Landon Manning is an editorial intern at BTC Media and writes articles for its publications, including Distributed.com and 123Cryptocurrency.
Bitcoin trader Jacob Burrell Campos was sentenced on April 8, 2019, to serve a two-year prison sentence and to forfeit more than $800,000 “for operating an unlicensed money transmitting business.”
The U.S. Department of Justice (DOJ) announced the conclusion of this case on its official website, claiming that Campos had already been in custody without bail for eight months prior to this verdict. He entered a guilty plea in late October, the DOJ stated, “admitting that he operated a Bitcoin exchange without registering with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury, and without implementing the required anti-money laundering safeguards.”
A Mexican-born, U.S. citizen, Campos moved more than $1 million between the two nations with the help of several associates, all without reporting the transfers. Other than this, however, the majority of the actual crimes the DOJ charged him with involve the running of what is essentially an unlicensed exchange, with no anti-money laundering or due diligence measures.
The DOJ has long shown interest in financial crimes that involve crypto assets and prosecuting criminals using new methods. As early as 2015, for example, when the value of one bitcoin had yet to surpass $1,000, the DOJ hosted a summit for regulators, law enforcement and cryptocurrency stakeholders. Its efforts to stay on top of the crypto industry have persisted ever since, particularly with the department launching an investigation into price manipulation in 2018.
The prosecution’s main argument in the Campos case followed this trend, claiming 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.”
This verdict sets a clear precedent that a certain threshold of direct peer-to-peer exchanges of crypto for cash can open one up to prosecution.
David Shaw, a special agent for homeland security investigations in San Diego, called the trial a “reminder to those illegal and unlicensed money transmitters that the laws and rules apply to cryptocurrency dealings just as they do to other types of financial transactions,” per the DOJ announcement.
As long as trades are carried out over official exchanges, however, they should remain free of prosecution.