For one to run an exchange within the purview of the Financial Crimes Enforcement Network (FinCEN) in the US, it must be licensed and must comply with all regulatory requirements from FinCEN. However, for 22-year-old Jacob Burrell Campos of Rosarito, Mexico he didn’t see the need to comply with all regulations in place. He operated an unlicensed bitcoin exchange, and according to court proceedings, made dealings with over 1,000 people with the transactions amounting to hundreds of dollars. For the above crimes, Burrell was handed two years in jail for by Marilyn L. Huff a U.S. District Judge. Besides that, Burrell has to forfeit $823,357 he made as profits from his bitcoins sale transactions. Though he pleaded guilty on the 29th of October 2018, it’s now that the court is sentencing him to jail for his crimes. He was arrested on 13 August 2018 and since then has been in custody without bail.
How Burrell Exchange Worked
Per the plea data, Burrell advertised his services on localbitcoin.com and was asking for 5% higher for making the transactions. The 5% margin was higher than the current market asking price at that time. For communications, he employed the use of text messages and emails which were under heavy encryption. On the other hand, when it came to payments, Burrell only dealt in hard cash and came in person to receive the money. However, for clients who were far away from his location, he accepted payments in MoneyGram or ATMs. For FinCEN, their prosecution team had an easy time to win the case since Burrell didn’t carry out any due diligence to ascertain where his client’s cash came from and had no program in place to analyze things like know your customer measures together with applications for fighting money laundering.
Further on, Burrell plea also disclosed he had dealings with San Diego based precious metal dealer Joseph Castillo and exchanged his money in US dollars with him. Moreover, he and others also imported US dollars exceeding the reporting amount which is $10,000. The file shows they imported more than $1,000,000 into the US on almost a daily basis between early 2018 and late 2016. Before doing all the above, Burrell had made transactions in a regulated exchange, but his purchases raised suspicious leading to the closure of his account. However, he didn’t stop there. He moved to a crypto exchange in Hong Kong.