A LocalBitcoins seller pleaded guilty of operating an illegal money transfer business in a Southern California federal court earlier today.
The defendant admitted to buying thousands of Bitcoin over a 16-month period and selling them through the popular peer-to-peer marketplace without the correct licence to do so.
Bitcoin Dealer Agrees to Forfeit Over $820,000
According to a news release from the Southern California Department of Justice, a San Diego man has pleaded guilty of operating an unlicensed money transmitting service today.
Jacob Burrell Campos admitted to illegally selling hundreds of thousands of dollars’ worth of Bitcoin without taking necessary precautions to abide by federal financial regulations.
Campos had used the platform LocalBitcoins to advertise his operation.
According to the news release, at first he was buying the Bitcoin from a “U.S.-based, regulated exchange” and then selling them privately at a 5% premium. He would accept a range of payments including: cash, ATM deposits, and MoneyGram transfers and often communicated trades via email or SMS.
Shortly after setting up shop his initial account was shut down following a “large number of suspicious transactions”. This prompted him to move to a Hong Kong-based exchange. The report indicates that this account was used to buy $3.29 million BTC over a series of several transactions.
During the period between January 2015 and April 2016 Burrell is thought to have served over 1,000 independent customers sourced from LocalBitcoins. However, federal law requires money transmitting businesses of this size be registered with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury and operate according to know-your-customer and anti-money laundering regulations. The San Diego man’s operation was compliant with neither of these regulations.
Finally, the 21-year-old also admitted to being involved in a dollar smuggling operation. The combined effort of this are thought to have resulted in over $1 million crossing the Mexico – America border between late 2016 and early 2018. The group are thought to have been arranging the transfer of amounts just under the $10,000 reporting requirement.
In the plea agreement, Campos states that he is willing to forfeit $823,357 to the U.S. government. He could also receive up to five years in jail for his crimes or a $250,000 fine. The 21-year-old will be sentenced on February 19.
U.S. Attorney Adam Braverman added:
“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.”