The United States Department of Justice charged the operator of crypto exchange AurumXchange with money laundering, alleging it processed millions for the darknet marketplace, Silk Road.
In an Oct. 28 statement, the DOJ alleges when 53-year-old Maximiliano Pilipis operated AurumXchange, over $30 million in funds across 100,000 transactions went through the exchange, some of which came from accounts held on the Silk Road.
Using the pseudonym “Dread Pirate Roberts,” American Ross Ulbricht ran the Silk Road marketplace on the Tor network from 2011 to 2013. The platform allowed users to buy and sell products anonymously and became a hub for thousands of drug dealers.
It’s alleged that Pilipis operated his exchange without a license from 2009 until 2013, the same year the FBI shut down the Silk Road.
Pilipis collected millions in fees for facilitating these transactions, including 10,000 Bitcoin (BTC) worth about $1.2 million at the time, the DOJ alleged.
Related: $2B in Silk Road Bitcoin seized by DOJ moves to new wallet
The authorities also accused Pilipis of neglecting federal registration and reporting requirements for crypto exchanges by failing to register with the US Treasury Department and file reports of the exchange’s activity with the federal government.
He also failed to implement Know Your Customer (KYC) rules, in violation of Anti-Money Laundering (AML) and counter-terrorism financing (CTF) regulations, they said.
After AurumXchange shut down, authorities say Pilipis split up and transferred the Bitcoin and other assets he gained from operating AurumXchange to “launder and conceal the proceeds of the offenses.”
He is accused of converting his crypto into US dollars, which was then used for real estate investments in Arcadia and Noblesville, Indiana.
One of Philips’ reported properties in Noblesville, according to real estate listings, is currently bank-owned. Source: Redfin
In the process, authorities say Pilipis’ assets generated hundreds of thousands of dollars in income in 2019 and 2020, and he didn’t file a tax return.
A federal grand jury returned a superseding indictment, charging Pilipis with five counts of money laundering and two counts of willfully failing to file a tax return.
If convicted, he could face up to 10 years behind bars and a fine of up to $250,000.
A federal district court judge will ultimately decide Pilipis’ fate, based on sentencing guidelines and other statutory factors, meaning his sentence could be lighter.
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