A US citizen faces up to 5 years in prison after pleading guilty in federal court as an illegal Bitcoin (BTC) dealer, so, without a license. The information emerged through a press release from the US Department of Justice (DoJ). The defendant, named Jacob Burrell-Campos, admitted having negotiated hundreds of thousands of dollars in Bitcoin (BTC) through the peer-to-peer platform LocalBitcoins, with more than a thousand customers across the United States.
The volume of transactions places the defendant’s business in the category of “unregistered Bitcoin (BTC) exchanges.”. Under the US law, such businesses must apply for an operating license from the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN). In addition to that, such startups must comply with Anti-Money Laundering (AML) measures and Know Your Customer (KYC) policies.
Burrell-Campos signed a plea agreement in which he acknowledged that he evaded legal registration and failed to implement the required guarantees on the source of his clients’ funds. He also advertised on LocalBitcoins site and negotiated his sales at 5% above the current exchange rate.
Bitcoin (BTC) dealer pleads guilty for operating without a license
Initially, the defendant purchased Bitcoin (BTC) through a regulated US-based crypto exchange, but his account was closed for suspicious activity. He then turned to an exchange platform based in Hong Kong, where he managed to trade $3.29 million in Bitcoin (BTC). The amount corresponds to hundreds of separate transactions between March 2015 and April 2017.
According to the DoJ press release, Burrell-Campos kept the money in a bank account in Mexico, and between 2016 and 2018 he imported about one million dollars a day into the United States, in association with other individuals. As part of his plea agreement, the defendant will surrender to the US Treasury a total of $823,357, corresponding to his earnings. The court will sentence Burrell-Campos on February 11th, 2019.
Last February, FinCEN sent a communication to the Finance Committee of the US Senate, where it states that the administrators of cryptocurrencies, including the ICOs and crypto exchanges, are “money dealers.” This qualification obliges them to comply with the legal requirements of Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT).