A California resident has pleaded guilty to running an unlicensed network of Herocoin cryptomats. Up to $25 million was laundered through it, including proceeds from illegal activities.
According to the press release
In the us Department of justice, Kais Mohammad pleaded guilty to money laundering, operating an unlicensed money transfer business, and failing to maintain compliance with anti-money laundering regulations.
According to the statement, Mohamed was laundering money, personally taking Fiat currency from customers and used cryptomate for money laundering. In the plea agreement, he also admits to laundering $15-$25 million between December 2014 and November 2019.
Cryptomats operated under the Herocoin brand and were located at gas stations, shopping centers, and convenience stores in Los Angeles and nearby cities. The devices allowed you to buy and sell BTC in exchange for Fiat currencies.
According to the Ministry of justice, Mohammad deliberately failed to register his firm with the financial crime Network (FinCEN), and did not develop an effective anti-money laundering program. He never reported suspicious transactions to the regulator.
In July 2018, Mohammad contacted FinCEN and registered his company, but then did not meet any of the necessary conditions for work. Mohammed knew that at least one of his clients was engaged in criminal activity on the darknet.
As part of the investigation, undercover agents conducted several suspicious transactions in Herocoin cryptomats, which the company did not report to the regulator. In September 2018, one of the agents purchased BTC for approximately $14,500 in three consecutive transactions via cryptomats. The company should have reported them to FINCEN, but did not. The agents also conducted several personal transactions with the defendant.
In August 2019, an undercover agent met with Muhammad, gave him $16,000 in cash, and said the money was obtained from illegal activities. The agent received 1.58592 BTC during the exchange, but Mohammed did not mark this transaction as suspicious.
Mohammed faces up to 30 years in prison. As part of the plea agreement, he agreed to the confiscation of cash, cryptocurrencies, and 17 cryptomats that he managed.
According to a recent report
CipherTrace, as the number of cryptomats in the world grows, criminals are increasingly using them to launder money. Last summer, the Spanish police have uncovered a gang that used cryptomate to transfer money to the drug dealers. It used cryptomats to transfer more than 9 million euros to drug traffickers in Colombia and other countries.