Department of Justice charges California man who operated 'illegal' bitcoin ATM network

A man in California has agreed to plead guilty to operating an illegal bitcoin ATM network that exchanged up to $25 million, according to a U.S. Department of Justice announcement on Wednesday. 

Kais Mohammad, 36, who goes by the digital moniker  “Superman29,” was charged in the United States District Court on three counts: for operating an unlicensed money exchange business, for money laundering and for not being able to maintain an effective anti-money laundering program. 

According to his plea agreement, Mohammad owned and operated Herocoin, an illegal virtual-currency financial business from December 2014 to November 2019. 

Mohammad offered Bitcoin-cash exchange services, charging commissions of up to 25%, which is significantly above the current market rate. He met clients in public locations and exchanged currency for them without asking about the origin of those funds. According to the announcement, Mohammed was aware that some of the funds he exchanged came from criminal activities. 

Officials noted that "[a]fter FinCEN contacted Mohammad in July 2018 about his need to register his company, Mohammad did so, but he continued to fail to comply fully with federal law concerning money laundering, conducting due diligence and reporting suspicious customers."

He later purchased Bitcoin ATM-type kiosks which were placed in malls, gas stations and convenience stores in several California counties. These kiosks allowed customers to buy and sell Bitcoin in exchange for cash. Mohammad supplied the machines with cash that customers could withdraw and maintained the server software to keep the kiosks running 

Mohammed is expected to plead guilty at a hearing in the coming weeks and could face up to 30 years in federal prison. 

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