https://www.analyticsinsight.net/news/doj-charges-aurumxchange-operator-in-30m-silk-road-money-laundering-case

The United States Department of Justice (DOJ) has charged Maximiliano Pilipis, a former exchange operator, with money laundering in Silk Road, a popular darknet marketplace. Federal prosecutors accused Pilipis of managing AurumXchange from 2009 to 2013 without a license to process payments, including money reportedly connected to Silk Road sales.

Silk Road Links and Alleged Evasion of Federal Regulations

Prosecutors assert that Pilipis, 53, facilitated over $30 million in transactions through his platform, AurumXchange, including a reported 10,000 Bitcoin—valued at approximately $1.2 million at the time of the transactions.

The DOJ's statement claims that Pilipis failed to register AurumXchange with the U.S. Treasury Department, thereby bypassing regulations established for anti-money laundering (AML) and counter-terrorism financing (CTF) compliance. Authorities allege that Pilipis also neglected to implement standard Know Your Customer (KYC) protocols, critical measures to prevent criminal activity through financial channels.

AurumXchange operated from 2011 to 2013, when Silk Road was most active, until its closure. Ross Ulbricht created the Silk Road with the primary aim of creating a black market on the dark net, which had been associated with selling illegal commodities, particularly narcotics. The DOJ indicates that transactions flowing through AurumXchange included funds traced back to accounts connected with Silk Road, connecting Pilipis’s exchange to the darknet’s activities.

Asset Concealment and Real Estate Purchases After Closure

Following the closure of AurumXchange, the DOJ alleges that Pilipis took measures to conceal his financial gains, moving cryptocurrency assets through various accounts. Court filings claim he transferred Bitcoin into U.S. dollars and used these funds for substantial real estate investments in Indiana, purchasing properties in Arcadia and Noblesville.

Additionally, the DOJ claims that Pilipis generated considerable income in the years following AurumXchange’s closure, particularly in 2019 and 2020. However, despite these earnings, he allegedly failed to file tax returns, a further basis for the charges now filed against him. The federal grand jury has arraigned Pilipis for money laundering on five occasions and willful failure to file tax returns on two occasions. If convicted, Pilipis may face a jail term of up to 10 years and fines not exceeding $250,000.

Supreme Court Denies Hearing on Silk Road’s Seized Bitcoin

This case is the latest in a series of legal actions connected to Silk Road, an issue the Supreme Court recently addressed indirectly. Earlier in October, the Supreme Court declined to review a case involving 69,370 Bitcoin—worth an estimated $4.38 billion—seized from Silk Road.

Battle Born Investments, a private entity claiming ownership of the Bitcoin, sought a court review to obtain the assets, arguing that it acquired rights to the Bitcoin via a bankruptcy estate. However, the Supreme Court’s refusal leaves the government’s control over the cryptocurrency unchallenged, opening the path for future sales of the seized Bitcoin.