A Los Angeles – based 25-year-old man, who ran a bitcoin exchange service, has pleaded guilty to owning and running a money transmitting service without license. Federal authorities accused Kunal Kalra of using the crypto exchange service to transact up to $25 million in cryptocurrency and cash for various people, including drug dealers from the Dark Web. The lawsuit further alleged that the criminals and drug dealers had transacted tainted funds via a Bitcoin ATM.
Kalra also delivered two pounds of methamphetamine to a federal agent and is charged with distributing the drug. In all, he has pled guilty to four charges and is expected to make his appearance in court in September.
A Tale of Money Laundering And Distributing Drugs
Kalra, who was known by various nicknames – “shecklemayne,” “coinman,” and “Kumar”, operated the service between 2015 and 2017. The service only dealt with transactions involving $5000 or more and Kalra admitted that he had exchanged Bitcoin for cash for criminals, including drug dealers on the dark web. In addition to this, he had a Bitcoin ATM installation that allowed users to bypass mandatory KYC and AML checks and exchange fiat currencies for cryptocurrencies. The Bitcoin ATM also did not have a camera to monitor withdrawals.
Kalra admitted that about $400,000 was exchanged for BTC in 2017 for an undercover federal agent that contacted him online. Besides illicit crypto transactions, Kalra was accused of selling almost two pounds of meth to an undercover agent for $6000. Authorities seized about $889,000 in cash from Kalra’s car and bank accounts. He also had about 54.3 BTC and crypto in his possession.
The Justice Department believes this is the first time that someone has been prosecuted at the federal level for running a money remitting operation without a license.
Federal authorities have recently stepped up their efforts against crypto criminals. For instance, OFAC announced that they had sanctioned three Chinese drug lords under the Kingpin Act. Besides that, the White House issued advisories, warning financial firms that drug dealers were misusing their networks to launder money using crypto.