Vinnik was arrested in Greece while vacationing with his family in 2016, after Swedish software engineer Kim Nilsson, who had been investigating Mt. Gox's missing bitcoins, tracked several of the missing coins to a wallet owned by Vinnik.
Vinnik was accused by the U.S. of helping criminals circumvent KYC/AML policies in order to launder money with bitcoin; specifically, he was arrested in connection with the hacking attacks on Mt. Gox that caused the Tokyo-based exchange to lose millions of dollars worth of its customer's bitcoins.
In October 2019 the office of Nobuaki Kobayashi, a trustee recovering funds on behalf of Mt. Gox's creditors, announced that it had contacted the U.S. Department of Justice seeking information about its investigation of Vinnik.
While Vinnik claims he was not guilty of orchestrating the hacking attacks, he is the only employee of the exchange who has been accused of any charges relating to the Mt. Gox incident. Vinnik said in 2017 that he did not orchestrate the attacks and had no knowledge of criminal activity on BTC-e, and that he was only a technician. He also denied the claim that he was the exchange's operator. He appealed to Greek authorities for extradition to his native Russia for trial. The United States appealed for Vinnik's extradition to the U.S., which was greenlit by the Greek court system. Russia responded to the verdict with criticism, calling the verdict "unjust," and saying it violated international law. The Russian government added that it hoped Greece would reconsider its request to have Vinnik extradited to Russia.
This caused a stalemate that effectively blocked Vinnik's extradition to the U.S. Vinnik allegedly wrote an admission of guilt to Russian authorities, vowing to testify in his native country. In May 2018, Greek authorities uncovered a plot to murder Vinnik in prison that was allegedly "linked to the criminal world." France later filed a similar extradition request as the U.S. - claiming Vinnik had laundered 133 million euros using bitcoin - which was approved on July 13, 2018. However, in September, Greece's supreme court announced it had approved Vinnik's extradition to Russia, with a written statement to follow September 14.
Vinnik filed an appeal in a Piraeus city court for release or extradition to Russia. In the appeal, he said this was due to "humanitarian reasons."
In January 2020, Vinnik was successfully extradited from Greece to France, where he was interrogated by French investigators. His lawyers told Bloomberg that he was charged with extortion, aggravated money laundering, conspiracy and harming automatic data-processing systems. They also said that after he is tried in France, he would likely be tried in the United States next, that Vinnik was innocent, and that he was likely being "persecuted" because of his nationality and connection to cryptocurrency, which is seen as a threat to the global financial system.
Possible connection to Mueller investigation
After news of the extradition reached the U.S., Bloomberg reported that based on evidence collected by the United States Federal Bureau of Investigation, Vinnik could have a connection to the Russian hackers being investigated by U.S. Special Counsel Robert Mueller, who investigated the influence of Russian hackers on the 2016 U.S. elections. Though Vinnik himself is not suspected of directly influencing the elections, he may have helped Fancy Bear, a Russian hacking unit linked to the attacks, launder money using bitcoin.
In October 23, French prosecutors requested a 10-year jail sentence and 750,000 euro fine for Vinnik. Although Vinnik continued to say that he was innocent of any wrongdoing, a joint U.S. and Interpol investigation found a connection between Vinnik and the cryptocurrency ransomware "Locky," which encrypts its victim's data and demands bitcoin in exchange for opening access to the victim's computer. Vinnik and his lawyer responded by saying that Vinnik had no connection to "Locky," and that he was being set up by bad information by the U.S.
On December 7, 2020, Vinnik was charged with “extortion, conspiracy and harming automatic data-processing systems” by a court in Paris, France, as well as creating the "Locky" malware. He was sentenced to five years in prison.