Man in California Sentenced to 2 years Over $25M BTC ATM Illegal Operation

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After being found guilty of operating an unlawful BTC ATM service, a guy from Orange County, California, will spend the next two years in prison. According to the US DOJ (Departement of Justice), the individual processed up to $25 million in Bitcoin for his clients, some of it for criminals, which he knew about.

Judge Josephine Staton of the Central District of California condemned Kais Mohammad. As CoinGeek revealed in 2020, he pleaded guilty to money laundering, operating an illegal money transferring business, and failing to maintain an adequate anti-money laundering policy. He also agreed to lose 17 BTC ATMs, 18.5 BTC, 222.5 Ether, and $22,820 in cash, This is in addition to the punishment.

According to the Department of Justice, Mohammad’s company Herocoin owned and operated a network of Bitcoin ATMs from 2014 to 2019. He will provide BTC-to-cash exchange services to his customers both in person and through his ATMs. He allegedly charged up to 25% commission, which is significantly higher than the industry average.

Mohammad promoted his company online under the handle “Superman29,” claiming to be able to trade up to $25,000 in Bitcoin. He never asked about the source of the monies when he met his clients in person. His customers might also use his ATMs to get cash in BTC.

The Department of Justice asserts that undercover agents posed as clients and solicited Mohammad’s services on several occasions. Federal agenst told Mohammad that the Bitcoins came from a sex trafficking & prostitution racket in one instance. Another agent presented him with $16,000 in Bitcoin, which he claimed was obtained from illegal dark web activity. Despite knowing that the Digital currency was obtained through improper means, Mohammad continued to swap it.

Mohammad, a former bank teller, was well aware that he needed to register his organization with FinCEN. FinCEN notified him in July 2018, requesting that he register his firm meet all of the standards for a money service firm.

And, despite the fact that he was registered, he never adopted anti-money laundering measures.

“Instead of using his skills to create a robust compliance program, (Mohammad) managed to avoid one altogether and profited by trying to make his business an efficient, unchecked, and nearly anonymous conduit for laundering and other offences,” the federal prosecutors in charge of this case wrote in their sentencing memorandum.

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