The U.S. Department of Justice (DOJ) has seized 17 Bitcoin ATM, along with some cryptocurrencies, including Bitcoin
According to the announcement of the U.S. Department of Justice (DOJ), police seized 17 Bitcoin ATM, along with several cryptocurrencies, including Bitcoin.
Illegal Bitcoin ATM operator sent to prison
A Bitcoin ATM operator has been sent to federal prison for two years for running an illegal cryptocurrency exchange. Specifically, a California man, Kais Mohammad, has been operating for two years in federal prison for an illegal ATM network that laundered Bitcoin and cash for criminals.
The 37-year-old operated an illegal crypto business that exchanged up to $25 million, some of which were on behalf of criminals through in-person transactions and a network of Bitcoin ATM-type kiosks. Yorba resident Linda pleaded guilty last September to a three-count felony informant that forced him to operate an unlicensed money-transfer business, launder money, and fail to maintain an effective anti-money laundering program fruit.
The DOJ describes and adds:
“Mohammad has agreed to forfeit to the government 17 Bitcoin ATMs, $22,820 in cash, 18.4 Bitcoin, and 222.5 Ethereum cryptocurrency.”
Mohammad owned and operated Herocoin from December 2014 to November 2019 under the moniker “Superman29”. Herocoin is a cryptocurrency exchange that charges a commission of up to 25%, which is significantly higher than the prevailing market rate.
The Justice Department said:
“Mohammad generally did not inquire as to the source of the clients’ funds and, on certain occasions, he knew the funds were the proceeds of criminal activity. Mohammad knew at least one Herocoin client was engaged in illegal activity on the dark web.”
Mohammad also processed cryptocurrency into Bitcoin ATMs, supplied the machines with cash for customers to withdraw, and maintained the server software that operated the machines.
The Department of Justice said that Mohammad intentionally failed to register his company with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) even though he was aware of the registration requirement.
The DOJ detailed, adding:
“He also chose not to … develop and maintain an effective anti-money laundering program, file currency transaction reports for exchanges of currency over $10,000, conduct due diligence on customers, and file suspicious activity reports for transactions over $2,000 involving customers he knew or had reason to suspect, were involved in criminal activity.”
Concerning his Bitcoin ATM network, Mohammad’s machines allowed customers to conduct financial transactions without requiring any identification and permitted customers to conduct multiple, consecutive transactions of up to $3,000 each without ever reporting suspicious activity to regulators or law enforcement.
FinCEN contacted Mohammad in July 2018 and he subsequently registered with the regulator but continued to fail to fully comply with federal laws regarding money laundering, conducting due diligence, and reporting suspicious customers.
Mohammad also conducts many transactions directly with secret agents, helping them to exchange cash for Bitcoin. The agents said they worked at a karaoke bar that recruited women from South Korea, who entertained men in various ways, including sexually.
The DOJ said:
“Mohammad never filed a currency transaction report or suspicious activity report for these transactions.”
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