Illegal mass adoption

[bitcoinst]

A man in California has agreed to plead guilty to operating an illegal bitcoin ATM network that exchanged up to $25 million, according to a U.S. Department of Justice announcement on Wednesday.

Kais Mohammad, 36, who goes by the digital moniker  “Superman29,” was charged in the United States District Court on three counts: for operating an unlicensed money exchange business, for money laundering and for not being able to maintain an effective anti-money laundering program.

He purchased Bitcoin ATM-type kiosks which were placed in malls, gas stations and convenience stores in several California counties. These kiosks allowed customers to buy and sell Bitcoin in exchange for cash. Mohammad supplied the machines with cash that customers could withdraw and maintained the server software to keep the kiosks running

https://www.theblockcrypto.com/linked/72697/doj-california-bitcoin-atm

----

We live in amazing times. To be honest, this is the first time I've heard about illegal Bitcoin ATMs. Now Muhammad can get 30 years in prison for illegal mass adoption.

I wonder what will happen to ATMs and what is their number, I hope the state will appropriate it and allow people to use them with reduced commissions. 

[mk4]

Wot. This dude managed to get some kiosks in freakin malls without a business license? I'm not even mad, that's impressive.. impressive how the malls have been so careless to the point that they conducted business with some dude without a license.

I really don't know what this dude was thinking though. Did he really expect to not get caught? I would understand if he did everything online, but we're talking about physical bitcoin ATMs. Literally thousands of people pass by those ATMs by the daily LOL.

[DdmrDdmr]

Well, he did allegedly help to launder up to 25M$ through his Bitcoin ATM network. Apparently, an undercover agent managed to purchase 14,500$ at a given ATM during September 2018, failing the ATM owner to file the necessary reports for the sums. If that was not enough, he also transacted similar amounts with some other undercover agents in person (allegedly workers from a "karaoke bar" that went the extra mile for their customers), also failing to file the necessary reports. Twice shy ...

https://www.justice.gov/usao-cdca/pr/oc-man-admits-operating-unlicensed-atm-network-laundered-millions-dollars-bitcoin-and

[audaciousbeing]

The problem is not the illegal mass adoption but the fact that he chose to look away which is what they are going to use to hang him and he might go away for a long time or maybe pay one huge fine. From the posts earlier, its obvious that this is an action that have been planned that he has dealt with undercover agents without taking proper precautions. From the way I see it, its two major charges

1. Operating illegal money shop like not having a business license to operate which would likely to pay a fine then close the business and maybe even go to jail for a shorter time and

2. The money laundering charges which is the most important part because he simply fail to do KYCs by looking the other way when his customers came to transact business. Yes he has done his part in bringing some publicity to the crypto world, but things needs to be done the right way to avoid problem with the authorities.

[palle11]

Wot. This dude managed to get some kiosks in freakin malls without a business license? I'm not even mad, that's impressive.. impressive how the malls have been so careless to the point that they conducted business with some dude without a license.

I really don't know what this dude was thinking though. Did he really expect to not get caught? I would understand if he did everything online, but we're talking about physical bitcoin ATMs. Literally thousands of people pass by those ATMs by the daily LOL.

Not only the dude should lick the walls of prison bars but also the agent or the person in charge for whatever means that he bought the ATM machine.
However, I was a little confused by the title coming as illegal ATM. I thought the ATM itself was fake and scamming users but now I understand that it is the process of acquisition that was illegal.

[stompix]

Mohammad offered Bitcoin-cash exchange services, charging commissions of up to 25%, which is significantly above the current market rate. He met clients in public locations and exchanged currency for them without asking about the origin of those funds.

Common, nobody would pay 25% just for privacy, even if we speak of sums above 1k it was worth the effort to go in another city and deal with a different ATM. And why did he kept meeting clients..

Officials noted that "[a]fter FinCEN contacted Mohammad in July 2018 about his need to register his company, Mohammad did so, but he continued

Common, he thought that just playing possum would be enough?
He was plain stupid, he should have simply disbanded his business at that time and try his luck with a new company, new guy in charge...

Wot. This dude managed to get some kiosks in freakin malls without a business license? I'm not even mad, that's impressive.. impressive how the malls have been so careless to the point that they conducted business with some dude without a license.

I don't know what the laws are in the US but here it's pretty easy to install almost any kind of teller machine in malls, since it's a private company running it they will simply lend you the space needed, you just need a registered company and that's all, nobody will do extended checks on you,  like a fincen compliant check. They are happy to take your money as long as your machines don't interfere too much with the shop activity. Besides he started his business well back in 2014, probably got them set up years ago when rules were much much lax.

However, I was a little confused by the title coming as illegal ATM.

Nice clickbait, right? Got me too!!

[BrewMaster]

To be honest, this is the first time I've heard about illegal Bitcoin ATMs.

this is not the first time to be honest with you. there has been multiple other cases. it seems like some people think just because bitcoin is decentralized and doesn't need any license to be used, they can also run a bitcoin ATM without any license or stuff like that.
here is a case from 2018 in India as an example:
https://www.news18.com/news/india/indias-first-bitcoin-atm-seized-owner-arrested-for-illegal-kiosk-1918235.html

[bitcoinst]

Wot. This dude managed to get some kiosks in freakin malls without a business license? I'm not even mad, that's impressive.. impressive how the malls have been so careless to the point that they conducted business with some dude without a license.

I really don't know what this dude was thinking though. Did he really expect to not get caught? I would understand if he did everything online, but we're talking about physical bitcoin ATMs. Literally thousands of people pass by those ATMs by the daily LOL.

While reading the article, the same questions occurred to me. It's just a matter of time before you get caught while carrying out such machinations in the United States.
I think there is every chance that he will make a deal with the investigation, given that he had connections with criminals. So maybe his prison term will be reduced. But I doubt that he will live to old age.

this is not the first time to be honest with you. there has been multiple other cases. it seems like some people think just because bitcoin is decentralized and doesn't need any license to be used, they can also run a bitcoin ATM without any license or stuff like that.
here is a case from 2018 in India as an example:
https://www.news18.com/news/india/indias-first-bitcoin-atm-seized-owner-arrested-for-illegal-kiosk-1918235.html

I have no doubt that such precedents have already existed, especially in such a country of opportunities as India, but this news passed me by.

[adzino]

A man in California has agreed to plead guilty to operating an illegal bitcoin ATM network that exchanged up to $25 million, according to a U.S. Department of Justice announcement on Wednesday.

Kais Mohammad, 36, who goes by the digital moniker  “Superman29,” was charged in the United States District Court on three counts: for operating an unlicensed money exchange business, for money laundering and for not being able to maintain an effective anti-money laundering program.

He purchased Bitcoin ATM-type kiosks which were placed in malls, gas stations and convenience stores in several California counties. These kiosks allowed customers to buy and sell Bitcoin in exchange for cash. Mohammad supplied the machines with cash that customers could withdraw and maintained the server software to keep the kiosks running

https://www.theblockcrypto.com/linked/72697/doj-california-bitcoin-atm

----

We live in amazing times. To be honest, this is the first time I've heard about illegal Bitcoin ATMs. Now Muhammad can get 30 years in prison for illegal mass adoption.

I wonder what will happen to ATMs and what is their number, I hope the state will appropriate it and allow people to use them with reduced commissions. 

I don't see anything wrong over here. That dude was operating an exchange without a license. He would have gotten it if he has applied for it. Not sure why he didn't. Maybe he probably wasn't aware? Or he was aware and was up to something.
I hope he gets a proper justice if he is wasn't aware and has no ill intention. But, if he does had some ill intentions, he is going to get screwed under the money laundering law.

[bitbunnny]

To be honest, this is the first time I've heard about illegal Bitcoin ATMs.

this is not the first time to be honest with you. there has been multiple other cases. it seems like some people think just because bitcoin is decentralized and doesn't need any license to be used, they can also run a bitcoin ATM without any license or stuff like that.
here is a case from 2018 in India as an example:
https://www.news18.com/news/india/indias-first-bitcoin-atm-seized-owner-arrested-for-illegal-kiosk-1918235.html

For me this is also something I hear of for the first time but I can't say I'm surprised. You're right, just because Bitcoin is decentralized and independent many think that everything is allowed and that Bitcoin are its related services are out of any kind of law and regulation. Of.course that it's not true but some people ignore it and that is why Bitcoin is often involved in different illegal or half illegal activities.

[uneng]

I don't see anything wrong over here. That dude was operating an exchange without a license. He would have gotten it if he has applied for it. Not sure why he didn't. Maybe he probably wasn't aware? Or he was aware and was up to something.
I hope he gets a proper justice if he is wasn't aware and has no ill intention. But, if he does had some ill intentions, he is going to get screwed under the money laundering law.

I think if it was just a license problem the sentence wouldn't be so tough. The point is that he was being investigated for a long time already and federal agents collected irrefutable evidences of his awareness about money laundering when dealing crypto currency with his customers.
He also admited that, like we can see on the link below:

Well, he did allegedly help to launder up to 25M$ through his Bitcoin ATM network. Apparently, an undercover agent managed to purchase 14,500$ at a given ATM during September 2018, failing the ATM owner to file the necessary reports for the sums. If that was not enough, he also transacted similar amounts with some other undercover agents in person (allegedly workers from a "karaoke bar" that went the extra mile for their customers), also failing to file the necessary reports. Twice shy ...

https://www.justice.gov/usao-cdca/pr/oc-man-admits-operating-unlicensed-atm-network-laundered-millions-dollars-bitcoin-and

Mohammad generally did not inquire as to the source of the clients’ funds and on many occasions he knew the funds were the proceeds of criminal activity. Mohammad admitted that he knew at least one Herocoin client was engaged in illegal activity on the dark web.

Federal intelligence seems to be very attentive to crypto businesses. If someone is willing to work on this field it's better to follow all the government's requirements, especially the ones regard money laundering practice.

[dothebeats]

To be fair, I'm quite amazed how the dude managed to get his 'business' across several key places without having a license. It's not really a case against bitcoin but rather a case against operating and facilitating money exchanges without having the proper license to do so. Also, 30 years isn't really the number of years a person must serve due to licenses; his offense must be more than that to receive a punishment that heavy. Operating a bitcoin ATM is far too risky without having the proper licenses since you are always on the watchful eye of the government for money laundering and whatnot. I don't see anything wrong here, really, and applying for a license should have saved his ass if he really wanted to continue this kind of business.

[The Sceptical Chymist]

Wot. This dude managed to get some kiosks in freakin malls without a business license? I'm not even mad, that's impressive.. impressive how the malls have been so careless to the point that they conducted business with some dude without a license.

Well, you know malls these days ain't what they used to be, and who knows what kind of management they have now.  Sounds like there were some seriously careless managers at those malls if they allowed this dude to install all those ATMs. 

And I don't know “Superman29” was simply attempting to offer bitcoin ATM services or not, but if he was he was extremely careless as well.  He had to have known there were regulatory hoops to jump through before setting those things up....but who knows. 

Federal intelligence seems to be very attentive to crypto businesses. If someone is willing to work on this field it's better to follow all the government's requirements, especially the ones regard money laundering practice.

No kidding.  Thirty years in prison is no joke for not going through the proper channels--but I suspect he won't serve anywhere near that amount of time, depending on how good his lawyer is.

[Oasisman]

Oh oh! Another Bitcoin related crime.

~snip~

I don't see anything wrong over here. That dude was operating an exchange without a license. He would have gotten it if he has applied for it. Not sure why he didn't. Maybe he probably wasn't aware? Or he was aware and was up to something.
I hope he gets a proper justice if he is wasn't aware and has no ill intention. But, if he does had some ill intentions, he is going to get screwed under the money laundering law.

I think he refused to be further investigated and that's where the problem came from. The article says he did somehow complied when Fincen contacted this person to register his company, but deliberately fail to fully comply with the said federal laws. That means he was constantly investigated for operating for such a long period of time without any license to operate his business.

~snip~

Well, you know malls these days ain't what they used to be, and who knows what kind of management they have now.  Sounds like there were some seriously careless managers at those malls if they allowed this dude to install all those ATMs.  

He might have made a good offer to this malls. ATM machines only occupies a very small portion of floor area in the malls. So, I guess the mall management won't dig deeper on your legalities and papers to install your machine if you pay more for the rent.

~snip~.

No kidding.  Thirty years in prison is no joke for not going through the proper channels--but I suspect he won't serve anywhere near that amount of time, depending on how good his lawyer is.

I think he made enough money to get the best lawyer lol.  

[20kevin20]

It's quite fair though to punish the guy for running an entire chain of ATMs without a license, I mean it's nothing compared to the abuses and unfair sentences given in some of the crypto cases. If the guy is guilty, let him serve his sentence. This doesn't hinder the ATM (and Bitcoin) expansion at all, it's not like he was legally running the chain of bancomats.

impressive how the malls have been so careless to the point that they conducted business with some dude without a license.

Guess all those places should be penalized as well for letting this happen as well..

[Vaskiy]

People tries to make money out of each and everything associated with bitcoin. Anyhow he hasn't scammed the people, until then it's good. Now this could've been a big loss for the government as no taxes paid. This guy is truly intelligent, because he has been running more number of ATM with perfect functionalities. This is like illegal slot Machines that are placed on the African countries.

[Twinkledoe]

People tries to make money out of each and everything associated with bitcoin. Anyhow he hasn't scammed the people, until then it's good. Now this could've been a big loss for the government as no taxes paid. This guy is truly intelligent, because he has been running more number of ATM with perfect functionalities. This is like illegal slot Machines that are placed on the African countries.

Yes, I thought he scammed people but it was his fault that he did not acquire permits and licenses to operate this business. He should know better as this is very prominent to the eyes especially with authorities. So someone will really notice this business, and now is the time to uncover the foundation of his business. Maybe, just pay what he owed to the government up to the last cent and get license and he can still operate the business.

[Wexnident]

Damn man has balls of steel. He should've gotten warning signs when he registered but failed to comply in 2018. He could've gone under for a bit of time and proceeded to continue after a period of time has passed. Well, not like I know how investigations go though. Still, it's pretty fair for him to get punished, his illegal activities have been ongoing for ~5 years after all. If the guy still got away even after doing that openly for 5 years, then I suppose investigative units should just quit their jobs.

Well, you know malls these days ain't what they used to be, and who knows what kind of management they have now.  Sounds like there were some seriously careless managers at those malls if they allowed this dude to install all those ATMs. 

He might have made a good offer to this malls. ATM machines only occupies a very small portion of floor area in the malls. So, I guess the mall management won't dig deeper on your legalities and papers to install your machine if you pay more for the rent.

Then technically, shouldn't the malls also be fined or something? I mean, they were technically part of illegal activity, whether it is voluntary or not. Plus, it wasn't only malls but convenience stores and gas stations.

[mk4]

I don't know what the laws are in the US but here it's pretty easy to install almost any kind of teller machine in malls, since it's a private company running it they will simply lend you the space needed, you just need a registered company and that's all, nobody will do extended checks on you,  like a fincen compliant check. They are happy to take your money as long as your machines don't interfere too much with the shop activity. Besides he started his business well back in 2014, probably got them set up years ago when rules were much much lax.

I mean, yea. I wasn't expecting compliance checks, but at the very least they should've at least checked for a company registration document. I'd let it pass for the smaller convenience stores and probably the less-commercial gas stations too, but freakin malls lmao.

[cheezcarls]

This reminds me of an office that I visited back then somewhere in the National Capital Region of the Philippines. It was last year. My friend and I have visited her business contact, and he showed to us his various Bitcoin ATMs. I asked him if these Bitcoin ATMs are already registered and regulated for massive adoption, but he said it was still "under process", so it was not yet licensed to operate in various public establishments.

It's very essential for a Bitcoin ATM to be registered with proper license even if it's decentralized. Although licensing fees costs us a lot, it's way better than just doing massive adoption in an illegal way. Like Forsage right now, they are massively adopting Ethereum in an illegal way.