Man behind $4M unregistered digital currency business indicted in US

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The U.S. Department of Justice has unsealed an indictment against a man accused of operating an unregistered digital currency business for two years. The indictment, which the Internal Revenue Service (IRS) shared with CoinGeek, stated that Brannen Mehaffey processed at least $4 million from January 2018 to March 2020 worth of digital currencies.

A grand jury in the District Court of Arizona alleges that Mehaffey exchanged digital currencies for cash in person through peer-to-peer sales. He also put up a network of digital currency ATMs at brick-and-mortar stores including at a smoke shop and a strip club in Austin, Texas.

Mehaffey also had an online presence, advertising his services on LocalBitcoins and Craigslist, according to federal authorities. On his listing on the peer-to-peer trading platform, Mehaffey allegedly told his prospective buyers: “What you do with bitcoin is your business and not mine. Please do not speak how you use it.”

On March 12, 2020, a law enforcement officer disguised as a client reached out to Mehaffey to launder proceeds of crime through his network, according to the indictment. The officer allegedly deposited $8,000 in the first transaction, and $13,000 in the second, to Mehaffey’s BBVA Compass Bank account. A month later, another officer deposited $20,990 to multiple bank accounts Mehaffey owned in Wells Fargo, Bank of America and Chase Bank.

In yet another count, the DoJ alleges that Mehaffey “did knowingly cause and attempt to cause each domestic financial institution to fail to file a Currency Transaction Report, all while violating another law of the United States and as part of a pattern of illegal activity involving more than $100,000 in a 12-month period.”

Prosecutors want Mehaffey to forfeit any property which constitutes or is derived from proceeds traceable to the offenses. If the property can’t be located, has been transferred or sold, or has diminished in value substantially, he shall forfeit substitute property.

The DoJ has seized a record amount of funds from digital currencies-related criminal entities this year. In November, the department made one of the biggest seizures of all time, taking over $1 billion in BSV, BTC and BCH from an alleged hacker. They claimed that the hacker had attacked dark web marketplace Silk Road and stolen the fund in 2013.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift and Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.