Kais Mohammad, 37, operated an illegal cryptocurrency business that laundered Bitcoin for criminals through a sophisticated network of cryptocurrency ATM’s. The man calling himself “Superman29” has exchanged a whopping $25 million in cryptocurrency though various in-person transactions and Bitcoin ATM kiosks. These transactions included large amount of cryptocurrency from criminals as well. The business was thus far unlicensed and failed to maintain any kind of anti-money laundering program, according to the Justice Department.
Mohammad’s cryptocurrency ATM’s processed crypto deposits, he supplied the machines with cash that customers who used the ATM’s could withdraw in exchange for cryptocurrency and he maintained the machines software as well. The man didn’t register the company with U.S. Treasury Department and didn’t file any report for transactions including cryptocurrency made of more than US$10,000, which is obligated in the United States.
As former bank employee, Mohammad knew he was required to register his company with the U.S. Treasury Department’s Financial Crimes Enforcement Network, that he needed to maintain an effective anti-money laundering program and that he needed to report various virtual currency exchanges, but chose not toCiaran McEvoy, spokesman for the U.S. Attorney’s Office said
Mohammad was contacted by FinCen in July 2018 with the request to register his company. Eventually Mohammad did register the ATM business but still continued to fail to register transactions above US$10,000 and to failed to comply completely with federal law regarding money laundering, conducting due diligence and reporting suspicious customers.
Mohammad owned and operated Herocoin, the unregistered illicit crypto-for-cash service from December 2014 to November 2019, offering cryptocurrency-cash exchange services for transactions of any amount without registering them. The company consisted of a variety of kiosks in several malls, gas stations and convenience stores located throughout Southern California. At these kiosks customers could buy Bitcoin with cash deposits or sell their Bitcoin in exchange for cash-in-hand by using any of the cryptorrency ATM’s.
Mohammad would charge commissions on transactions up to 25% because he knew that some of his clients’ funds came from illegal / criminal activities. In total, the illegal ATM business exchanged between US$15 million and US$25 million. This happened with both in-person transactions and at his kiosks.
During the time he operated the ATM’s, Mohammad conducted in-person trades on multiple occasions with undercover agents who said that:
“They worked for a karaoke bar that employed women from Korea who entertained men in various ways.”
The agents explained that the funds were possibly from illegal activities but Mohammad still toke used US$16,000 in cash to exchange for Bitcoin apparently not caring where the funds came from.
According to the statement from the Justice department, Mohammad was required to forfeit US$1.25 million worth of Bitcoin (BTC) and Ethereum (ETH) cryptocurrency to the state. The amount came from 18.4 Bitcoin and 222.5 Ethereum which at the time were valued at Bitcoin at US$37,500 – Ethereum at US$2,500. Most likely these assets will be auctioned off as has happened multiple times with earlier cryptocurrency seizures.
As part of the arrest, prosecutors also seized 17 ATM machines and US$23,000 in cash.
Mohammed was sentenced to 2 Years in Prison for Operating Illegal ATM Network that Laundered Bitcoin and Cash for Criminals