The U.S. Attorney for the Southern District of New York filed charges against two men from Florida for allegedly operating an unlicensed bitcoin exchange. This comes weeks after the state rolled out its BitLicense framework covering the digital currency industry and requiring bitcoin companies to secure licenses for their services and products.
The filing indicated that Anthony R. Murgio and Yuri Lebedev had been running an underground bitcoin exchange online since 2013. Their service, which is called Coin.mx, had apparently been in violation of the Fed’s anti-money laundering regulation.
Underground Bitcoin Exchange Operations
Through Coin.mx, Murgio, Lebedev, and their co-conspirators enabled their customers to exchange cash for bitcoins, charging a fee for their service. Upon investigation, the authorities saw that this was conducted through a phony front-company and a federal credit union that Murgio allegedly acquired for the purpose of carrying on with the scheme.
With that, Murgio and Lebedev may have engaged in money transmittance activity for those guilty of criminal activity. After all, bitcoin has still been clouded with a negative reputation for being used as the currency of choice for illegal dealings, as the cryptocurrency’s transactions are anonymous and cannot be traced.
In addition, perpetrators of online attacks or malware encryption have typically been demanding bitcoin as ransom. For instance, TorrentLocker in the UK has been known to require bitcoin payments before unlocking files in computers they’ve encrypted with ransomware. Authorities believe that transactions similar to these have been conducted through unlicensed bitcoin exchanges like Coin.mx.
The filing also indicated that between approximately October 2013 and January 2015, Coin.mx exchanged at least $1.8 million for bitcoins on behalf of tens of thousands of customers. Their operations are believed to have spanned Cyprus, Hong Kong, and Eastern Europe.
With that, Murgio and Lebedev are charged each with one count of conspiracy to operate an unlicensed money transmitting business and one count of operating an unlicensed money transmitting business, each of which carries a maximum sentence of five years in prison.