Global standard for cryptocurrency anti-money laundering to be agreed

The global anti-money laundering task force has said it is closer to establishing a worldwide set of standards to apply to virtual currencies.

The president of the Financial Action Task Force, Marshall Billingslea, said he is optimistic that at its plenary, due in October, the FATF will agree a series of standards that will close the anti-money laundering “gaps” that all nations face.

“It is essential that we establish a global set of standards that are applied in a uniform manner,” he added.

The task force has accelerated its work and made significant progress on reaching a “consensus across nations” after the G20 requested the organisation tackle the issue as a matter of urgency.

In October, the FATF will discuss which of its existing standards need to be updated to address virtual assets, since its current recommendations do not acknowledge them. It will then revise the methodology it uses to assess how countries implement these standards and when this revised assessment methodology will take effect.

Mr Billingslea, who is also assistant secretary to the US secretary, said currently the adoption of anti-money laundering standards and regimes pertaining to digital assets and virtual currencies is “very much a patchwork quilt or spotty process,” which is “creating significant vulnerabilities for both national and international financial systems”.

China and South Korea have clamped down on the sector, while other countries — including France, Switzerland, Malta and Gibraltar — are drawing up regimes for formally policing the space in an attempt to attract fintech business.

UK MPs also highlighted on Wednesday the urgent need to regulate “Wild West” crypto-asset markets. The Commons Treasury select committee warned that a dearth of regulation around crypto-assets had left investors exposed to a “litany of risks” — without any of the protections usually afforded to consumers, such as access to compensation.

Cryptocurrencies are not regulated by central banks but are held digitally via electronic identities that in many cases allow their owners to remain anonymous. As a result, they have been linked to payments for prohibited goods such as guns and drugs and are a target for hackers.

Mr Billingslea said there were concerns of an emerging use of virtual currencies by terrorist organisations including Isis, as well as in extortion schemes, such as the WannaCry attacks.

His comments come after some observers argued that authorities such as Europol, Europe’s law enforcement agency, should devise a centralised system that flags cryptocurrency wallets linked to nefarious activities to major exchanges, so that they can block the owners from exchanging those funds for hard cash.

Despite the risks associated with digital assets, Mr Billingslea said they also presented “a great opportunity”. In terms of regulation, he said, “you can’t tilt too far in one direction or another” since blockchain, the technology that underpins virtual assets, “will continue to evolve”.

https://www.ft.com/content/1a67f6b2-bbf7-11e8-94b2-17176fbf93f5

House Passes Bill to Update Money Laundering Crypto Enforcement

By Jacob Rund

The Treasury Department’s anti-money laundering enforcement unit could soon see an update to its duties after the House advanced legislation aimed at prioritizing its focus on cryptocurrencies and other emerging technologies.

The FinCEN Improvement Act (H.R. 6411), which passed Sept. 12 on a voice vote, would add language to the Financial Crimes Enforcement Network’s governing law that requires it to coordinate with other countries’ financial intelligence units on cryptocurrency-related initiatives.

It would also add tribal law enforcement groups to the list of “partners” with whom FinCEN is tasked with working to combat money laundering and other activities that fund terrorism and organized crime. Those partners, according to U.S. code, include “federal, state, local, and foreign” law enforcement and regulatory authorities.

The bill “is an important step in modernizing FinCEN and ensuring our law enforcement and intelligence communities can detect and prevent criminals and terrorist networks from using virtual currencies” for money laundering and cyberwarfare, Rep. Ed Perlmutter (D-Colo.) said in July when the bill was introduced.

Rep. Steve Pearce (R-N.M.) joined Perlmutter in sponsoring the legislation.

Redundant?

“It’s an insult to small potatoes everywhere,” Ross Delston, a Washington attorney and anti-money laundering expert witness, said of the bill. It would give FinCEN authority that it already has to deal with activities involving cryptocurrency, he told Bloomberg Law.

FinCEN officials have stated that they will go after criminals using bitcoin and other virtual currencies to launder money and avoid the traditional financial system.

“As far as coordinating with tribal authorities, while that could in theory be an issue, it’s not going to come up an awful lot,” Delston said. “It’s a really minor issue.”

Regardless of these complaints, the bill passed with bipartisan support.

The bill, in addition to its language on cryptocurrencies and tribal law enforcement, contains a provision that would require FinCEN to support activities that protect against “terrorism,” rather than “international terrorism” as U.S. code now states.

Another Bill Coming

Another bill targeted at FinCEN’s information sharing and collaborative efforts will be considered this week. Financial Services Committee members plan to vote Sept. 13 on the 2018 FinCEN Modernization Act (H.R. 6721), which would instruct the bureau to create and maintain “research, development, and information sharing programs.”

It would allow FinCEN to enter into transactions with other government agencies, states, and “any agency or instrumentality” of the United States that furthers the goals of information sharing and developing new technologies. The bureau could also solicit and accept gifts from these parties.

The bill could provide an inside track for vendors to avoid the normal procurement process and land a government contract by offering cash or “in kind” gifts, Delston said.

Jailed Bitcoin expert subject of three-way fight over money-laundering inquiry

https://www.thenational.ae/business/technology/jailed-bitcoin-expert-subject-of-three-way-fight-over-money-laundering-inquiry-1.766673

A cryptocurrency expert languishing in a Greek jail may have a vantage point on a tantalising issue – how Russians in US Special Counsel Robert Mueller’s crosshairs used Bitcoin to obscure their money trail.

The expert, Russian citizen Alexander Vinnik, was detained last year after US prosecutors in San Francisco accused him of supervising a digital-currency exchange that helped criminals launder billions of dollars. That exchange, according to cryptocurrency analysis company Elliptic, handled some Bitcoins traced to Fancy Bear, a hacking unit. Fancy Bear is one of the names for the Russian military intelligence officers who Mr Mueller separately accuses of stealing and releasing Democrats’ emails to sway votes in the 2016 elections.

Three countries are fighting to extradite Mr Vinnik: Russia, France and the US. The link outlined by Elliptic could explain why – and why Russia has threatened retaliation against Greece if it hands him over to one of the others.

The next turn in the Greek matter comes Tuesday. The country’s Supreme Court is set to rule on extradition requests from France and Russia, which both allege that Mr Vinnik committed cybercrimes against their citizens.

Mr Vinnik is one of multiple Russian hackers indicted by the US, some of whom could provide insights into Russian cybercrime beyond their individual cases.

Yevgeniy Nikulin, who was extradited from the Czech Republic and is charged in San Francisco with hacking LinkedIn and Dropbox in 2012, is of interest in the US inquiry into election meddling, a Justice Department official said last week. Peter Levashov, a Russian programmer who has claimed he worked for Vladimir Putin’s ruling party, is charged in Connecticut with cybercrimes linked to spamming.

Mr Vinnik denies the US money-laundering accusations, according to his lawyer, Ilias Spyrliadis. He had no control over the $9 billion (Dh33.06bn) in Bitcoin that US prosecutors in San Francisco say ran through BTC-e, the cryptocurrency exchange, the lawyer said.

Mr Vinnik won’t comment on the Russian fraud accusations, Mr Spyrliadis said, and he denies the French charges including money laundering. Still, as an alternative to extradition, Mr Vinnik has offered to work with Greek and possibly other authorities from his current location, the lawyer said.

In the San Francisco case, the US says that Mr Vinnik and BTC-e catered to cybercriminals and allowed them to launder criminal proceeds from Bitcoin and other digital currencies and turn them into cash. The exchange didn’t vet customers, letting them move money in and out anonymously. To set up an account, according to the indictment, all a person needed was a username, password and email address, which often bore no relationship to the identity of the user.

That sort of service matches a description by Mr Mueller of how the Russian military intelligence officers layered transactions through cryptocurrency exchanges to maintain anonymity when they bought time on servers they used to launch attacks.

Elliptic used details provided in the indictment, such as a transfer of exactly 0.026043 Bitcoin on February 1, 2016, to search the electronic register of all Bitcoin transactions – known as the blockchain – to find specific payments. It then used software it has developed to identify the origin of the funds for those transactions.

“There was a strong link between much of the funds allegedly used by the Fancy Bear group and BTC-e,” said Tom Robinson, Elliptic’s chief data officer. “What I can’t say for certain is whether Fancy Bear obtained them directly from BTC-e, or whether there was an intermediary.”

Mr Vinnik couldn’t have known who, really, was using the platform, Mr Spyrliadis said. While Mr Vinnik was an expert working for BTC-e he was “in no way running it”, the lawyer said.

“Mr Vinnik could sometimes see a passport and ID when performing the transactions, but was in no place to know whether this person was using a fake ID, whether he or she was wanted by Interpol or involved in anything,” he said.

The US has been trying to get its hands on Mr Vinnik for more than a year. Greece’s Supreme Court ruled in December that he could be extradited to the US to face the charges in San Francisco. But the process has been stalled by the requests from Russian and France. Greece’s Supreme Court may well approve both the French and Russian requests, Mr Spyrliadis said.

That would punt the decision to Greece’s new justice minister. Before coming to any resolution on extradition, the Greek Justice Ministry will also need to examine a political asylum request by Mr Vinnik. A justice ministry spokeswoman said the minister couldn’t comment on the case as he has just assumed his post.

A co-operating Mr Vinnik would open the door to the US gaining strategic information on Russian hackers, said Arkady Bukh, the lead lawyer defending Mr Nikulin. Getting access to emails, names and bank accounts related to Russian hacking is what Mr Vinnik’s case in the US is really about, said Mr Bukh, who isn’t representing Mr Vinnik.

Cryptocurrency exchanges are “extremely important and of great interest to the US”, said Mr Bukh. He had been in touch with Mr Vinnik’s friends about getting him legal representation outside of Greece, he said.

But first, the US would have to get its hands on Mr Vinnik, something Russia appears dead set against.

A Greek regional court approved the French extradition request in July. Russia immediately lashed out at the country: “It is obvious the Russia cannot leave these actions unanswered,” its foreign ministry warned.

Later that same day, July 13, Mr Mueller rolled out his indictment against the Russian military intelligence officers.

21-Year-Old Trader Prosecuted Over Bitcoin Money Laundering

A 21-year-old bitcoin dealer from California is being prosecuted for allegedly committing numerous counts of illegal money transmission and money laundering.

According to an announcement from the Department of Justice in the Southern District of California, Jacob Burrell Campos was ordered to be held without bail at a hearing on Friday in connection to the charges.

Based on a court filing against him entered on Aug. 8 and unsealedover the weekend, the prosecutors alleged that, from January 2015 to April 2016, Burrell sold about $750,000 worth of bitcoin to 900 individuals in the U.S. via his bitcoin exchange service.

The document said Burrell had not registered the exchange as a licensed money transmitter and intentionally failed to implement anti-money laundering measures. As such, he was accused of one count of illegal money transmission and one count of money laundering.

Further, the prosecutors said in order to fund his “illegal” bitcoin exchange, Burrell committed a total 28 counts of international money laundering. From February 2015 to February 2016, Burrell allegedly wired at least $900,000 in 30 transactions from his bank accounts in the U.S. to Hong Kong-based crypto exchange Bitfinex to buy bitcoin.

The transfers were allegedly conducted in an effort to avoid ID verification processes after Burrell’s trading account with U.S.-based crypto exchange Coinbase was closed, the document said.

The prosecutors said in the announcement:

“Burrell’s activities ‘blew a giant hole’ through the legal framework of U.S. anti-money laundering laws by soliciting and introducing into the U.S. banking system close to $1 million in unregulated cash.”

The defendant is also facing a further charge of structuring international instrument transactions to evade reporting, when he tried to smuggle around $1 million from Mexico into the U.S.

If Burrell is convicted on any of the money laundering charges, the U.S. government plans to forfeit “any property, real and personal, involved in such offense, and any property traceable to such property.”

‘Game Over’: Wall Street Analyst Says Bitcoin Must Not Breech Year-To-Date Support

By: William Suberg

Renaissance Macro Research’s head of technical research Jeff deGraaf concluded it may be “game over” for Bitcoin (BTC) in a new analysis, CNBC reports August 9.

In a note to clients, deGraaf, who has received multiple accolades for his trading insights in the past twenty years, claimed Bitcoin’s price movements suggest the largest cryptocurrency is “permanently impaired.”

CNBC quotes deGraaf as writing that Bitcoin’s “parabolic moves are notoriously dangerous for short-sellers,” adding that a top normally develops with the appearance of a “descending triangle over months, with reduced volatility and little [fanfare],”

“Once the top is complete on the support violation, the security in question can often be considered permanently impaired or even ‘game‐over’. We are of course referencing Bitcoin as exhibit ‘A’ in today’s market.”

Such a situation would become a genuine consideration if BTC/USD broke year-to-date support levels, deGraaf added.

Bitcoin prices have come full circle over the past three weeks to trade around $6,359 by press time, after previously rising as high as $8,450 in late July.

This time last year, Bitcoin traded at around half that figure — $3,400 — as markets began their ascent that brought Bitcoin’s price to around $20,000 in December 2017.

Chart

Meanwhile, misgivings from traditional finance sources have continued in recent months, despite increased Wall Street interest and pledges to build out Bitcoin-related infrastructure.

Last week, JPMorgan CEO Jamie Dimon broke silence once more to call the cryptocurrency a “scam” after previously saying he “was not going to talk about” it.

https://cointelegraph.com/news/blockchain-encyclopedia-launches-as-developers-iron-out-token-challenges

Arizona Bitcoin Trader Handed 41-Month Jail Time for Money Laundering Read more: https://cryptovest.com/news/arizona-bitcoin-trader-handed-41-month-jail-time-for-money-laundering/

By Maryam Manzoor

A Bitcoin (BTC) trader from the US state of Arizona has been sentenced to 41 months in federal prison after he was found guilty of money laundering, the Department of Justice said in a statement on Wednesday.

Thomas Mario Costanzo, 54, known online as Morpheus Titania, will get credit for the time he has already served since his arrest in April 2017.

At the end of March, Costanzo was was found guilty of five counts of money laundering by a federal jury in Phoenix. Federal agents launched an investigation into the suspect in 2014, after Costanzo posted on an exchange website, claiming he was prepared to engage in cash transactions of up to $50,000.

When approached by undercover federal agents posing as drug dealers, Costanzo “provided them with Bitcoin and told them it was a great way to limit their exposure to law enforcement”.

“The jury found that over a two-year period, Costanzo took $164,700 in cash from the agents (whom he believed to be heroin and cocaine traffickers) and exchanged it for Bitcoin in order to conceal and disguise the nature, location, source, ownership, and control of the drug proceeds,” the statement reads.

Last year, federal agents conducted a raid on Costanzo’s home, on suspicion of unlawful possession of ammunition and money laundering via cryptocurrencies, which resulted in his arrest. The jury also found him guilty of using Bitcoin to buy drugs, and aiding other individuals in similar purchases by providing the with Bitcoins.

At its March conviction, the Justice Department acknowledged that Bitcoin may be used for legitimate purposes, as anyone can get BTC from a commercial exchange, paying about 1.5% as a commission. For comparison, Costanzo charged some 7% to 10% in his peer-to-peer transactions.

In addition, the court ruled that the 80 BTC (now worth more than $600,000), provided by Costanzo to the undercover agent as part of the final $107,000 money laundering deal are to be forfeited.

Digital currencies’ potential for usage in illicit activities such as fraud and money laundering is among the most frequently cited concerns by cryptocurrency detractors. Bitcoin has been dismissed by countless critics as a vehicle for crime. A study conducted earlier this year revealed that cybercriminals specifically target cryptocurrencies, as the anonymity they provide makes them ideal for laundering criminal proceeds.

Recent reports of crypto crime include Japanese organized crime groups and California’s “Bitcoin Maven” who was recently sentenced to one year in jail for laundering Bitcoins worth millions of dollars.

 

LONDON POLICE PROACTIVE AGAINST ALLEGED CRYPTOCURRENCY MONEY LAUNDERING

By Austin Kennedy

After a warning from European law enforcement agency Europol earlier this year that billions of pounds are being laundered through cryptocurrencies, City of London officials have decided to take matters into their own hands.

Transactions made in Bitcoin and other cryptocurrencies are notoriously complicated to trace due to the fact that users can generally generate unlimited numbers of wallets without providing any identifying information. Nevertheless, law enforcement agencies seem to have no trouble tracking down cybercriminals dealing in cryptocurrencies — as evidenced by the recent indictment of Russian intelligence officers who used Bitcoin to fund their interference with the 2016 U.S. presidential election.

Earlier this year, Europol officials arrested 11 individuals and identified 137 others allegedly involved in a large-scale network for laundering drug money with cryptocurrencies as a part of its Tulipan Blanca operation. The agency warned that there is currently three to four billion pounds ($4.1 to $5.5 billion) worth of digital currencies being laundered in Europe alone, though little evidence was provided to back this claim.

In contrast, the Hong Kong Financial Services and Treasury (FSTB) admitted in its “Money Laundering and Terrorist Financing Risk Assessment” report that it sees no evidence of Bitcoin or other cryptocurrencies being used to launder money or fund terror organizations whatsoever.

Still, accusations of crime in the cryptocurrency world persist.

The Deputy Governor of the Bank of England, Sam Woods — who is candidly wary of cryptocurrencies — wrote letters to the executives of financial institutions claiming (without evidence) that digital currencies “appear vulnerable to fraud and manipulation, as well as money-laundering and terrorist financing risks.”

LONDON POLICE GETTING PROACTIVE

To stay ahead of the future generation of cybercriminals, the City of London Police Department is implementing a new cryptocurrency fraud course at their Economic Crime Academy beginning this fall, according to The Telegraph. A City of London Police spokesperson commented:

On successful completion of this course, participants will understand how to detect, seize and investigate the use of cryptocurrencies in an investigative context… It will be the first of its kind and has been developed in response to feedback from police officers nationally who felt there wasn’t enough training available in this area.

While Bitcoin cannot be blamed for financial transgressions any more than SMS can be blamed for infidelity, a select bunch of computer literate criminals has taken a liking to the new technology and it is to the advantage of law enforcement agencies and financial authorities around the world to keep their staff educated on the latest blockchain trends — whether they are being used to clean dirty money or not.

G20 Eyes October Deadline for Crypto Anti-Money Laundering Standard

By Wolfe Zhao

G20 member countries are now looking at an October deadline for reviewing a global anti-money laundering (AML) standard on cryptocurrency, a document shows.

According to a statement issued on Sunday, finance ministers and central bank governors of the G20 member countries hosted a meeting during the weekend and reiterated their position on a plan for “vigilant” monitoring of cryptocurrencies.

The member countries further called on the Financial Action Task Force (FATF) – an intergovernmental body formed to fight money laundering and terrorist financing – to clarify how its existing AML standards can apply to cryptocurrency within three months.

“While crypto-assets do not at this point pose a global financial stability risk, we remain vigilant. … We reiterate our March commitments related to the implementation of the FATF standards and we ask the FATF to clarify in October 2018 how its standards apply to crypto-assets,” member countries said in the document.

As previously reported by CoinDesk, the G20 initially asked for an AML standard on cryptocurrency from the FATF in March, as part of its wider push for global regulatory recommendations on the issue.

Last month, it was reported that the FATF is planning to develop binding rules of AML for the world’s cryptocurrency exchanges, following a February report that the agency would step up its scrutiny effort over crypto money laundering.

Early last week, the Financial Stability Board, an organization focused on analyzing and making recommendations to the G20 on global financial systems, presented several key metrics for monitoring crypto assets ahead of the weekend meeting, in a response to the G20’s request in March of this year.

Peer-to-Peer Crypto-Exchanges: A Haven for Money Laundering

By Tara Seals

Buyers and sellers can exchange cash in person, transfer bank funds online or can exchange funds for prepaid cards, gift cards or other cryptocurrencies.

The need to launder money is omnipresent in the criminal world, and lately, a new way of doing it has come to the fore: peer-to-peer cryptocurrency exchanges.

These exchanges offer one-to-one relationships and transactions; buyers and sellers of virtual currency sign-up with their location information, IP address and other data to verify their identity, link to their wallets, and from there can swap and cash out currencies with other people who decide to trust them. Parties sometimes take the relationship offline too, meeting face-to-face to close out deals. After striking a bargain, a buyer can exchange cash in person, transfer bank funds online or can exchange funds for prepaid cards, gift cards or other cryptocurrencies.

These platforms offer an alternative to the marketplace methods represented by big Bitcoin exchanges such as Coinbase, and many users feel they can get better deals and a better service experience by using them. There’s another difference though: Peer-to-peer exchanges are decentralized and often lack the accountability, security and transparency measures used by the larger players.

Coinbase for instance monitors for dark web activity and recently implemented the Know Your Customer identity verification service (not that it’s not in hot water in other ways), which in theory makes it harder for criminals to launder money or use the funds to buy items from the underground. So, peer-to-peer alternatives have started to be a go-to choice for criminals looking to take advantage of the anonymity of cryptocurrency.

“Although certain peer-to-peer cryptocurrency exchanges might willingly cooperate with law enforcement, there are readily available methods that threat actors utilize while laundering their illicitly gained funds to maintain anonymity,” said Flashpoint, which flagged the increasing criminal activity on the exchanges in a post Monday. Intelligence analyst Kathleen Weinberger told Threatpost that these include tried-and-true methods like using forged documents to sign-up for the services.

“A lot of what’s going on here is just a criminal rather than a technical story,” she said in an interview. “It’s easy to look for a technical solution to prevent this – there certainly is one (or rather a thousand of them). But there’s pressure on services to try and make their service usable – they don’t want their average user having to struggle for days to have their identity verified. At the same time, they have to make sure that this isn’t getting in the way of things being safe and accountable.”

Being a relatively new arena, that’s a work in progress. So for now, “it’s law enforcement having to crack down on those buying and selling identities and fake documents to combat this,” she said.

Law enforcement has seen some successes despite the hurdles that the exchanges present; for instance, OxyMonster, a notorious dark web purveyor of drugs and other illicit goods, was nabbed in May after detectives made a connection between a Facebook page and his dark web site on the Dream marketplace. Even though he was using a peer-to-peer Bitcoin “tip jar” for transactions, they managed to track him down by other means, arresting him as he entered the country from France, on his way to a beard contest in Miami.

Because of this Wild West element, Flashpoint analysts have observed a growing number of underground discussions around using these exchanges for criminal means, including recommendations around certain peer-to-peer services that threat actors consider valuable or the safest. Some discussions include listings of established—also known as “aged”—local exchange accounts for sale, which are less likely to be flagged for fraud because they have the appearance of long-term use.

“Discussions among threat actors in these forums primarily are concerned with recruiting others to cash-out schemes,” explained Flashpoint. “They also spell out the prerequisites for others to join and the terms necessary to convert stolen funds to Bitcoin or Monero, even in large amounts.”

Some discussions around peer-to-peer exchanges date back at least four years, but the interest is growing and likely to continue as larger exchanges stiffen their security controls.

“We’ve seen threat actors on a daily or weekly basis looking for ways to clean Bitcoin or Monero – it’s not a huge secret,” Flashpoint intelligence analyst Carles Lopez-Penalver said in an interview. “It’s somewhat easy to commit tax fraud and money laundering in general, or to purchase drugs with these methods, so the government needs to crack down. I appreciate blockchain technology – but I think that there has to be a better understanding of what’s happening out there, and that people doing very bad things with cryptocurrency.”

“Bitcoin Maven” Theresa Lynn Tetley Sentenced To 12 Months Jail For Money Laundering

By Yuri Besmanoff

Theresa Lynn Tetley, the so-called “Bitcoin Maven,” who admitted to running a Bitcoin-for-cash exchange business without a license, as well as laundering Bitcoin purchased from the proceeds of drug trafficking, was last week sentenced to 12 months and one day in federal prison and also fined $20,000.

The Downfall Of The Bitcoin Maven

She reveled in being known as the “Bitcoin Maven,” a moniker she gave herself because of her deep knowledge of cryptocurrency. That knowledge enabled her to make a substantial amount of money in a shorts space of time.

However, this week, Theresa Lynn Tetley, aged 50, of Southern California, who in a former, less complicated life had been a stockbroker and real estate investor, pleaded guilty to one count of money laundering and one count of operating a money transmitting business without a license, and was sentenced to 12 months in prison by US District Judge Manuel L. Real.

The official charge was conducting an illegal business and engaging in unlawful monetary transactions involving Bitcoins. Tetley was also ordered to forfeit some 40 Bitcoin, worth around $250,000, to forfeit $292,264.00 in cash, as well as 25 assorted gold bars (worth around $12,500) that were deemed to be the proceeds of her illegal activities.

Between $6-$9.5 Million In Illegal Transactions

The court heard how Tetley ran a Bitcoin-for-cash exchange platform without first registering with the Financial Crimes Enforcement Network (FinCEN). She had also failed to implement anti-money-laundering mechanisms such as customer due diligence, and had failed to report certain transactions required for these types of businesses.

Tetley advertised on the website LocalBitcoins.com, and took part in illegal transactions that totaled between $6-$9.5 million. Her customers were almost all from the United States. Ironically, clients that used her exchange received no special favors, as Tetley actually charged higher rates for Bitcoin transactions than legal exchange platforms do.

Laundered Drug Money Earned On The Dark Web

The most serious offence – at least in the eyes of the public – was that Tetley knowingly laundered funds from an individual suspected of receiving Bitcoin as payment for selling drugs on the “Dark Web.” During the investigation, an undercover agent representing himself as a drug trafficker successfully swapped Bitcoin for cash using Tetley’s exchange platform.

According to sentencing documents, the prosecution had successfully argued that:

“In light of the growth of the dark web and the use of digital currency, unlicensed exchangers provide an avenue of laundering for those who use digital currency for illicit purposes. Tetley’s business fueled a black-market financial system that purposely and deliberately existed outside of the regulated bank industry.”

The case against Tetley was the first of its kind in the annals of the Central District of California.