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Unlicensed Bitcoin Seller Faces Life Sentence After Processing $25 Million

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August 26, 2019 | 

Darryn Pollock |  0 Comments| 

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A 25-year old man from California faces a harsh sentence for the role he played in running an illegal and unlicenced Bitcoin exchange where he is reported to have exchanged over $25 million in cash and crypto. The concerns here for authorities links directly to money laundering which is something that the accused could well have been doing. 

Kunal Kalra, also known as “Kumar,” “shecklemayne” and “coinman,” faces the charges after it emerged that some of his clients for his exchange services were known drug dealers. Kalra has said, ahead of his first appearance in court, that he will plead guilty to the charges. 

Two years, $25 Million

A release detailing the case alleges that Kalra ran his unlicensed Bitocin exchange and ATM kiosk from May 2015 through October 2017. It was in this time where he admitted to having exchanged bitcoin for cash from criminals including drug dealers who obtained the cryptocurrency from selling narcotics on the darknet.

This immediately raises money laundering concerns for authorities, especially considering the recent crackdown on darknet drug dealers who have been forced to forfeit their own cryptocurrency when being arrested. 

Had Kalra institute the required anti-money laundering policy, he would not have been able to facilitate these types of transactions which also netted him commission on his transactions; all the while knowing these transactions came from drug trafficking

As part of the investigation, law enforcement seized about $889,000 in cash from Kalra and about 54.3 Bitcoin and other cryptocurrencies, worth more than half-million dollars. The announcement said the maximum penalty Kalra could face is to serve a lifetime behind bars.

Long rap sheet

The reason for such a high potential imprisonment terms also relates to the manner in which Klara operated, as well previous charges against the California resident. 

In June 2017, Kalra sold nearly two pounds of methamphetamine to an undercover law enforcement official in exchange for $6,000. Kalra and the undercover agent later met to exchange $50,000 in Bitcoin for cash, which the undercover agent represented to Kalra was the proceeds of the sales of the methamphetamine that Kalra had sold to the agent.      

Moreover, Kalra also faces federal criminal charges in San Antonio, Texas, that were filed earlier this month. That case alleges Kalra conspired to commit money laundering for a drug trafficking network that sold fraudulent prescription tablets, including some laced with methamphetamine and fentanyl. In the plea agreement filed today, Kalra agreed to plead guilty to those charges in Los Angeles federal court.

Growing number of cases

More and more law enforcement are coming across cases that either involve cryptocurrency in some sense, or are related to crimes committed with cryptocurrency. There have been growing cases of dark net drug dealers facing the law and having to give up their ill-gotten cryptocurrencies, but then there are cases like Klara’s whih see the cryptocurrency being used in an illegal manner. 
 

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