Bitcoin exchange business requires a license. The United States cracks down on illegal Bitcoin cash exchange

Golden Finance News - It is illegal to operate a currency exchange service in the United States unless it is registered and licensed by a state agency. It is worth mentioning that such a legal system also applies to Bitcoin exchange for legal currency.

(In the United States, Bitcoin cash exchange business requires a registration license. Image source: Golden Finance)

In recent years, the U.S. government’s crackdown on illegal bitcoin exchanges has become more evident, as at least four people have been arrested and charged with operating illegal bitcoin exchanges, which is a financial crime.

Usually the people involved advertise these bitcoin exchange services online. They are discovered and arrested by local or federal investigators.

Missouri Case

In a recent case, a Missouri man pleaded guilty to operating an unlicensed fiat money transmission service. Jason R. Klein was a suspect in the case who posted ads on the Internet offering to exchange bitcoin for cash, or to perform money transmission.

“Between February 6, 2015 and July 27, 2016, Klein, in contact with two undercover federal investigators, exchanged Bitcoin for U.S. cash on multiple occasions.

Klein’s confession documents list five separate transactions, each of which involved money ranging from $1,000 to $15,000 that was converted into Bitcoin and transferred abroad. Klein collected a fee from each transaction, totaling $2,122.

Klein was sentenced to up to five years in prison without parole.

Ohio Case

In another case, an Ohio man named Daniel Mercedes was accused of buying large amounts of Bitcoin and reselling it to others for a profit.

After a lengthy investigation, police learned that Mercedes was conducting illegal bitcoin exchange operations. Agents allegedly discovered that Mercedes was buying large quantities of bitcoin from overseas exchanges and reselling them at a premium.

The FBI explained what they found:

“Court records show that Mercedes’ cable fund purchased $10,000 to $40,000 worth of Bitcoin every day. In the six months starting in August 2014, Mercedes illegally used Bitcoin to exchange $1.4 million.”

The FBI determined that the purchase of large amounts of Bitcoin from overseas was illegal currency transfer, and Mercedes was sentenced to more than six years in prison on March 21. This case is considered the first conviction for "unlicensed Bitcoin exchange currency business."

New York Case

In the New York case, which took place between 2014 and 2015, a man named Richard Petix pleaded guilty to "unlawful money transmitting business" and "making false statements."

On December 3, 2015, Petix conducted a Bitcoin transaction with a federal agent in Buffalo, New York. He paid 37 Bitcoins, which were worth about $13,000 at the time.

“From August 2014 to December 3, 2015, Petix conducted more than 100 bitcoin transactions, and he transferred more than $200,000 in bitcoin to local and U.S. customers. Some of these customers then used bitcoin to purchase contraband from underground black markets. However, during this period, Petix always complied with the U.S. federal money transmitter registration requirements.”

These cases represent the U.S. government’s crackdown on the use of Bitcoin for cash. Needless to say, the U.S. government has become aggressive in curbing the illegal use of Bitcoin. They are now willing to investigate even when the evidence is tentative or even non-existent.