DOJ indicts cryptocurrency exchange operator over Silk Road laundering

Maximiliano Pilipis, a 53-year-old former resident of Noblesville, Indiana, has been indicted by a federal grand jury on five counts of money laundering and two counts of failure to file a tax return.

The indictment alleges that Pilipis laundered substantial funds, including proceeds from Silk Road, through his operation of an unlicensed virtual currency exchange called AurumXchange.

The benefits of laundering the Silk Road

Court documents revealed that Pilipis launched AurumXchange in 2009 and ran it until 2013. The platform allowed people to exchange Bitcoin and other virtual currencies for US dollars and various international currencies. AurumXchange reportedly facilitated more than 100,000 transactions totaling more than $30 million in exchanged funds.

In exchange for his services, the platform charged fees that allowed Pilipis to amass more than 10,000 BTC, valued at around $1.2 million at the time.

However, prosecutors say the platform operated without proper licensing, oversight or compliance with federal regulations. US law requires money transmitters to verify customers’ identities, report transactions to the US Treasury and maintain records to protect the country’s financial system and national security.

The US Department of Justice argues that Pilipis bypassed those safeguards by allowing transactions from anonymous accounts, some allegedly linked to the defunct online marketplace Silk Road.

Created in 2011 and shut down in 2013, the platform was a dark web conduit that allowed the illegal sale of drugs and other illicit goods using cryptocurrency to maintain anonymity.

According to the agency, Silk Road clients used AurumXchange to convert crypto into fiat currency while avoiding detection and identification, thereby facilitating money laundering.

Tax evasion charges

The case also alleges that after ceasing operations in 2013, the defendant began splitting, transferring and concealing AurumXchange’s Bitcoin earnings to conceal the origins of the funds.

In 2018, he converted parts of the digital currency into US dollars, investing in real estate in Arcadia and Noblesville, Indiana, among other expenses. During 2019 and 2020, the 53-year-old generated hundreds of thousands of dollars in income, but did not file federal tax returns.

“Fighting the criminal misuse of cryptocurrencies and other digital assets is a critical priority for the Department of Justice,” said U.S. Attorney Zachary A. Myers for the Southern District of Indiana.

If found guilty of all charges, Pilipis could face up to 10 years in federal prison and a fine of up to $250,000. His sentence will be determined by a federal district court judge who will consider a number of factors, including US sentencing guidelines.

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