DOJ Indicts Crypto Exchange Operator for Laundering Funds

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 failing to file a tax return. The indictment claims that Pilipis laundered significant amounts of money, including proceeds from the infamous Silk Road, through his unlicensed virtual currency exchange, AurumXchange.

Operation of AurumXchange

Court documents indicate that Pilipis launched AurumXchange in 2009 and operated it until 2013. The exchange facilitated the conversion of Bitcoin and other cryptocurrencies into U.S. dollars and various international currencies, reportedly handling over 100,000 transactions amounting to more than $30 million. For his services, Pilipis collected fees that allowed him to accumulate over 10,000 BTC, valued at approximately $1.2 million at that time.

Lack of Compliance and Licensing

Prosecutors assert that AurumXchange operated without the necessary licensing and compliance with federal regulations. U.S. law mandates that money transmitters must verify customer identities, report transactions to the U.S. Treasury, and maintain records to safeguard the financial system and national security. The DOJ argues that Pilipis circumvented these regulations by permitting transactions from anonymous accounts, some of which were allegedly tied to the Silk Road marketplace.

The Role of Silk Road

Silk Road, created in 2011 and shut down in 2013, was a notorious darknet platform that facilitated the illegal sale of drugs and other illicit goods while using cryptocurrency for anonymity. According to the DOJ, customers from Silk Road utilized AurumXchange to convert their cryptocurrency into fiat currency, thereby evading detection and facilitating money laundering activities.

Tax Evasion Allegations

The indictment also alleges that after ceasing operations in 2013, Pilipis began splitting, transferring, and concealing the Bitcoin proceeds from AurumXchange to obscure the origins of the funds. In 2018, he converted portions of this digital currency into U.S. dollars and invested in real estate in Arcadia and Noblesville, Indiana. Despite generating substantial income in 2019 and 2020, he failed to file federal income tax returns.

DOJ's Commitment to Combatting Crypto Crimes

U.S. Attorney Zachary A. Myers for the Southern District of Indiana emphasized the DOJ's commitment to addressing the criminal misuse of cryptocurrencies and digital assets. If convicted on all charges, Pilipis could face up to 10 years in federal prison and a fine of up to $250,000. The final sentence will be determined by a federal district court judge, taking into account various factors, including the U.S. Sentencing Guidelines.