US Court Sentence Bitcoin Dealer To 2-Year in Prison

By Prashant Jha

Jacob Burrell Campos, the Bitcoin dealer was sentenced to two years in Prison for operating an unregulated crypto exchange. The verdict came on April 8th, 2019 by US District Judge Marilyn L. The accused Jacob has been also ordered to forfeit $823,357 in illicit profits.

The verdict shows the strict policies of the SEC towards crypto operations. Jacob was accused of running an illegal crypto trading platform which dealt in hundreds of thousands of dollars in Bitcoin trade throughout the United States.

Jacob was arrested in August last year and has been in the custody without bail. He pleaded guilty of the charges on October 29, 2018, for running a Bitcoin exchange without registering with the Financial Crimes Enforcement Network (FinCEN) of the US Department of Treasury.

How Jacob Used To Run His Operations on the Bitcoin Exchange

The plea agreement suggests that Jacob advertised his unregulated bitcoin exchange on Localbitcoins.com. He used to deal with customers through emails and text messages and made use of encrypted applications to avoid being tracked. The accused also pleaded guilty of the charges that his firm was not adhering to any of the money laundering regulations or had any form of KYC for the customers.

Jacob also revealed that earlier he used to buy his Bitcoin supply from a regulated crypto exchange, but it got banned latter as his account showed many irregular transaction activities. He started to buy Bitcoin from a Hong-kong based exchange, from which he bought a total of $3.29 million in Bitcoin in several small transactions between March 2015 and April 2017.

The accused also admitted to laundering money to Mexico. Jacob used to exchange US dollar for precious metal and bring it back to the US. The total laundered money came quite close to $1 Million.

The prosecutors appealed that these kinds of unregulated firms create loopholes in anti-money laundering laws and can bring the financial system of the United States under threat. The Jacob run exchange fell under scrutiny for providing total anonymity or privacy of the customers.

David Shaw, Special Agent in Charge for Homeland Security Investigations in San Diego said,

“today’s sentencing of Burrell is a reminder to those illegal and unlicensed money transmitters that the laws and rules apply to cryptocurrency dealings just as they do to other types of financial transactions”