If you want proof that authorities are no longer taking matters related to private Bitcoin exchanges lightly, look no further than a recent string of arrests. Last week Louis Ong – a notable private exchange operator that crossed between Canada and America – received a 20-day jail sentence. Another Bitcoin trader – this time from Los Angeles, California – is similar facing charges related to the operation of an unregistered Bitcoin-standard money transmitting business.
Bringing Down the Bitcoin Maven
Theresa Tetley, who operated under the “Bitcoin Maven” pseudonym, stands as the woman accused. According to reports, she was able to generate a yearly return of more than $300,000 between 2014 and 2017 through her criminal operation. Tetley ran her business via localbitcoins.com – a site that facilitates private Bitcoin sales. The US Attorney’s Office believes that Tetley exchanged upwards of $6 million through her operation. For Southern California, this represents the first case of its type.
When brought in front of a judge, Tetley did not dispute the charges – pleading guilty to running an illegal money transmission operation. She also pled guilty to conducting a single financial transaction linked to the proceeds of drug trafficking. According to the court documents, Tetley has been “fueling a black-market financial system that purposely and deliberately existed outside of the regulated [banking] industry.”
Sentencing Severity Controversy
Due to the new nature of crypto related crime, sentence severity has become a controversial subject. Ong received what many deemed to light sentence, with matters heading in the other direction in the case of Tetley. Prosecutors are seeking a 30-month prison sentence for Tetley’s crimes. Tetley’s defense – arguing against the harshness of this sentence – are asking for reduced jail time of 12 months.
Much like in the case of Ong, Tetley will face a hefty fine. A request is already being prepared that will secure the forfeiture of 40 BTC – valued at approximately $270,000. This is in addition to 25 gold bullion bars and $292,264 in cash that were also seized. While these matters are addressed, prosecutors have postponed sentencing from June 11th to a yet to be scheduled date.
Cracking Down on Crypto Crime
Since becoming a sought-after commodity, US authorities have been struggling to control the rise of crypto-related crime. In an attempt to fight back, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) made the decision to police such dealings under the current laws for money transmitters. This means that post-2011 US crypto exchanges are subject to the Bank Secrecy Act. In 2013, the regulations received an update. All related crypto-related businesses must now follow anti-money laundering (AML) practices, along with registering as money service businesses (MSB).
Financial crime prevention has become a huge issue in North America, with Tetley’s arrest and prosecution being the latest in a long line of related cases. If this case – and the case of Louis Ong – is anything to go by, these crackdowns are only set to continue.