Exchange running without a license, Owner pleads guilty of money laundering as well

A 25-year-old has pleaded guilty amongst others, of running a cryptocurrency exchange without a license in Los Angeles, California. According to reports, the 25-year-old Kunal Kalra also going by the online name “Coinman” and ”Shecklemayne” was charged at the United States District Court of the Central District of California on August 23.

The Exchange was a front for other illicit activities

The guilty is a part of a plea bargain deal whose details are not in the public domain. However, Kalra pleaded guilty to distributing methamphetamine, operating an unlicensed money transmitting virtual platform, laundering money and failing to maintain an effective anti-money laundering instrument. Reportedly, the said activities that took place between May 2015 and October 2017 are estimated to have resulted in the laundering of over $ 25 million. 

Through a platform called LocalBitcoin and a company named Paxful, Kalra allegedly operated a virtual currency exchange that traded Bitcoin for US dollar. The business is reported to have majored the exchange of cash for Bitcoins to suspected criminals operating on the darknet. 

Kalra is accused of going ahead and exchanging $400,000 in cash for Bitcoins with an undercover agent who expressly told him that the proceeds he was using to transacts are from drug trafficking. He also in another instant exchanged $50,000 in Bitcoin for cash with another undercover agent.

ATM machine used to launder money

The 25-year-old was able to make these illegal transactions by allegedly operating a compromised ATM machine. The ATM machine had no security cameras installed in it and did not require users to provide any form of identification when using it. These exemptions were in total breach of the United States law requirements.  The Los Angeles man also runs the businesses without a money transmitter license as required by the local financial laws.

Reports from the United States Department of Justice indicates that this is set to be the first federal criminal case involving unlicensed Blockchain-based money remitting business. The crimes are likely to carry a life sentence given that some assets have already been seized from the accused. The assets seized included $889,000 cash in a bank account, a vehicle, 53.4 bitcoin, and other cryptocurrencies.