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California Man Pleads Guilty to Running Illegal Bitcoin ATMs and Money Laundering

The US Department of Justice has accepted a guilty plea from a Californian man for operating a money laundering and illegal Bitcoin business.

According to a plea agreement filed Wednesday, July 22 in federal court, 36-year old Kais Mohammad, also commonly recognized as “Superman 29”, has agreed to plead guilty to one count each of operating money laundering, unlicensed money transmitting business, and failing to maintain an effective AML (anti-money laundering) program.

Law Enforcements Spot and Study Patterns to Catch Criminals

Federal investigators revealed that Mohammed owned and operated HeroCoin, which was an illegal digital currency money services business, exchanging Bitcoin cryptocurrency for cash and charging commission rates of up to 25% that were “significantly above” the market rate.

The company also operated Bitcoin ATM kiosks in multiple retail centers, including convenience stores, gas stations, and malls throughout San Bernardino, Riverside, Los Angeles, and Orange counties. Such kiosks allowed customers to either sell Bitcoin in exchange for cash or buy Bitcoin with cash that would be dispensed on site.

Prosecutors claimed that Mohammad knew at least some of his clients’ funds were obtained through illegal activities.

As part of his plea agreement, Mohammad admitted to having exchanged more than $25 million through the firm.

Prosecutors alleged that Mohammad intentionally failed to register the firm with the U.S Department of Treasury’s Financial Crime Enforcement Network (FinCEN) or develop an effective anti-money laundering program.

Prosecutors also claimed that being a former banker, Mohammad was aware, but ignored regulations related to reporting requirements for digital currency exchanges. Regulations required Mohammad to report exchanges of currency bigger than $10,000 or any transactions over $2,000 involving customers suspected to be involved in criminal activities. But Mohammed ignored complying with these regulations.

According to court records, law enforcement officials conducted several transactions with Mohammad as a way of carrying out their investigations. One undercover agent bought $14,500 value of Bitcoin cryptocurrency during three successive transactions at a Bitcoin ATM kiosk located in Lakewood.

As per the U.S attorney’s office, Mohammad once again met in person with undercover agents who represented themselves that they worked at a ‘karaoke bar, which employed beautiful women from Korea who entertained men in several ways, including engaging in sexual activity. Mohammed agreed to accept $16,000 in cash from one of the undercover agents in exchange for Bitcoin, prosecutors reported.

Prosecutors alleged that Mohammed did not file the required currency transaction reports nor a suspicious activity report, in relation to the exchanges involving the undercover agents.

So far, no hearing date has been scheduled for Mohammad to enter a plea of guilty. He faces a maximum sentence of 30 years in federal prison. He has agreed to forfeit cryptocurrency, cash, and 17 Bitcoin ATMs that he used for his business operations.

Laundered Cryptocurrency Washed with Exchange Services

Chainalysis report reveals that a majority of criminally-connected cryptocurrencies are laundered on basic online exchange services. In 2018, doge cryptocurrencies amounted to more than $1 billion were washed by simply depositing them onto digital asset exchanges and trading them. Money launders utilized other p2p (peer-to-peer) exchange services to clean a further 12% of their illegal proceeds. This implies that over 75% of illegal cryptocurrencies were moved through an online exchange service in 2018.

The majority of illicit money flowed through either peer-to-peer exchanges or crypto exchanges, with others flowing through conversion services like gambling sites, mixing services, and Bitcoin ATMs.

Most of the digital currencies were acquired by hacking crypto exchanges directly. In 2018, about $36 million value of Ethereum was stolen through exit scams, Ponzi schemes, or phishing.

German Authorities Clamps Down on 'Shitcoins club' Bitcoin ATM Operations

Germany’s financial regulator (BaFin) has moved to stop the operations of a popular Bitcoin ATM operator in the country. Known by the name Shitcoins Club, the German financial regulator said that Shitcoins club’s operations are illegal as it operates without either a banking or a proprietary license.

Germany as a whole has about 67 operational bitcoin Automated Teller Machines and Shitcoins Club operates about 17 Bitcoin, Litecoin, and ether ATMs in the country. With this clampdown, a substantial portion of Germany’s crypto ATMs will likely go offline. One of the major concerns according to the sources quoted on the local news site Handelsblatt is the ease with which crimes could be perpetrated using the Bitcoin ATMs.

“If a person with criminal energy wanted to launder money with Bitcoin machines, this would in some cases be entirely possible,” Handelsblatt reported quoting Professor Philip Sandner. In the case of Shitcoins Club, it is mainly as a result of improper Know Your Customer Procedures the organization adopts.

Germany is a crypto-friendly nation that encourages the emergence of blockchain and cryptocurrency service providers. Earlier in the year, the BaFin received more than 40 applications from German banks to provide cryptocurrency custody services. A similar service was unveiled by the German Stock Exchange Subsidiary Blocknox while expectations of more players billed to soar in the coming months as the European giant has the legislative backing.

Bitcoin ATMs Become a Trend

Although every country is trying to adjust its legislation to enable blockchain and cryptocurrencies to thrive, most countries are not slowing down when it comes to the emergence of Bitcoin ATMs. Bitcoin ATMs reign supreme in East and South London as the residents have reportedly overcome their fears of crypto scams.

Asian countries including South Korea also have a surge in Bitcoin and Bitcoin Cash ATM transactions and there is a general belief that the full blockchain adoption and integration will only be realized by the global democratization of digital technologies through crypto ATMs.

Crypto ATM Operator Bitcoin Depot to Place Thousands of ATMs in Circle K

Bitcoin Depot, a Bitcoin operator, based in Atlanta, Georgia, announced its cryptocurrency ATM business expansion to Circle K convenience stores in more than 30 states in Canada and the United States.

Reportedly, more than 700 cryptocurrency ATMs will be provided to customers for purchasing more than 30 cryptocurrencies, such as Bitcoin, BTC, and Ethereum, which will install in large chain retail stores Circle K.

The company claims that it has accumulated more than 3,500 encrypted ATMs in Canada and the United States.

Bitcoin Depot also stated that this cooperation with Circle K aims to meet the needs of public investors for cryptocurrency investment to have the opportunity to access cryptocurrency ATMs in most places where they may go to complete the simplest, convenient, and most Fast cryptocurrency transactions.

The CEO of Bitcoin Depot, Brandon Mintz, said that:

“We’re thrilled to create a long-term, strategic partnership with Circle K and to expand our footprint internationally with a global leader in convenience and fuel retail. Circle K understands that cryptocurrency will be a growing part of the future economy and payments landscape.

“By adding Bitcoin ATMs to the Company’s stores, Circle K can attract new customers to their stores, offer financial access to underserved communities, and set itself apart from other retailers with this new technology,” Mintz added.

Bitcoin ATM Operators Joins Forces to Float New Compliance Cooperative

A group of crypto industry’s Bitcoin ATM (BTM) operators, including DigitalMint and Coinsource, as well as blockchain analysis platform Chainalysis amongst others, have launched the Cryptocurrency Compliance Cooperative (CCC), an associated with the underlying aim to promote regulatory compliance amongst players in cash to crypto industry for risk diversification to the consumers.

The majority of regulators worldwide are naturally sceptical about using digital currencies per their underlying pseudo-anonymous transactions. Along with the proliferation of self-service Bitcoin ATMs worldwide, the CCC believes there will be a need to promote a common culture amongst its members and the entire industry in seeking stipulated information that will help bolster laid down KYC and AML provisions from BTM users.

“The nefarious use cases plaguing this industry are well documented by several law enforcement agencies and include fraud, elder abuse, and drug and human trafficking,” said Seth Sattler, Director of Compliance for DigitalMint and leading contributor of the Cryptocurrency Compliance Cooperative.

“While a small number of Bitcoin ATM operators go above and beyond with know your customer (KYC) and anti-money laundering (AML) protocols, others in the cash-to-crypto industry simply turn a blind eye and are complacent to these bad actors by simply applying the bare minimum customer protections, which in many cases allow for completely anonymous transactions.”

The need for regulatory compliance has put many industry players at loggerheads with market watchdogs around the world. Seychelles-based BitMEX exchange has had to pay a $100 million settlement to the US Commodity Futures Trading Commission to settle various charges, including lack of implementing adequate KYC.

The CCC seeks to bring in major players in the crypto ecosystem, including cash-based cryptocurrency MSBs, regulatory bodies, financial institutions, suppliers, non-governmental and law enforcement agencies. The body will organise meetings quarterly. It will always work to bring its members up to speed about regulatory demands, challenges and ways to meet compliance, amongst others.

Honduras Receives First Crypto ATM In Tegucigalpa, Following El Salvador's Step Foot

The first cryptocurrency ATM has been opened in Honduras. TGU Consulting Group, a firm based in Honduras, has installed the first Bitcoin ATM in an office tower in Tegucigalpa, the city and capital of the Republic of Honduras.

The crypto ATM, locally dubbed as “la bitcoinera,” allows users to buy Bitcoin and Ethereum using “Honduran lempira,” the local currency of Honduras. Crypto users will have to scan official identification and input personal data such as phone numbers to buy cryptocurrencies through the ATM.

Juan Mayen, the CEO of TGU Consulting Group, led the effort to bring the ATM to Honduras to educate local citizens about digital assets through firsthand experience.

Although Mayen described such a move as the first automated way to buy cryptocurrency in Honduras, he acknowledged that several software developers have already paid in cryptocurrencies. However, he said that many citizens have had to exchange cash for cryptocurrency in person, which he termed a hazardous and inconvenient practice. Mayen said:

“You had to do it peer-to-peer, look for someone who … was willing to do it, meet in person and carry X amount of cash, which is very inconvenient and dangerous given the environment in Honduras,”

Ethereum was trading at $3,236 while Bitcoin was $49,132. Mayen said that if the cryptocurrency service is popular in the country, he hopes to install more ATMs.

He stated that using crypto assets will be a cheaper option to send remittances. In 2020, Hondurans living aboard, majorly the US, sent $5.7 billion, about 20% of the country’s gross domestic product (GDP), in remittances.

Crypto Demands Grow

Honduras is a country in Central America. It borders El Salvador, a nation that passed a law that legalized Bitcoin as legal tender alongside the US dollar on June 9. The bitcoin law, pushed by president Nayib Bukele through parliament in June, is set to take effect on September 7.

El Salvador recently started installing crypto ATMs and preparing over 50 bank branches to support its forthcoming law that seeks to make Bitcoin its legal tender status.

Bukele said that El Salvador citizens living abroad would use Bitcoin to send money instantly to family members and loved ones living in the country. The president stated that Bitcoin adoption would save local citizens $400 million per year in fees for receiving remittances from abroad.

Central American countries have been positive towards cryptocurrencies, showing interest to follow El Salvador’s footsteps. Recently, lawmakers in Panama proposed a bill for the nation to adopt Bitcoin and other crypto assets.

Anti-Government Protest Outbreak in El Salvador, Bitcoin ATM Burned in its Capital

Over thousand protestors marched in the capital of El Salvador Wednesday, while some Bitcoin ATMs reportedly were destroyed against the adoption of Bitcoin as fiat money.

Just more than a week after the national adoption of Bitcoin as legal tender in El Salvador, this Central American nation is challenged by the latest round of massive protest against the controversial “bitcoinization” economy by the government of President Nayib Bukele.

Protestors were marching to the central plaza in San Salvador, the capital of the country. Associated Press reported Wednesday that some protestors wore T-shirts with signs of “No to Bitcoin”. At least one Bitcoin ATM was set fire to burn and destroyed, according to Bloomberg reported. Around 200 Bitcoin ATMs has been installed across the country so far.

The adoption of Bitcoin also triggered marchers in a fury to other disappointing political issues, such as over-concentrated power for the presidency and the undermined independence of justice as President Bukele may seek for re-election, who mandated by the local supreme court recently.

In response to the latest chaos, President Bukele responded on Twitter in Spanish and challenged that why “they say the ‘vandalism’ was the work of ‘infiltrators,’ but there has been vandalism in ALL their demonstrations. And why weren’t there any shouts of ‘stop,’ or ‘Don’t do that?’”

However, the opposition party criticised that “Bitcoin as a big economic decision, (but) it was done totally illogically,” as high cost of living and unemployment still not settle, the opposition party added.

El Salvador officially adopted Bitcoin as legal tender last Tuesday, drawing the attention worldwide. More food and beverage enterprise, such as McDonald, Starbucks and Pizza Hut now accepts Bitcoin for the bill as payment.

Yet, a recent poll showed that the majority of Salvadorans still objected to Bitcoin’s implementation as the legal tender. Scepticism is still widespread across the country, while President Despite the major money transfer providers may lose their business under the new monetary policy, Bukele calmed that Bitcoin would improve the domestic economy by saving $400 million a year in fees for transactions on overseas remittances.

El Salvador Now Ranks Third in Global Bitcoin ATM Installations

Following its adoption of Bitcoin (BTC) as a legal tender, El Salvador is notably moving up the ladder when profiled using metrics that define major Bitcoin hotspots in the world. According to data from Bitcoin ATM Radar, El Salvador now ranks as the third country with the largest number of installed Bitcoin-backed Automated Teller Machines in the world.

With Bitcoin gradually becoming a mainstream asset, advances in engineering have birthed ATMs, which simplifies how the public views the cryptocurrency. With the ease that Bitcoin ATMs offer, in helping to convert Bitcoin assets into fiat cash in real-time, it has become necessary for countries like El Salvador in its newfound Bitcoin as a legal tender era.

The country whose Bitcoin law became effective on September 7 now has a total of 205 Bitcoin ATMs installed, making the chunk of the 290 ATMs on record for the entirety of South America. Notably, the United States has the largest number of Bitcoin ATMs with a total of 23,897 (86.4% of the total number of global installations). The Europe region tracks next to the US, with a total of 1,280 or 4.6% of the total global ATM outlets worldwide. The ease at which people can access a Bitcoin ATM, the more likely they will find the premier cryptocurrency helpful. This strategic positioning makes El Salvador’s push a futuristic one.

In the broader sense, a number of El Salvadorans may be anti-Bitcoin as some of the newly installed Bitcoin ATMs were vandalised last week as the country erupted in protests with citizens flooding the streets to speak against the government and the Bitcoin law. While this protest is not likely to undo the new law, the success of the cryptocurrency for use as a legal tender is sure to happen gradually over the next couple of months.

Crypto ATM Market Expected to Hit $1.88B by 2028 with CAGR of 59.2%

The crypto ATM market is anticipated to reach $1.88 billion by 2028, according to a report by US-based consulting firm Grand View Research Inc.

The compound annual growth rate (CAGR) is expected to hit 59.2% during the forecast period between 2022 and 2028.

The growth in this market is linked to a surge in new crypto users and the increasing demand for ATMs needed to convert cryptocurrencies into fiat money.

Per the report:

“Crypto ATMs offer several benefits to cryptocurrency users. They provide cryptocurrency users with easier trading options. Crypto ATMs automatically generate the receipt for transactions, and these receipts contain both private keys and public keys in the form of QR codes.”

The number of global crypto owners stands at 300 million as of 2021, according to cryptocurrency payment company TripleA. The study expects the number to continue rising because the Covid-19 pandemic era has made more people eye crypto investments based on ease of access and lower fees.

As part of digitization, some retailers offer the crypto ATM service option to optimize their customer satisfaction rates. For example, Walmart partnered with crypto companies Coinstar and Coinme to install Bitcoin ATMs across its retail stores in October 2021.

The report noted that the restaurant and hospitality industry dominated the crypto ATM market in 2021, driven by changing customer needs.

Airbnb’s co-founder and CEO, Brian Chesky, recently disclosed that crypto payments ranked the top suggestion from customers when it comes to better service provision.

Some of the key players in the crypto ATM market include Covault, Coinme, Coin ATM Radar, Cryptomat, Orderbob, Coinsource, Bitaaccess Inc., and Genesis Coin Inc., per the study.

Singapore Shuts down Crypto ATMs After Ban on Public Crypto Ads

All cryptocurrency ATMs in Singapore have been shut down by the Monetary Authority of Singapore, following the city-state’s prohibition of all crypto-related advertisements in public spaces.

“To comply with the sudden announcement, we have ceased to offer buy or sell services via our five ATMs while seeking further clarification from the MAS,” said Daenerys & Co, the biggest Singaporean crypto ATM operator.

Deodi Pte also announced the shutdown of its ATM in adherence to the new guideline.

The move by the MAS to ban crypto ads in public space for all crypto service providers was hinged on the fact that many of the ads can downplay the risks inherent in investing in the digital currency ecosystem, Blockchain.News reported.

The advice was contained in the newly published “Guideline on the Provision of Digital Payment Token Services to the Public” that was directed to both the licensed crypto service providers as well as those in the transitional period, the report added.

In the guideline issued by the MAS, the central bank said it had “observed that some DPT (digital payment token) service providers have been actively promoting their services through online and physical advertisements or through the provision of physical automated teller machines (ATM) in public areas.”

The move is part of a broader effort by the Singaporean watchdog to regulate advertising cryptocurrency to the public.

Prior to Singapore’s crackdown on cryptocurrency advertising, Spain and the United Kingdom also issued similar limitations.

While the Spanish government made it mandatory for crypto businesses to provide ad campaigns for regulatory approval ten days in advance, the UK launched a review of cryptocurrency advertising norms, vowing to crack down on products with deceptive claims.

Crypto ATM Market Expected to Hit $1.18B by 2028, Driven by Increasing Fund Transfers

A surge in fund transfers is expected to expedite the global crypto ATM market to hit $1.185 billion by 2028, according to Vantage Market Research, a company providing B2B research services.

The study expects the crypto ATM market to record a compound annual growth rate (CAGR) of 58.7% during the forecast period. This market was worth $74.2 million in 2021.

Per the report:

“The increasing fund transfers specifically in emerging economies are expected to fuel the growth of the crypto ATM market during the forecast period.”

According to the World Bank, remittances to low-and middle-income nations were projected to surge by 7.3% in 2021.

Remittances offer a crucial lifeline when it comes to spending on vital items like education, health, and food, especially given that economic hardship has increased.

Therefore, escalating fund transfers, especially in emerging economies, are considered a stepping stone towards more growth in the crypto ATM market. Per the study:

“Crypto ATMs are now seen installed in most of the countries across the globe as businesses are putting a strong emphasis on meeting the changing needs of their customers.”

The dominance of North America in this sector is expected to continue soaring based on the presence of key market players like Coin Flip, Bitcoin Depot, and Coin Cloud and the rollout of crypto ATMs in public areas.

Other prominent players in this industry include Covault, Cryptomat, Coin ATM Radar, Coin source, Bitaccess Inc., Orderbob, and Coin me.

In August 2021, Atlanta-based leading enterprise technology provider NCR Corporation announced the acquisition of crypto ATM provider LibertyX.

The acquisition intended to integrate the LibertyX mobile application so that NCR Corporation customers such as banks, retailers, and restaurants would be able to pay, purchase or withdraw cryptocurrencies directly from its Bitcoin (BTC) ATM network.