US Court issues 2-year prison sentence for Bitcoin dealer
Jacob Burrell Campos has admitted that he operated a Bitcoin exchange without registering with FinCEN.
The US authorities have once again demonstrated their harsh approach when handling cryptocurrency-related fraud. Jacob Burrell Campos was sentenced on April 8, 2019, by US District Judge Marilyn L. Huff to serve two years in prison and forfeit $823,357 in illicit profits for operating an unlicensed money transmitting business in connection with his sale of hundreds of thousands of dollars in Bitcoin to over 1,000 customers throughout the United States.
Burrell has been in custody without bail since his arrest on August 13, 2018. He pleaded guilty on October 29, 2018, admitting that he operated a Bitcoin exchange without registering with the Financial Crimes Enforcement Network (FinCEN) of the US Department of Treasury, and without implementing the necessary anti-money laundering safeguards.
According to the plea agreement, Burrell advertised his business on Localbitcoins.com, and communicated with his customers through email and text messages, often using encrypted applications. The defendant admitted that he had no anti-money laundering or “know your customer” program, and performed no due diligence on the source of his customers’ money.
He also admitted that, at first, he purchased his supply of Bitcoin through a U.S.-based, regulated exchange, but his account was soon closed because of the large number of suspicious transactions. He then resorted to a cryptocurrency exchange in Hong Kong, where he purchased a total of $3.29 million in Bitcoin, in hundreds of separate transactions, between March 2015 and April 2017.
Finally, Burrell admitted that he exchanged his US cash, which he kept in Mexico, with Joseph Castillo, a San Diego-based precious metals dealer, and that between late 2016 and early 2018, he and others imported into the United States, on an almost daily basis, a total of over $1 million in USD, in amounts slightly below the $10,000 reporting requirement.
In a sentencing memorandum, prosecutors argued that unlicensed money transmitters pose a serious threat to the integrity of the U.S. financial system by creating a hole in the anti-money laundering regulatory scheme and allowing criminals to launder their cash proceeds without scrutiny. In this case, Burrell provided his clients with anonymity and privacy, and exchanged over $1 million in unregulated cash.
“Today’s sentencing of Burrell is a reminder to those illegal and unlicensed money transmitters that the laws and rules apply to crypto currency dealings just as they do to other types of financial transactions,” said David Shaw, Special Agent in Charge for Homeland Security Investigations in San Diego.