Illegal Bitcoin Exchange Operation
A Massachusetts man found guilty of running an illegal Bitcoin exchange has received a prison sentence of six years alongside a hefty financial penalty. Trung Nguyen, who operated a cash-to-Bitcoin conversion service under the guise of a vending machine operation, was sentenced on May 22 by Judge Richard Stearns in a Boston federal court. He is also required to forfeit $1.5 million due to the illicit nature of his enterprise.
Operation and Methods
Between September 2017 and October 2020, Nguyen ran a business called National Vending, which prosecutors described as a “no questions asked” money-transmitting service. The operation catered to individuals who sought to exchange cash for Bitcoin without scrutiny, including victims of various scams and a drug dealer who funneled $250,000 through multiple transactions in 2018.
According to court documents, Nguyen learned methods to evade regulatory oversight from a course he attended online. These tactics included creating a façade of a legitimate business that accepted cash deposits while avoiding any explicit mention of Bitcoin. He had a list of fake suppliers and took steps to conceal his operations from financial institutions and law enforcement.
Legal Violations
The indictment revealed that Nguyen covertly converted over $1 million to Bitcoin and neglected to register his business with the Financial Crimes Enforcement Network (FinCEN), as mandated by federal anti-money laundering laws. He did not file any Suspicious Activity Reports or Currency Transaction Reports, particularly for cash transactions exceeding $10,000.
Nguyen was ultimately apprehended due to his method of meeting clients in person to transact substantial cash sums. Law enforcement, working undercover, engaged Nguyen in multiple meetings where he exchanged cash for Bitcoin, taking a commission of just over 5%. To complicate the tracking of these transactions, he utilized encrypted apps and broke down cash payments into smaller amounts over consecutive days at various bank branches.
Conviction and Implications
Initially pleading not guilty in June 2023, Nguyen was convicted by a jury in November on the charge of operating without a license. He was found guilty of one count of money laundering while being acquitted of another charge of money laundering.
This case underscores the ongoing efforts by authorities to crack down on unregulated cryptocurrency operations that bypass legal thresholds and regulations designed to prevent financial crimes, including money laundering.
