A LocalBitcoins trader who illegally sold Bitcoin to more than 1,000 people in the US has been sentenced by a California court to two years’ imprisonment, and ordered to give up $823,357 in illicit profits.
The US Attorney’s Office of the Southern District of California announced the outcome of the case on April 8, saying local citizen Jacob Burrell Campos had been found guilty of operating an unlicensed money transmitting business. Until his arrest in August last year, Burrell had been operating his business since 2015.
He started by advertising on Localbitcoins.com, taking a commission of 5% above the prevailing exchange rate. Burrell often communicated with customers using encrypted applications for email and text messages. He also admitted that he did not employ any anti-money laundering or Know-Your-Customer (KYC) checks, and did not perform any due diligence on the source of his customers’ payments.
While he initially purchased his Bitcoin supply from a US-based, regulated cryptocurrency exchange, his account was quickly closed because of the large number of suspicious transactions. He then turned to an exchange in Hong Kong, purchasing $3.29 million worth in Bitcoin through hundreds of separate transactions between March 2015 and April 2017.
Burrell kept the US dollars he received as payments in Mexico. Apart from changing some with Joseph Castillo, a San Diego-based precious metals dealer. he and others also imported almost daily into the US cash amounts slightly below the $10,000 reporting requirement to a tune of over $1 million cash in total.
Burrell pleaded guilty last October for running a Bitcoin exchange without registering with the Financial Crimes Enforcement Network (FinCEN) of the US Department of Treasury, and without implementing required anti-money laundering safeguards.
“Today’s sentencing of Burrell is a reminder to those illegal and unlicensed money transmitters that the laws and rules apply to cryptocurrency dealings just as they do to other types of financial transactions,” San Diego Homeland Security Investigations Special Agent David Shaw commented.