Despite the fact that growing numbers of people own cryptocurrencies, a widespread perception remains that their primary application is to enable people to make transactions that they would not make with bank accounts connected to their legal names. No one buys Bitcoins in the hopes of spending them at In-N-Out Burger. Although this may have seemed impossible 15 years ago, now there are legal regulations regarding cryptocurrencies and legal Bitcoin exchange businesses.
There is nothing inherently illegal about operating a business that enables customers to convert Bitcoins into U.S. dollars, but operating an unlicensed cryptocurrency business is as illegal as operating any other unlicensed business, and money laundering is money laundering whether it is in the form of cash, cryptocurrency, real estate, or any other valuable item. If you are facing criminal charges for money laundering or another financial crime, contact a Los Angeles federal crimes defense lawyer.
Defendant Knew That Clients Were Using His Business to Conceal the Proceeds of Illegal Drug Sales
In May 2018, Hugo Sergio Mejia, Jr. of Ontario, California began operating a business that exchanged Bitcoins for U.S. dollars and vice versa; he would charge clients a commission for using his exchange services. He never registered his business with the Financial Crimes Enforcement Network. The unlicensed business remained in operation for approximately two-and-a-half years, during which time Mejia exchanged approximately $13 million.
At least some of the assets he exchanged were the proceeds of illegal drug sales, and he was aware of this. He also actively tried to conceal the true nature of his business by establishing several apparently legitimate businesses. He would communicate with clients by encrypted messages, and the exchanges took place in person at various coffee shops, and some clients referred other clients to him by word of mouth.
One of his clients was a confidential police informant who met with Mejia at a coffee shop on several occasions, between May 2019 and March 2020, to make the exchanges. The informant told Mejia that he was making his exchanges on behalf of a client in Australia who bought methamphetamine online and sold it on the street for a much higher price than the street value of methamphetamine in California. By 2020, the informant had bought Bitcoins from Mejia in exchange for more than $250,000.
Mejia was arrested and charged with one count of operating an unlicensed money transmitting business and one count of money laundering. In July 2021, he entered a plea of guilty. In November 2021, Mejia, 50, received a sentence of three years in prison.
Contact the Manshoory Law Group About Accusations of Money Laundering
A Los Angeles criminal defense lawyer can help you if you are being accused of money laundering, operating an unlicensed money transmitting business, or other financial crimes. Your initial consultation is always free, so contact us at the Manshoory Law Group in Los Angeles, California, or call (877)977-7750 to discuss your case.