Kais Mohammad has been sentenced to two years in prison after pleading guilty to operating an unlicensed virtual currency business and laundering between $15 million and $25 million in Bitcoin and cash.
Between December 2014 and November 2019, Mohammad owned and operated “Herocoin” and used the moniker “Superman29” to advertise his business online, having customers buy and sell Bitcoin for cash in transactions of up to $25,000.
He also tacked on 25% commissions on these transactions, a significant mark up from the standard rate.
These operations were distinct from his fleet of Bitcoin kiosks, where users could buy and sell Bitcoin without the required identification procedures. He also allowed customers to conduct multiple, consecutive transactions of up to $3,000 each.
It’s unclear how different these machines were from a standard crypto ATM.
He knew that some of his clients’ funds came from illegal activity and were the proceeds of crime. Specifically, Mohammad was aware that one client’s funds were the proceeds of crime originating from the dark web.
Unlicensed Bitcoin ATM network
Ciaran McEvoy, a spokesperson for the U.S. The Attorney’s Office said that Mohammad was also a former employee in the banking industry. He was likely aware that he was required to register his activity with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN).
“Rather than use his knowledge to create a robust compliance program, Mohammad avoided one altogether and profited by making his business an efficient, unchecked, and nearly anonymous conduit for money laundering and other crimes,” said prosecutors involved in Mohammad’s sentence.
McEvoy said that Mohammad would have likely been aware that his activity fell under anti-money laundering regulations too, including the need to file currency transaction reports, conduct due diligence on customers, and file suspicious activity reports for any transactions over $2,000 that he knew or had reason to suspect were involved in criminal activity.
However, Mohammad chose not to report this information.
After being contacted by FinCEN, Mohammad reportedly registered his company activity but continued to fall short of the wider regulatory requirements.