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US Sends Bitcoin ATM Operator to Jail for Unlawful Operation — 17 Machines Seized

05/29/2021
US Sends Bitcoin ATM Operator to Prison for Illegal Operation — 17 Machines Seized

A bitcoin ATM operator has been despatched to federal jail for 2 years for operating an unlawful cryptocurrency trade operation. U.S. authorities have seized 17 bitcoin ATMs, together with some cryptocurrencies, together with bitcoin.

Unlawful Bitcoin ATM Operator Despatched to Jail

The U.S. Division of Justice (DOJ) introduced Friday {that a} California man, Kais Mohammad, has been sentenced to 2 years in federal jail “for working unlawful ATM community that laundered bitcoin and money for criminals.”

The Justice Division stated that the 37-year-old operated an unlawful crypto enterprise “that exchanged as much as $25 million,” a few of which had been “on behalf of criminals by way of in-person transactions and a community of bitcoin ATM-type kiosks.”

The Yorba Linda resident pleaded responsible in September final yr to “a three-count legal info charging him with working an unlicensed cash transmitting enterprise, cash laundering, and failing to keep up an efficient anti-money laundering program,” the DOJ described, including:

Mohammad has agreed to forfeit to the federal government 17 bitcoin ATMs, $22,820 in money, 18.4 bitcoin and 222.5 ethereum cryptocurrency.

Mohammad owned and operated Herocoin from December 2014 to November 2019 utilizing the moniker “Superman29.” Herocoin was a crypto trade enterprise that charged commissions of as much as 25%, which was “considerably above the prevailing market charge,” the DOJ famous.

He usually met his purchasers at a public location and exchanged foreign money for them. “Mohammad usually didn’t inquire as to the supply of the purchasers’ funds and, on sure events, he knew the funds had been the proceeds of legal exercise. Mohammad knew at the least one Herocoin shopper was engaged in criminality on the darkish net,” the Justice Division stated.

Mohammad additionally processed cryptocurrency deposited into bitcoin ATMs, provided the machines with money for patrons to withdraw, and maintained the server software program that operated the machines.

The Division of Justice stated that Mohammad “deliberately didn’t register his firm with the U.S. Treasury Division’s Monetary Crimes Enforcement Community (FinCEN)” despite the fact that he was conscious of the registration requirement. He additionally “selected to not … develop and keep an efficient anti-money laundering program, file foreign money transaction studies for exchanges of foreign money in extra of $10,000, conduct due diligence on clients, and file suspicious exercise studies for transactions over $2,000 involving clients he knew, or had motive to suspect, had been concerned in legal exercise,” the DOJ detailed, including:

With respect to his bitcoin ATM community, Mohammad’s machines allowed clients to conduct monetary transactions with out requiring any identification and permitted clients to conduct a number of, consecutive transactions of as much as $3,000 every with out ever reporting suspicious exercise to regulators or regulation enforcement.

FinCEN contacted Mohammad in July 2018 and he subsequently registered with the regulator however “continued to fail to conform totally with federal regulation regarding cash laundering, conducting due diligence and reporting suspicious clients,” in keeping with the DOJ.

Mohammad additionally performed a number of in-person transactions with undercover brokers, serving to them trade money into bitcoin. The brokers represented that they labored at a karaoke bar that employed ladies from Korea who entertained males in varied methods, together with partaking in sexual exercise. “Mohammad by no means filed a foreign money transaction report or suspicious exercise report for these transactions,” the DOJ stated.

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