Kais Mohammad, aka “Superman29,” has agreed to plead guilty to federal charges he ran an unlicensed bitcoin ATM network that laundered up to $25 million, including funds that originated in criminal activity.
According to a recent press release by the U.S. Department of Justice, the Orange County, California, resident is pleading guilty to one count each of money laundering, operating an unlicensed money transmitting business and failure to maintain an effective anti-money laundering program.
- The DOJ press release said Mohammad laundered money by taking fiat currency from customers in person and using the bitcoin ATMs to launder the cash. In the plea agreement, he also admitted he laundered from $15 million to $25 million between December 2014 and November 2019.
- The bitcoin ATMs were operated under the name “Herocoin” and were located in gas stations, malls and convenience stores in Los Angeles, Orange, Riverside and San Bernardino counties. The kiosks allowed customers to both buy and sell bitcoin in exchange for fiat.
- According to the DOJ, Mohammad intentionally did not register his firm with the Financial Crimes Enforcement Network (FinCEN) initially, and also did not develop or maintain an effective anti-money laundering program. He also failed to report any transactions that should have been flagged as suspicious.
- When contacted by FinCEN in July 2018, Mohammad registered his firm but then failed to comply with any of the regulations, the DOJ said. In the plea agreement, Mohammad also admits that he knew at least one of his clients was engaged in criminal activity on the Dark web.
- As part of their investigation, undercover agents conducted multiple transactions on Herocoin ATMs that were not reported by the firm. In September 2018, one of the agents purchased about $14,5000 in bitcoin in three successive transactions from the ATMs; even though Mohammad's firm would have been required to report this, it failed to do so. The agents also conducted multiple in-person transactions with the defendant.
- In August 2019, one of the undercover agents met Mohammad, gave him $16,000 dollars in cash and said the funds had been earned through illegal activity. The agent received 1.58592 bitcoin in return but Mohammad did not flag that transaction.
- Mohammad faces a maximum of 30 years in federal prison and, as part of the plea agreement, has agreed to forfeit cash, cryptocurrency and the 17 bitcoin ATMs he operated.