A California man named Kais Mohammad has been sentenced to two years in federal prison by the U.S. Department of Justice (DOJ) for his operation of “illegal ATM network that laundered bitcoin and cash for criminals.”
According to the Justice Department, Mohammad, 37, was involved in operating an illegal crypto business that was leveraged to exchange up to $25 million, with some of which were on behalf of criminals “through in-person transactions and a network of bitcoin ATM-type kiosks.”
Back in September last year, the Yorba resident pleaded guilty to three counts of criminal charges against him, including operating an unlicensed money transmitting business, money laundering, and failing to maintain an effective anti-money laundering program. In doing so, he agreed forfeiting to the government “17 bitcoin ATMs, $22,820 in cash, 18.4 bitcoin and 222.5 ethereum cryptocurrency.”
From December 2014 to November 2019, under the moniker “Superman29,” Mohammad owned and operated crypto exchange business Herocoin, charging up to 25% which was already considered a red flag as it was significantly above the prevailing market rate.
The Justice Department revealed he meets clients at a public location to exchange currency for them, almost all the time not inquiring about the client’s source of funds. On some occasions, Mohammad knew the funds were proceeds from criminal activities. At one point, Herocoin had a client that was involved in a dark web illegal activity.
Failing to register
The DOJ also said Mohammad “intentionally failed to register his company with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).”
Moreover, he failed to develop and maintain an effective anti-money laundering program for Herocoin and file currency transaction reports for exchanges that exceeded $10,000.
He did not show due diligence on customers and did not file suspicious activity reports for transactions that surpassed $2,000 on clients he knew were involved in criminal activities.
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