The CEO of a Bitcoin ATM company has conducted money laundering via LocalBitcoins.com and other BTC exchanges, as stated by a recently unsealed indictment.
The United States Department of Justice had revealed an indictment against the CEO of BASH Bitcoin ATMs, Brannen Mehaffey. The indictment has accused Mehaffey and booked him for seven counts of money laundering along with one count of structuring financial transactions.
The indictment of Mehaffey included the information regarding the victim of the fraud scheme that had been directly linked to the accused. Facts state that between December 2018 and February 2019, one of the many victims had lost $125,000. When the lost funds had been traced, they led the cops to an account controlled by one of the accused’s companies.
Following this, a year later, another victim had transferred $7,370 to another account that was under Mehaffey’s control. It is still unclear how all these transactions are related to the structuring charges and money laundering in the indictment.
As per the indictment, the accused had specialized in the virtual currency exchange for cash. He used to control a Bitcoin ATM company named BASH having units in over 20 locations across Texas, as stated in its now-inaccessible website. The places that hosted his ATMs consisted of computer repair companies, a strip club and smoke shops, the indictment states.
BASH advertises the Bitcoin ATMs as –
“that could withstand sledgehammer and crowbar abuse for at least 30 minutes without any being compromised.”
Here is what a copy of an old description of BASH’s services stated:
“We hold ourselves to a higher standard. Our ATMs are made American tough by a 100% American owned company. We have deployed over 20+ ATMs and throughout Texas and now we’re currently looking to expand nationally.
We noticed it was too easy to compromise or destroy every other Bitcoin ATM on the market. So, we knew we had to set the bar higher. The goal was to build a chassis that could withstand sledgehammer and crowbar abuse for at least 30 minutes without any being compromised.
The BEAST model looks mean because it is mean. With 6 hardened circular safety locks, 4x thicker metal used for the chassis (as compared to the competition), electronics mounted to vibration dampening materials, and metal straps for strength and resistance to multiple physical attacks. We have built the baddest, toughest, meanest bitcoin ATM on the planet.
As the popularity of Bitcoin ATMs grows, so does the number of thieves looking for a quick score. The majority of competitors’ hardware can be compromised and cracked open with 2 carefully placed swings of a sledgehammer purchased at any hardware store or Walmart. The hardware looks frail — and that ultimately acts as an invitation to thieves.
However, when thieves look at the BEAST, they are looking at the biggest, meanest, toughest ATM on the market. The message is clear: DON’T WASTE YOUR TIME!
Many of the stores that host our equipment chose BASH ATMs to make a passive stream of income without having the risk of a frail Bitcoin ATM. They want to keep their property and employees safe and their investment secured.”
The accused had also offered Bitcoin-for-cash services on LocalBitcoins.com and Craigslist. As per the indictment, the accused’s listings had instructed the users not to share extra information unnecessarily.
“What you do with bitcoin is your business and not mine. Please do not speak how you use it.”
Between January 2018 and March 2020, the accused had transferred over $4,000,000 via the bank accounts he used to control. It is still under the stone exactly how much money had been retrieved through the money laundering scheme.
The 1-7 counts of the indictment are identical virtually, other than the date and the transaction value. Below is an outline of what the first count looked like:
“On or about March 12, 2020, in the District of Arizona and elsewhere, Mehaffey, with the intent to conceal and disguise the nature, location, source, ownership, and control of property believed to be the proceeds of specified unlawful activity, and with the intent to avoid a transaction reporting requirement under federal law, did knowingly conduct and attempt to conduct a financial transaction affecting interstate or foreign commerce in any way or degree, in that he transmitted bitcoin in exchange for property represented by a law enforcement officer to be proceeds of specified unlawful activity, to wit: $8,000 in U.S. currency, plus an additional $13,000 in U.S. currency which was deposited pursuant to his directions by different individuals (at multiple Arizona 28 branches) of BBV A Compass Bank.”
Otherwise, it means that the undercover federal agents had contacted the accused regarding conducting a transaction with him. They had provided the accused with the information regarding the cash source that they wanted to exchange for Bitcoin. The investigators had represented the cash as the proceeds of the illegal activity. Although the accused knew about the money’s criminal origin, he had allegedly exchanged it for Bitcoin (BTC).
The indictment had listed seven different encounters between the accused and the law enforcement officers wherein the accused had exchanged cash for Bitcoin.
Adding to this, the accused had allegedly attempted to direct the cash transactions structuring at the banks and the various other financial institutions in Arizona and:
- Knowingly caused and also tried to cause each financial institution to fail to file a Currency Transaction Report.
- Violated another law of the United States.
- Involved over $100,000 in just 12 months, as a part of the pattern of illegal activity.
According to the Bank Secrecy Act, the banks and other financial institutions without a default must file a particular report to the IRS regarding any transaction more than $10,000. As per the government, this requirement aids the IRS to investigate the money launderers, amongst many other things. It is a violation of the federal rules to split a large transaction into several parts, intentionally attempting to avoid triggering the creation of a report on currency transaction.
In total, the indictment lists nine transactions ranging between $2,000 and $9,900 as a part of the accused’s attempt to structure the financial transactions.
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