Incidents

How this Man laundered $25 million USD via Bitcoin ATMs?

An Orange County resident admitted to washing about $25 million USD using a network of unlicensed Bitcoin ATMs, logical security experts report. Kais Mohammad acknowledged being aware that many of his clients used these cryptocurrency ATMs to launder illicitly obtained assets.

The 36-year-old pleaded guilty to an unlicensed money transmission operation charge, money laundering charges and one more charge for non-compliance with an organized crime program.

According to the logical security experts, Mohammad was the main operator of Herocoin, an ATM network for Bitcoin transactions, a task he performed between 2014 and 2019; In addition, the defendant also made multiple transactions using the LocalBitcoins platform using a pseudonym. The defendant exchanged Bitcoin for cash using an exchange rate about 25% higher than the current average, the authorities mention. Herocoin’s Twitter account confirms the signaling of prosecutors.

A few months ago, the authorities pressured the defendant to register Herocoin with the Financial Crimes Execution Network (FinCEN), as stipulated by American law. Mohammad tried to complete the process, although FinCEN concluded that this network of Bitcoin cashiers did not comply with its regulations; U.S. law also requires companies to notify transactions that exceed a specific amount, which Mohammad also failed in complying with.

In September 2018, undercover federal investigators bought $14,000 USD in Bitcoin from a cashier owned by Herocoin; agents repeated this activity frequently, to ensure that the defendant did not comply with anti-money laundering laws, logical security experts mentioned. Eventually, the Department of Justice (DOJ) initiated proceedings against him.

Mohammad admitted to having exchanged about $25 million USD during the operation of Herocoin ATMs and in his LocalBitcoins account. The defendant also admitted that he did not ask his clients for the least detail about obtaining their assets, adding that some of those involved kept active profiles on hacking forums on dark web.

The International Institute of Cyber Security (IICS) mentions that, as part of the sentence, the authorities seized the Bitcoin ATMs, a non disclosed amount of money and multiple cryptocurrency addresses. Mohammad faces a sentence of up to 30 years in prison.

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