TL;DR Breakdown
- California Department of Justice burst illegal Bitcoin operator
- How Mohammed runs his illegal business operations
The California Department of Justice has burst Kais Mohammad, who operated illegal Bitcoin ATMs among other crimes and subsequently sentenced him to two years in prison.
Mohammed also pleaded guilty to laundering between $15 million and $25 million in Bitcoin and cash.
Between November 2014 and December 2019 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.
Outside Herocoin, Mohammed also had illegal Bitcoin ATMs and kiosks where he sells and buys Bitcoin without the required identification procedures.
It’s unclear how different these machines were from a standard crypto ATM. He also allowed customers to conduct multiple, consecutive transactions of up to $3,000 each.
Despite knowing that some of his clients operated illegal businesses, he helped them launder proceeds of crimes. He knew primarily that what he processed were proceeds from the dark web.
Illegal Bitcoin ATM ring: How Mohammed circumvent the system
The U.S.attorney’s spokesperson, Ciaran McEvoy, revealed that the convict used to be a banker and likely aware that he was required to register his activity with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN).
Instead, she notes that he uses his knowledge to avoid compliance and profit by making his business efficient, unchecked, and nearly anonymous.
McEvoy said Mohammed should be aware that his activity fell under anti-money laundering regulations, 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.
He chose to stay silent on all these activities, which has landed him in prison now.
At some point, Mohammed registered his business with regulators but did not comply with regulations until his sentence.
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