Saturday, October 31, 2020

2 Plead Guilty to Dark Web Cryptocurrency Money Laundering Scheme

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Two San Diego men admitted in federal court Monday to conspiring to launder dark-web proceeds through an unlicensed money- transmitting business that exchanged cryptocurrency for cash.

As part of their guilty pleas, Connor Brooke, 25, and Aidan Curry, 23, agreed to forfeit tens of thousands of dollars worth of cash, cryptocurrency and sophisticated high-end hardware, including computers, phones, hard drives and storage devices that they used to carry out their scheme.

Brooke and Curry committed the offenses while managing a San Diego- based business that sold Bitcoin for a premium, and always in cash, to the public, according to prosecutors.

People who buy or sell contraband via online black markets — collectively known as the dark web — conduct their transactions with cryptocurrency, such as Bitcoin, because it provides them with perceived anonymity.

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As outlined in the plea agreements entered Monday before U.S. Magistrate Judge Michael Berg in San Diego federal court, Brooke and Curry conducted, controlled, managed, supervised, directed and owned all or part of a cryptocurrency-based money-transmitting business called BayCoins.

Curry described the unlicensed MTB to an acquaintance over text messages, stating, “I’m basically like a currency-exchange place for Bitcoin,” pointing out that he and Brooke advertised their business on a website that was equivalent to the “Craigslist of Bitcoin.”

By August 2018, BayCoins had posted two separate online solicitations, one with Brooke’s information and the other with Curry’s, court documents state. The advertisements promised “quick, easy and hassle-free” Bitcoin transactions with a “non-negotiable” 5% transaction fee.

By solely accepting cash — as opposed to other forms of payment, such as electronic money transfers, checks or cash deposits into a bank account – – the defendants operated their business in relative anonymity and evaded the anti-money-laundering scrutiny of other licensed and registered financial institutions, according to the U.S. Attorney’s Office in San Diego.

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BayCoins generated sufficient profits, alongside a growing inventory of cryptocurrency, to fund the Brooke and Curry’s acquisition, sale and distribution of marijuana on various dark-web marketplaces, court documents state. After receiving payment for the drug, Brooke and Curry sold cryptocurrency for additional profit through BayCoins.

Federal authorities “will continue to pursue, uncover and dismantle money laundering and narcotics-trafficking organizations seeking to operate behind multiple layers of anonymity — whether it’s the dark web, through unlicensed money-transmitting businesses or with sophisticated software,” said Robert Brewer, U.S. attorney for the Southern District of California.

“Compliance with the anti-money-laundering laws of the United States is not an option,” Brewer said. “We treat knowing compliance failures for what they are — a crime.”

The defendants will each face a maximum punishment of 20 years in prison and a $500,000 fine at their sentencing, scheduled for Jan. 6.

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