A California man failed to build anti-money laundering features into his cryptocurrency exchange, allowing fraudsters and drug traffickers to launder millions of dollars through the service. I admitted that.
Charles James Randle, 33, is currently scheduled to be sentenced to up to five years in federal prison, three years of supervised release, and either up to $250,000 or twice the total amount of illegal proceeds from fraud. or the greater of the fine. .
According to the agreement [PDF] In pleading guilty, prosecutors said Randle operated a cryptocurrency money company called Bitcoins4Less, then Digital Coin Strategies, from October 2017 to July 2021. The business offered the exchange of Bitcoin for cash, and Randle collected his commission on the payments. .
Prosecutors said Tuesday in Los Angeles federal court that Randle provided virtual currency exchange services in a variety of ways, including through the mail, at ATMs and sometimes in person. The Santa Monica man, without knowing who his customers were (e.g., people known as “Puppet Sharif,” “White Jetta,” “Aaavvv,” “Aaaa,” “Yogurt Monster,” etc.) It was processing cryptocurrency transactions worth over $10,000. This barely complies with regulatory requirements.
to stay on the right side american lawRandall should have confirmed their identities and recorded them.
In his plea agreement, the cryptocurrency dealer admitted to three face-to-face transactions between October 2020 and January 2021 in which he gave an undercover FBI agent a total of 270,000 yen in cash in exchange for Bitcoin. It handed over $3,940 and maintained a 4 percent commission.
Randle “did not request names, identification, social security numbers, or other information.” [the undercover agent] or as to the source of funds exchanged,” the plea agreement states.
The businessman also operated a network of automated kiosks in Southern California that exchanged cash for cryptocurrency or Bitcoin for cash. And he used snail mail in his operations. Unknown individuals mailed “large amounts of U.S. currency” to his post office box, and Randle also conducted Bitcoin and cash transactions with these suspicious individuals.
“Additionally, when the defendant received the package, the cash was placed inside hidden children’s books, hidden inside fake birthday and Christmas presents, buried inside puzzle pieces, and placed in multiple magazines.” “They were often packaged in suspicious ways, such as wrapping or wrapping,” court documents state.
FBI agents interviewed Randle in June 2019 about fraudulent proceeds mailed to a P.O. Two days later, Randle told his customers that he was “pausing” the process of exchanging cash parcels for cryptocurrencies because he had “encountered an issue.” Federal authorities. But soon after, Randle agreed to exchange $10,000 in cash for Bitcoin for this same anonymous investor.
Regulation brought him down.
Randle advertises his services on his own website and third-party sites such as localbitcoins.com, and the court documents state that Digital Coin Strategies is a fully compliant FinCEN-registered money service. “It falsely represents that it is a business.”
FinCEN (Financial Crimes Enforcement Network) is a U.S. regulatory agency that ensures money services businesses comply with the Bank Secrecy Act. Federal law requires these companies to develop and maintain anti-money laundering programs, report currency exchanges over $10,000, conduct due diligence on customers, and prevent money laundering and other financial crimes. It is mandatory to submit a suspicious activity report for the purpose.
“In fact, as detailed below, Defendant knowingly and willfully failed to meet his obligations under the Bank Secrecy Act,” according to the plea agreement.
Specifically, Randle failed to collect “adequate information” about his customers, submit transaction reports, and notify the government when suspicious transactions “recurred.”
His business has a written anti-money laundering policy that “prohibits and actively prevents money laundering and any activity that facilitates money laundering or the financing of terrorist or criminal activities” and has a digital Federal law stating that CoinStrategies will take the above steps to comply with this federal law.
Of course, the company does not take any of these measures to prevent money laundering.
Randle hired a compliance officer in September 2020, but ignored the executive’s advice to stop using accounts labeled “test” for customer transactions at Bitcoin kiosks.This person too I warned Randall. They argued that face-to-face transactions would increase the risk of breaking the law, but Randle ignored that advice.
Although the plea agreement was filed Tuesday, Randle will formally plead guilty in court at some point in the coming weeks. ®