The French Police have taken apart an illegal Bitcoin exchange assumed to be bestxchanger.com, which is currently “under maintenance.” Authorities confiscated 388 bitcoins worth nearly US$272,800. Two individuals were placed under investigation as they were suspected of operating a website that sold Bitcoins illegally to the users.
BTC exchange dismantled by French Police
A special branch of the French Armed Forces, the National Gendarmerie of France, announced in a recent press release that they made three arrests during various raids in Toulouse, Cannes, Nice, and Brussels. Those arrested are suspected of owning an illegal Bitcoin exchange. They were particularly targeted because they didn't have ACPR certification. The report outlines:
“The site used to trade without any approval of the Prudential Control Authority and Resolution (ACPR), French supervisory body for the banking and insurance industries.”
Two individuals implicated in the illegal exchange were charged by a Foix (Ariege) judge and placed under judicial supervision. The police responded to a letter issued by Catherine Ostengo, a judge responsible for investigating illicit practices in the banking industry. Apart from seizing wallets with 388 bitcoins, the police additionally found €9,000 in cash, as well as various hardware and credit cards.
The website's owner, a Tunisian aged 27, was already convicted on a former case of fraud. Currently, he is charged with “illegal employment, illegal practice of the profession of banker, money laundering and illegal gambling offer,” according to sources.
He has another conviction pending which is related to a virtual cryptocurrency casino he was planning on setting up. The Tunisian's accomplice, a French man aged 36, was the supplier of Bitcoins. He is charged with “undeclared work and illegal practice of the profession of banker.” There was also a third accomplice to the scam, the Tunisian's wife, who was released.
Bestxchanger.com under maintenance
Based on a judicial source, the name of the illegal Bitcoin exchange is bestxchanger.com. Hosted in the US and launched in 2013, the website had its big breakthrough in restricted, underground circles such as blackmarkets and poker sites. Most users praised the anonymity and speed of the website, and the exchange permitted anyone to get bitcoins using Paysafecard vouchers and Ukash. These could have been easily purchased anonymously from supermarkets bars, tobacco suppliers, and so on.
According to the French investigators, the website processed about 2,750 transactions between November 2013 and July 2014, covering 2,500 bitcoins and a total value that exceeded €1 million. The illegal exchange had allegedly charged large commissions for every successful transaction ranging from 30% to 50% which was one of the reasons for investigators to be suspicious of possible money laundering activities:
“35% or 50% commission, is that not the clear evidence of money laundering purpose? In other words: why are you willing to pay 35-50 euros an intermediary to convert 100 euros in bitcoins, if it’s not due to the “dirty” nature of these 100 euros?”
An operation like no other
The whole operation was the work of an expert who is “sensitized to computer security issues in his work”. He's is a reservist of the French Gendarmerie and he immediately alerted the economic crime, financial, and digital research division of Midi-Pyrénées after he felt extremely worried that “it was very easy to obtain Bitcoins completely anonymously.”
The French Police declared in an interview:
“This is the first dismantling at the European level of such an unauthorized bitcoin exchange.”
Warrant Officer Reveillac, member of the cybercrime group in Toulouse and main investigator in the case, declared that “the two indicted recognized the facts, but deny having committed crimes.”
This incredible case should help elucidate the legal scenario of Bitcoin exchanges in France. In early January, the Bank of France recalled:
“[In] the context of a buying / selling bitcoin operation against a legal tender currency, [...] when operation is made in France, these transactions must be done through a claimant payment services (that is to say, a credit institution, a payment institution or an electronic money institution).”
Just last week, banks were advised by the European Banking Authority to stay away from digital currencies. The French Financial Markets Authority additionally mentioned that crypto currencies such as Bitcoin are linked to multiples risks (financial, legal, and operational). Now it will be interesting to see what the French authorities will do with the 388 seized bitcoins? Perhaps another auction is in the cards.