The United States Justice Department has brought charges against Maximiliano Pilipis, the operator of the cryptocurrency exchange AurumXchange, on allegations of money laundering connected to the notorious Silk Road darknet marketplace. According to a recent statement, the DOJ claims that from 2009 to 2013, AurumXchange processed upwards of $30 million through approximately 100,000 transactions. Many of these funds reportedly originated from accounts associated with Silk Road.
Silk Road, which functioned from 2011 until 2013 under the alias Dread Pirate Roberts, was an anonymous marketplace used primarily for illicit transactions involving drugs. The FBI dismantled the platform in 2013, the same year that Pilipis allegedly operated AurumXchange without the necessary licensing. The indictment suggests that he profited immensely from facilitating transactions, accumulating millions in fees, including about 10,000 Bitcoin valued at around $1.2 million during that timeframe.
Furthermore, the DOJ outlines that Pilipis failed to meet federal registration and reporting requirements, neglecting to register with the US Treasury Department and not adhering to mandatory financial reporting protocols. His operations allegedly disregarded Know Your Customer (KYC) regulations which are critical for compliance with Anti-Money Laundering (AML) and counter-terrorism financing (CTF) laws.
Following the closure of AurumXchange, Pilipis is claimed to have engaged in activities to launder and disguise illicit proceeds. Reportedly, he converted his cryptocurrency into US dollars, subsequently investing in real estate in Indiana. This venture is said to have generated substantial income, yet he failed to file tax returns in 2019 and 2020.
A federal grand jury has issued a superseding indictment, charging Pilipis with five counts of money laundering and two counts of intentionally failing to file a tax return. Should he be found guilty, the penalties could include a maximum prison sentence of ten years and a fine of $250,000. Nevertheless, the final determination on sentencing will rest with a federal district court judge, who will consider various statutory factors.
