US man pleads guilty to operating $4M unregistered digital currency business linked to criminal activities

US man pleads guilty to operating $4M unregistered digital currency business linked to criminal activities

A man who processed $4 million in digital currencies in a period spanning two years has pleaded guilty to operating an unlicensed money transmitting business. A year ago, Brannen Mehaffey was indicted by the U.S. Department of Justice (DoJ) and has now agreed to pay full restitution to all the victims directly or proximately harmed by his actions.

As CoinGeek reported exclusively, Mehaffey is accused of exchanging digital currencies for cash in person through peer-to-peer sales. He also put up a network of digital asset ATMs and was active on LocalBitcoins and Craigslist, where he offered his services at a premium. Authorities said Mehaffey didn’t care about the source of the funds and even had a tagline stating, “What you do with bitcoin is your business and not mine. Please do not speak how you use it.”

As a result, he ended up processing digital asset transactions for clients involved in criminal activities.

A year later, Mehaffey has pleaded guilty, but only to “conducting, managing and directing an unlicensed money transmitting business affecting interstate and foreign commerce, to wit, a digital currency exchange business, which failed to comply with the money transmitting business regulations.”

Following the guilty plea, which the Internal Revenue Service (IRS) shared exclusively with CoinGeek, Mehaffey shall forfeit any property which constitutes or is derived from proceeds traceable to the offense. Suppose any of this property cannot be located or has been sold. The U.S. government is entitled to forfeiture of substitute property, reads the plea agreement, which was entered at the District Court of Arizona.

As part of the plea deal, the Arizona court, on its part, agreed not to prosecute Mehaffey for any offense “in connection with the peer-to-peer exchange of virtual currency for fiat currency, including any charges arising out of the monies deposited by individuals and entities into bank accounts controlled by defendant.”

Mehaffey also agreed to cooperate with U.S. authorities and provide any information required pertaining to financial information, criminal convictions, and more.

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

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