Shipkevich Bitcoin and ICO Attorney
Felix Shipkevich August 22, 2018
Bitcoin Money Transmitter License for Exchange

Bitcoin “Exchanger” without Money Transmitter License Indicted on 28 Counts of Money Laundering

California native Jacob Burrell-Campos, 21 years old, has been arrested at the U.S-Mexico border for dealing on bitcoin without a money transmitter license. He was held without bail on charges of operating an “illegal money transmitting business,” the United States Department of Justice stated Friday, August 17th.  Reportedly he was a “prolific” Bitcoin “exchanger” selling about $750,000 worth of Bitcoin within the U.S, to 900 individuals, throughout 971 separate transactions. He was indicted on 31 counts, 28 of those being international money laundering violations for not having a money transmitter license with the U.S Department of Treasury.

Assistant U.S Attorney Robert Ciaffa stated during the bond hearing that he accepted cash in person, through bank wires, and through MoneyGram. AUSA Ciaffa explained that He accepted cash “with no questions asked” with a 5% fee. He facilitated for hundreds of individuals to avoid money transmitter licensing and anti-money laundering laws that apply to all financial institutions such as registered Bitcoin Exchanges.

 

Money Transmitter Licensing and Regulations for Cryptocurrency

Burrel’s money transmitter business operations violated laws and regulations as he failed to maintain an anti-money laundering program, was not registered with the Financial Crime Enforcement Network (FinCEN), nor California state regulations. In the Department of Justice’s press release, AUSA Ciaffa stated that, “Burrell’s activities “blew a giant hole” through the legal framework of U.S. anti-money laundering laws by soliciting and introducing into the U.S. banking system close to $1 million in unregulated cash.”

He  sent 28 wire transfers of over $900,000 from his U.S Bank account to a Bitfinex cryptocurrency bank account in Taiwan. He was forced to use the Hong Kong based exchange when Coinbase closed his U.S account. Coinbase is one of the largest cryptocurrency exchanges complying with every federal and state money service business regulation, and acquiring a money transmitter license from every state granting one to cryptocurrency businesses. According to the Department of Justice, Burrell evaded Coinbase’s ID verification procedure and cancelled his account.

Money Service Business, or individuals transmitting money must maintain a money transmitter license in the state in which they operate, or with the state to which they are transmitting money or cryptocurrency. New York recently requested cryptocurrency exchanges not based in New York for information about their business operations serving New York residents. Consequently the Department of Treasury requires transmitters of money and cryptocurrency exchanges to register with the federal government through FinCEN. Among other requirements and regulations, a money transmitter license demands the individual or company to have a anti-money laundering framework in place to be granted.

Burrel was also indicted with conspiracy to facilitate the importation of monetary instruments by agreeing with others to smuggle over $1 million U.S dollar from Mexico. They would avoid customs currency reporting requirements by smuggling amounts just under $10,000.

The Department of Justice press release maybe found here, along with the case information below:

DEFENDANT                                            Case Number 18CR3554-H

Jacob Burrell-Campos                                     Age: 21                       Rosarito, Baja California, Mexico

SUMMARY OF CHARGES

Count 1:  Conducting an unlicensed money transmitting business, in violation of 18 USC 1960.

Statutory maximum:  Five years in prison, $250,000 fine.

Count 2:  Failing to maintain an anti-money laundering program, in violation of 18 USC 5318(h), 5322(b)

Statutory maximum: Ten years in prison, $500,000 fine.

Counts 3-30:  International money laundering, in violation of 18 USC 1956(a)(2).

Statutory maximum: Twenty years in prison for each count, $500,000 fine.

Count 31:  Conspiracy to structure international instrument transactions, in violation of 18 USC 371 and 31 USC 5324(c)(3)

Statutory maximum: Five years in prison, $250,000 fine.

AGENCIES

Homeland Security Investigations

Internal Revenue Service

Postal Inspection Service

*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.

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