Last week, a Bitcoin dealer was arrested on 31 criminal charges, all of which appear to stem from operating a Bitcoin exchange without a license. Jacob Burrell-Campos, described by the U.S. Attorney's Office in the Southern District of California as a 21-year old "Bitcoin dealer," allegedly sold approximately $750,000 in Bitcoin to various buyers in the U.S. while operating this exchange.
The central alleged crime was charged in one count of conducting an unlicensed money services business, which is punishable by a maximum of five years in prison. However, the government massively expanded the potential punishment for this activity by loading the indictment with largely duplicative criminal charges with lengthy maximum sentences. It charged Burrell-Campos with failing to maintain an adequate anti-money laundering program, which is punishable by ten years of imprisonment and twenty-eight counts of "international money laundering," each of which is punishable by an additional 20 years imprisonment. The "money laundering" crimes were simply 28 transfers from the defendant's bank account in San Diego (apparently held in his own name) to a Bitfinex account in Taiwan.
Perhaps even more shocking than the decision to use duplicative charges that ratchet up the defendant's potential prison term is the fact that the charged transactions occurred when the defendant was a teen.
The government's willingness to criminalize the act of operating a cryptocurrency company without the proper licensing should terrify small FinTech companies. FinTech startups often are unsure of the licenses they are required to obtain or lack the resources to hire legal counsel to advise them on these requirements. The notion that a teenager can be charged with crimes collectively punishable by several hundred years' imprisonment for operating a Bitcoin exchange without a license is deeply troubling. Right now, no charges have been proven against Burrell-Campos, but he is sitting in prison and held without bail at the request of federal prosecutors.
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