Bitcoin ATM operators have been sent to federal prisons for two years to operate illegal cryptocurrency exchanges. The US authorities seized 17 bitcoin ATMs along with cryptocurrencies Some include bitcoin.
Illegal Bitcoin ATM Operators Sent To Prison
The US Department of Justice (DOJ) announced on Friday that Californian man Kais Mohammed was sentenced to two years in federal prison for “illegal ATM network operations that launder bitcoins and cash for criminals.”
The Justice Department said the 37-year-old operated an illegal crypto business “in exchange for up to $ 25 million”, some of which was “on behalf of criminals through self-service transactions and a network of bitcoin ATMs.” ”
A Yorba Linda resident pleaded guilty in September of last year: “Three counts of criminal information charged him with running an unlicensed money transfer business, money laundering and non-treatment. An effective anti-money laundering program, ”explains the DOJ further.
Mohammad has agreed to forfeit 17 government bitcoin ATMs, $ 22,820 cash, 18.4 bitcoin and 222.5 ethereum cryptocurrency.
Mohammad owned and operated Herocoin from December 2014 to November 2019 under the nickname “Superman29”. Herocoin is a cryptocurrency exchange that charges up to 25% commission, which is “significantly higher than the current market rate. “DOJ said.
Basically, he meets his clients in public places and exchanging currencies. “Mohammad generally did not inquire about the source of his clients’ funds, and at times he knew that these were proceeds from the financial institutions. Criminal activity Mohammad knew at least one Herocoin client was involved in illegal activities on the dark web, ”the Justice Department said.
Mohammad also processes cryptocurrency deposited in bitcoin ATMs, providing machines with cash for customers to withdraw and maintain the server software running the machines.
The Justice Department said Mohammad “intentionally failed to register his company with the US Department of the Treasury’s Financial Crime Enforcement Network (FinCEN),” although he was aware of the registration requirements. He also “chose not to… develop and maintain an effective anti-money laundering program, file a currency transaction report for a currency exchange worth more than $ 10,000, conduct customer due diligence and file suspicious activity reports. For transactions involving clients he or she knows more than $ 2,000 or is suspected to be involved in criminal activity, ”the DOJ provides further details:
In connection with his bitcoin ATM network, Mohammad’s machines allow clients to conduct unauthorized financial transactions and allow clients to transact up to $ 3,000 per transaction without ever reporting activity. Questionable to regulators or law enforcement
FinCEN contacted Mohammad in July 2018 and he later registered with the regulator, but “still does not fully comply with federal law related to money laundering, conducting due diligence and reporting suspicious clients”. According to the DOJ
Mohammad also performed a number of manual transactions with undercover agents, allowing them to exchange cash for bitcoins. The representative said they work in a karaoke bar that employs women from Korea who entertain men in various ways, including engaging in sexual activities. “Mohammad has never filed a currency transaction report or a suspicious activity report for. These transactions, ”the DOJ said.
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