Crypto Trader Faces 5-Year Jail Term For Operating Unregistered Bitcoin Exchange
A 21-year-old U.S. citizen charged with operating an "unlicensed money transmitting business" has pleaded guilty to the offense, and faces up to five years in prison if found guilty.
A 21-year-old U.S. citizen charged with operating an “unlicensed money transmitting business” has pleaded guilty to the offense, and faces up to five years in prison if found guilty.
According to a press statement from the U.S Department of Justice (DoJ), Jacob Burrell Campos illegally sold “hundreds of thousands of dollars” in Bitcoin (BTC) to more than 1,000 people in the U.S between January 2015 and April 2016.
As per the DoJ, this amounted to running an unregistered “Bitcoin exchange” which the accused operated without the approval of the Financial Crimes Enforcement Network (FinCEN), using advertisements placed on the peer-to-peer platform LocalBitcoins to attract customers.
U.S authorities also say that Burrell did not carry out any due diligence on his customers, including finding out the source of their money and implementing anti-money laundering (AML) checks.
Burrell admitted to using encrypted email and SMS applications to communicate with potential customers, charging them a 5 percent commission above prevailing rates for each Bitcoin sale. Reportedly, he only accepted payments made in via cash in hand, ATMs, and MoneyGram.
Burrell, who first purchased his bitcoins on “a U.S.-based, regulated exchange,” was forced to switch to a Hong Kong-based exchange after his suspiciously large transactions led to the closure of his U.S account.
He allegedly was able to purchase BTC worth $3.29 million between March 2015 and April last year using the Hong Kong account. The DoJ statement says that Burrell managed to make such a huge purchase making “hundreds” of transactions.
The defendant also admitted to having exchanged his U.S. dollars, and storing the fiat in Mexico. He worked on this part of the deal with Joseph Castillo, precious metals dealer based in San Diego.
Incidentally, Castillo is facing imprisonment too after he pleaded guilty to giving a false statement about his federal tax returns. His sentencing has been set for December 13, 2018.
And with “others” not before the court, Burrell imported over $1 million into the U.S on a daily basis, doing so from the end of 2016 to early 2018. To avoid raising suspicions about their activities, the group transacted in small amounts often under $10, 000, which is the reporting threshold.
The plea agreement includes Burrell’s agreement that he will forfeit over $820,000 to the U.S government. He is awaiting sentencing on February 11, 2019.
U.S. attorney Adam Braverman said that unregistered money transmitting businesses, “pose a serious threat to the integrity of the US banking system,” especially those that operate near the border that can be an ‘open door’ for money launderers.
In June, a trader based in L.A with the pseudonym “Bitcoin Maven,” faced prosecution for operating a similarly unregistered Bitcoin-fiat ‘money transmitting business’ ostensibly advertised on the popular LocalBitcoins.
Braverman has warned that the DoJ “will continue to investigate and prosecute” all those that are trying to skirt the licensing process or do not implement AML requirements as prescribed under federal law.