AurumXchange owner charged with laundering Silk Road-linked funds

American authorities have charged the owner of crypto trading platform AurumXchange for allegedly transferring funds linked to the infamous Silk Road market.

In a statement dated October 28, the United States Department of Justice said that 53-year-old Indiana resident Maximiliano Pilipis donated more than $30 million between 2009 and 2013, some of which came from “accounts held at Silk Road.”

Silk Road was the first modern darknet market, launched as an online black market in 2011. The FBI closed the facility in 2013 and arrested founder Ross Ulbricht, who is currently serving a life sentence for money laundering, drug distribution and other charges.

More than 100,000 transactions were made on AurumXchange, which the DOJ claims operates without a license. During nearly 4 years of operation, Pilipis managed to accrue over 10,000 Bitcoins in fees; This would have netted him approximately $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 transfer business called Aurum Capital Holding. Funds from the operation were split across multiple wallet addresses to “launder and hide” the proceeds, with some transactions redirected to darknet markets.

Some of the funds were used for real estate investments in Arcadia and Noblesville, Indiana, and profits from these investments were not reflected on the tax return.

The Internal Revenue Service’s criminal investigation branch seized nearly $10 million from Morgan Stanley accounts controlled by Pilipis in January 2024, claiming it “knew that the properties involved in the transactions represented the proceeds of some form of illegal activity.”

Later that month, a federal grand jury indicted Pilipis on money laundering charges. Following an expanded DOJ investigation, a grand jury recently returned a superseding indictment, adding five counts of money laundering and two counts of willful failure to file tax returns.

If convicted, Pilipis faces up to 10 years in prison and a fine of up to $250,000.

Crackdown on cryptocurrency laundering

Cryptocurrency exchanges are facing intense scrutiny around the world due to their potential involvement in money laundering activities. Last month, Swedish authorities coined the term “professional money launderers” to label specific exchanges that facilitate such activities.

Meanwhile, regulatory authorities have stepped up enforcement efforts to curb illicit flows of funds through these platforms. Many major crypto exchanges such as Binance, KuCoin, OKEx, and BitMEX have faced money laundering accusations or investigations over the years.

Recently, the Federal Criminal Police Office and the Central Office for Combating Internet Crime in Germany shut down 47 cryptocurrency exchanges that allowed transactions without implementing anti-money laundering measures.