Operator Of Unlawful Bitcoin Exchange Pleads Guilty In Multimillion-Dollar Money Laundering & Fraud

[nitpicker]

https://www.justice.gov/usao-sdny/pr/operator-unlawful-bitcoin-exchange-pleads-guilty-multimillion-dollar-money-laundering

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Monday, January 9, 2017

Operator Of Unlawful Bitcoin Exchange Pleads Guilty In Multimillion-Dollar Money Laundering And Fraud Scheme

Three Guilty Pleas to Date in Bitcoin and Bribery Scheme

Preet Bharara, the United States Attorney for the Southern District of New York, announced that ANTHONY R. MURGIO pled guilty today before U.S. District Judge Alison J. Nathan to charges associated with operating Coin.mx, an internet-based Bitcoin exchange, through which MURGIO processed more than $10 million in illegal Bitcoin transactions. MURGIO also pled guilty to conspiring to obstruct an examination of the Helping Other People Excel Federal Credit Union (“HOPE FCU”) by the National Credit Union Administration (“NCUA”) in furtherance of the illegal Coin.mx scheme. To date, three individuals involved in the Coin.mx schemes have pled guilty. MURGIO is scheduled to be sentenced by Judge Nathan on June 16, 2017.
(snip)

According to the allegations contained in the Superseding Indictment to which MURGIO pled guilty and statements made during the plea proceeding and other court proceedings:

Between 2013 and July 2015, MURGIO knowingly operated Coin.mx, an unlawful internet-based Bitcoin exchange, in violation of federal anti-money laundering laws and regulations, including those requiring money services businesses like Coin.mx to meet state licensing and federal registration requirements set forth by the United States Treasury Department. MURGIO and his co-conspirators engaged in substantial efforts to evade detection of their unlawful Bitcoin exchange by operating through a phony front company called “Collectables Club.” MURGIO used Collectables Club to open bank accounts, through which Coin.mx operated, in order to trick financial institutions into believing the unlawful Bitcoin exchange was simply a members-only association of individuals who discussed, bought, and sold collectible items and memorabilia.

In addition to lying to banks to open accounts, MURGIO and his co-conspirators deceived financial institutions by deliberately misidentifying and miscoding Coin.mx customers’ credit and debit card transactions, in violation of bank and credit card company rules and regulations. MURGIO and his co-conspirators also instructed Coin.mx customers to mislead banks about the nature of the credit and debit card transactions the customers executed through Coin.mx. For example, MURGIO and his co-conspirators caused customers to falsely tell the banks that the transactions in which they engaged with Coin.mx were for collectibles items, when in reality they were for Bitcoins. Through the illegal Coin.mx scheme, MURGIO and his co-conspirators caused more than $10 million in Bitcoin-related transactions to be processed illegally through financial institutions.

In 2014, in an effort further to evade scrutiny from financial institutions about the nature of the business engaged in by Coin.mx, MURGIO and his co-conspirators gained control of HOPE FCU, a federal credit union in New Jersey with primarily low-income members. After making more than $150,000 in illegal bribes, MURGIO and his co-conspirators took control of HOPE FCU. MURGIO installed various co-conspirators on HOPE FCU’s Board of Directors and transferred Coin.mx’s banking operations to HOPE FCU.

In late 2014, MURGIO and his co-conspirators attempted to obstruct an examination of HOPE FCU by the NCUA in order to perpetuate MURGIO’s control of the credit union. In furtherance of this scheme, MURGIO and others caused numerous misrepresentations to be made to the NCUA, including misrepresentations about the headquarters of the Collectables Club, in an effort to convince the NCUA that the Coin.mx-affiliated board members were eligible to serve on HOPE FCU’s Board of Directors. HOPE FCU was operated as a captive bank by MURGIO and his co-conspirators until the end of 2014. In October 2015, the NCUA placed HOPE FCU into conservatorship, and subsequently liquidation.
(snip)