could face up to 10 years in prison along with a maximum fine of $250000.

In a related note the U.S. Supreme Court recently declined to hear a case concerning 69370 Bitcoin valued at $4.38 billion that was seized from the Silk Road marketplace. The case brought by Battle Born Investments which claimed ownership of the Bitcoin sought Supreme Court review arguing that it acquired the rights through a bankruptcy estate. However the Supreme Court’s refusal to engage leaves the government’s control over the seized cryptocurrency largely uncontested and paves the way for the U.S. government to potentially sell the substantial Bitcoin holdings.

The legal dispute commenced when Battle Born Investments claimed it obtained the Bitcoin through a bankruptcy claim following Silk Road’s closure in 2013. The firm alleged that Raymond Ngan a debtor in the bankruptcy proceedings was the unidentified “Individual X” who illicitly took billions of dollars worth of Bitcoin from Silk Road. However the courts have consistently ruled against the company including a 2022 district court ruling that dismissed Battle Born’s claim to the Bitcoin as illegitimate which was upheld by an appeals court in 2023.