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Bitcoin Trader Faces Five Years in Jail over Operating Unlicensed Exchange

November 01, 2018 00:59:16

21-year-old Jacob Burrell Campos has pleaded guilty in an agreement with California authorities.

A Californian cryptocurrency trader, Jacob Burrell Campos, will be sentenced to up to five years’ imprisonment after pleading guilty to managing an unregistered Bitcoin (BTC) exchange. Burrell signed an agreement with the local prosecutor and will pay a penalty of $823,357 as a forfeit for his “ill-gotten gains,” the Southern District of California Attorney’s office explained in a press release on Monday.

Between January 2015 and April 2016, the trader sold hundreds of thousands of US dollars in Bitcoins to over 1000 clients on its platform. Burrell had not registered the exchange as a money transmitting business with the federal anti-money laundering (AML) agency, the Financial Crimes Enforcement Network (FinCEN). Moreover, he was marketing his business on crypto websites to target US investors and was offering a commission, which was more than 5% above the average BTC rate. Burrell often used encrypted messaging applications to negotiate the fee, the California Attorney’s office explained.

As part of the plea agreement, the 21-year old man admitted that his exchange had no AML or know-your-customer (KYC) procedures, and he was not performing due diligence on the source of his client’s funds. Burrell also confessed that he had bought the Bitcoins needed to start his exchange from a licensed US trading platform, but the operator closed Burrell’s account after a large number of suspicious transactions. Then, the trader purchased BTC worth of $3.29 million from a Hong Kong-based virtual asset market.

“Unlicensed money transmitting businesses, especially those operating at or near the border, pose a serious threat to the integrity of the US banking system, and provide an ‘open door’ for criminals to utilize such businesses to launder the proceeds of their illicit activities,” Attorney Adam Braverman explained in the press release.

Burrell’s sentence is expected in February next year.

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Category: News

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