A Bitcoin dealer in California has pled guilty in federal court over running an unlicensed money transmitting business which had amassed hundreds of thousands of dollars from over 1,000 customers.
According to a release published October 29 by the U.S. Attorney’s Office of the Southern District of California, 21-year old Jacob Burrell Campos has admitted to illicitly operating an unlicensed money transmitting service between January 2015 to April 2016, purchasing hundreds of thousands of dollars worth of Bitcoin and offering them through peer-to-peer marketplace LocalBitcoins without proper authorization, thereby violating prevailing federal financial regulations.
As detailed in the release, Campos initially purchased the digital assets from a “U.S.-based, regulated exchange” and privately sold them thereafter with a 5 percent premium. Among the range of payment means Campos accepted included ATM deposits, MoneyGram transfers, and cash, of which most were transacted through either email or SMS.
Following a “large number of suspicious transactions,” Campos’ initial account was terminated, prompting the defendant to sign up an account with a Hong Kong-based platform. Allegedly, the new account was then used to conduct a series of transactions to purchase over $3.29 million Bitcoin.
During the 16-month period, Campos has purportedly facilitated transactions with over 1,000 customers from LocalBitcoins. As the release noted, a money transmitting transaction of this size falls under the federal laws and should, therefore, be registered with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) and must comply with existing anti-money laundering and know-your-customer regulations, both of which were allegedly violated by the defendant.
On top of operating an unlicensed money transmitting business, Campos has also pled guilty to running a dollar smuggling operation in which the defendant has reportedly smuggled over $1 million from Mexico to the U.S. sometime between 2016 to 2018. As per the plea agreement, Campos has conceded to turning over $823,357 to the U.S. government.
In addition, the defendant could also potentially be facing a five-year imprisonment, on top of a $250,000 penalty. The verdict is slated to be released on February 19, 2019.
As U.S. Attorney Adam Braverman stressed in the release:
“Unlicensed money transmitting businesses, especially those operating at or near the border, pose a serious threat to the integrity of the U.S. banking system, and provide an ‘open door’ for criminals to utilize such businesses to launder the proceeds of their illicit activities.”