Unlicensed Crypto Exchange and the U.S. Attorney’s Office

Cryptocurrencies have the potential to solve many issues. However, there is no lack of crypto-related crimes and it is quite hard to identify such cases. Recently, U.S. authorities charged Hugo Sergio Mejia for one count of money laundering as well as one count of operating an unlicensed money exchange which he failed to register with the FinCEN. As a reminder, FinCEN (Financial Crimes Enforcement Network) is part of the Treasury Department. It is worth mentioning that, unlicensed crypto exchange operator faces 25 years for laundering $13 million.

Interestingly, a peer-to-peer crypto trader agreed to plead guilty to charges of money laundering as well as operating an unlicensed money transmitting business.

According to the U.S. Attorney’s Office, Mejia used a suite of limited liability corporations to conceal the true nature of his operations. He used to exchange cash for Bitcoins over a period spanning more than two years.

Interestingly, the complaint accuses Mejia of transferring funds between Bitcoin and U.S. dollars worth at least $13 million for clients. He started transferring funds from May 2018 to September 2020. A California resident used his companies WorldWide Secure Communications, World Secure Data, and The HODL Group.

Unlicensed crypto exchange and legal aspects

Based on the information taken from the proposed plea agreement, he negotiated with a client who was cooperating with law enforcement to exchange Bitcoin for tens of thousands of dollars in cash between May 2019 and March 2020. Importantly, the client informed Mejia that his primary customer was an Australian methamphetamine buyer. However, Mejia was willing to proceed with the transaction.

According to the complaint, Mejia carried out transactions worth more than a quarter of a million dollars for the client. Interestingly, the client conducted at least five transactions worth more than $250,000 in total.

Importantly, as part of the deal, Mejia agreed to forfeit almost $234,000 in cash as well as approximately $95,000 in cryptocurrency and metals. Moreover, the person who used to operate an unlicensed crypto exchange has to comply with another requirement. He will have to maintain, at most one virtual currency wallet. 

Interestingly, that one wallet will have a use for all personal transactions, it will have a limit on only using and processing open public blockchain virtual transactions. He won’t be able to use privacy-based blockchain virtual currencies. The case of an unlicensed crypto exchange once more highlights the complexity of crypto-related crimes. People should pay more attention to such cases. This way it will be easier to protect their assets.