A man from the Orange County has been admitted of laundering up to 25 Million Dollars via a network of the unlicensed Bitcoin ATMs and also in-person exchanges. The accused has been identified to be Kais Mohammad who knew that many of his customers had laundered the proceeds of the crime via his Bitcoin exchange network.
The defendant, aged 36 years belonging from the Orange County of California has pleaded guilty on the 22nd of July, 2020 to a single count of operating an unlicensed money transmitting business, a single count of the failure to maintain an efficient anti-money laundering program and a single count of money laundering.
The information that has revealed in the court states that Kais had operated Herocoin, which is a Bitcoin ATM Network (Bitcoin Exchange Network), between the period December 2014 and November 2019. The United States prosecutors have described Herocoin to be an illicit virtual currency money services business. As per the information, he has also exchanged a significant amount of the Bitcoin cryptocurrency for cash through the LocalBitcoins under the username or pseudonym “Superman29”. Mohammad has also exchanged Bitcoin for Cash at a much steeper rate than the industry standards, as stated by the prosecutors. He has put an advertisement of a 25% rate for the transactions up to $25K.
The Herocoin account on Twitter has confirmed a 20% rate along with a $5 fee per transaction in response to an outraged user.
The user @EsmeGregson tweeted:
PEOPLE NEED TO KNOW THAT HEROCOIN charges 20% plus 5 dollars “fee” per transaction. For example: $155 deposited into a HeroCoin ATM will get $120 worth of coins in your wallet. IMO charging 25% to convert CASH into digital currency is OFFENSIVE.
In response to the tweet of @EsmeGregson, @HeroCoinBTC has tweeted:
Hello, yes, that is our current rate which is displayed in the total price of BTC on the machine before purchase as well as the $5 transaction fee. We have deleted our tweet from over a year ago of our prior rates to avoid any confusion.
Kais has failed to register Herocoin Bitcoin Exchange Network with FinCEN or Financial Crimes Enforcement Network, as the law requires it. He has registered the company back in the year 2018 after FinCEN had contacted him regarding the status of his company. Even after FinCEN has approached him, he has failed to comply with the regulations set up by them, which includes the Anti-Money Laundering (AML) measures and also the KYC or the Know Your Customer. Simultaneously, he has also failed to report the transactions above a specified dollar amount as is required by the law.
On the 12th of September, 2018, the federal investigators in an undercover operation had purchased $14, 000 in Bitcoin (BTC) from one of the ATMs put up by the accused. But Kais has never reported the transaction. Between the months of February and August 2019, Kais had regularly exchanged Bitcoin for cash with the undercover agents who had claimed to have an illicit source of income. The agents had informed Kais that they worked for a bar, which employs women to offer sexual favours to the patrons. On the 28th of August, 2019, Kais had exchanged $16, 000 in BTC for one of the undercover agents, but he did not report any of the transactions with the agents.
Kais Mohammad has admitted the exchange of funds between $15 million and $25 million while the operation of Herocoin ATMs (Bitcoin Exchange Network) and the “Superman29” LocalBitcoins account was going on. He has also admitted that he failed to ask his customers regarding the source of their funds and had admitted of knowing that at least one of his clients have conducted the illicit activity on the dark web. Kais has agreed on the forfeit of Bitcoin ATMs through the Bitcoin Exchange Network, a hidden amount of cryptocurrency and a secret amount of cash as well. He now faces a maximum imprisonment of 30 years.
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