California man Kais Mohammad will spend two years in jail after he was found guilty of operating an illegal BTC ATM service. The U.S. Department of Justice said the man had processed up to $25 million in BTC for his clients, some of it for criminals, which he was aware of. Kais was sentenced in the Central District of California by Judge Josephine Staton.
Kais pleaded guilty to money laundering and other charges.
Kais Mohammad pleaded guilty to the charges of money laundering, operating an unlicensed money transmitting business, and failing to maintain an effective anti-money laundering program. In addition to the two years sentence behind bars, he agreed to forfeit 17 BTC ATMs, 18.5 BTC, 222.5 Ether, and $22,820 in cash. As per the DoJ, Kais owned and operated a network of BTC ATMs from 2014 to 2019 through his company Herocoin. He offered his clients BTC-to-cash exchange services, both in-person and through his ATMs. He reportedly charged up to 25% in commission which is way above the market average.
Kais failed to register with FinCEN.
The DoJ claims that undercover agents posed as clients on a number of occasions and reached out to Mohammad for his exchange services. In one instance, the agent told Mohammad that the BTC was from a human trafficking and prostitution ring. Mohammad still exchanged the BTC despite knowing it was from illegal activities. A former bank employee himself, Mohammad was well aware that he needed to register his business with FinCEN. In July 2018, FinCEN even contacted him and asked him to register his business and comply with all requirements for a money service business. And while he did register, Kais never implemented anti-money laundering programs.