On the surface, it feels like the US Department of Justice came down a little harsh on a particular American crypto trader recently. However, once you unwrap the details you can see why he might get five years behind bars. Jacob Burrell Campos had been selling hundreds of thousands of dollars worth of Bitcoin via LocalBitcoins between January 2015 and April 2016. This volume of trades qualifies Campos as a crypto exchange all on his own, and as he wasn’t registered as a broker or exchange he was penalized. Still, you could pass this as an honest crime, right? Unfortunately, there’s more to the story.
Big Time Bitcoin Dealer
Campos didn’t end his crypto trading endeavors there. He used private messaging services to contact the buyers directly and arranged a price that was higher than the exchange quoted price of Bitcoin, meaning he was making a juicy profit even in times of crypto correction. On top of this, he was buying Bitcoin from various crypto exchanges around the globe – to the tune of around $3.2 million – and then selling them for profit on LocalBitcoins.
After one crypto exchange banned his account for suspicious activity, he swapped over to a Hong Kong-based exchange that was slightly less fussy about his dealings. He then decided to store his fiat currencies in Mexico, and imported them to the US in batches of $10,000 – just below the limit of declaration – in order to avoid paying taxes and excessive fees. For his crimes, Campos is looking at five years in jail and a $800,000 fine.
US Authorities Clamping Down
The US Securities and Exchange Commission (SEC) is starting to clamp down on unlawful crypto traders and hedge funds. In October, the Commodity Futures Trading Commission (CFTC) fined a crypto hedge fund $2.5 million for being a Ponzi scheme. Gelfman Blueprint Inc had been running as a Ponzi scheme for a number of years and took thousands from unknowing investors. The SEC shut down another crypto hedge fund for willfully violating securities laws. The crypto markets are proving a haven for scammers who are looking to make a quick buck from investors that aren’t clued up on the crypto markets.
Scammers like Gelfman Blueprint Inc and Campos give the crypto world a bad name, and will eventually harm the industry. There are so many genuine exchanges and players in the industry, all it takes is a few to ruin it for everyone. Campos knew the crime he was committing and justice has been served – to the tune of a potential five-year jail sentence.