Last Updated: 30 May 2021
In the US, a Bitcoin ATM operator was sent to prison for running illegal operations. He was sentenced to 2 years of prison sentence. The US authorities have confirmed that 17 illegal Bitcoin ATMs have been sealed due to illicit operations. The ATMs were also running illegal exchange operations with other cryptocurrencies.
Illegal Operator Sent to Prison
On Friday, the US department of justice has confirmed that Kais Muhammad, a California resident, has been sent to prison for laundering bitcoin and cash to criminals via illegal bitcoin exchanges. According to the Department of Justice, 37 years old, Kais Muhammad running an illegal crypto-exchange, has laundered more than $25 million for criminals via Bitcoin ATMs. The convict pleaded guilty in September last year. The court charged him with running an illegal unlicensed crypto business via which he was operating illicit transactions. The convict agreed that the government could seize his 17 bitcoin ATMs, $22,820 in cash, 18.4 bitcoins, and 222.5 ethereum coins.
Kais Muhammad was the owner of Herocoin from December 2014 to November 2019, which he operated under the moniker Superman29. His company was charging a commission of 25%, which was way above the market price. He set up meetings with his clients in public places and exchanged currency for them. While meeting his clients, he didn’t ask any of them regarding their source of income. In fact, on some occasions, he knew that his clients are linked with criminal activities. The Department of Justice confirmed that Kais Muhammad knew at least one of his clients associated with illegal activity on the dark web. He also managed and exchanged this currency for his clients into Bitcoin via using bitcoin ATMs.
He is also accused of intentionally failing to register his company with the US Treasury Department’s Financial Crimes Enhancement Network. He also purposely didn’t fulfil the requirement of the anti-money laundering code. He should have informed the authorities before making a transaction of over $10,000 and $2000 if he suspected any of his clients. His ATMs allowed customers to process multiple $3000 without informing the authorities on providing the identification.
He was contacted by FinCEN in July 2018, after which he registered his company but failed to fulfil the regulatory requirements.
He also helped people in person and exchanged money for them. These meetings were conducted with undercover agents who have told Kais Muhammad that they are dealing on behalf of a Korean woman who works in a Karokee bar to entertain men in various ways, including sexual activity.
What Message Does This Deliver?
This is precisely the concern associated with bitcoin. Most people have already said that bitcoin can be used for illegal transactions and is not secure as it is operated digitally. However, as the technology is improving, these concerns are also being addressed to avoid future inconvenience.