A Vancouver, B.C., man was sentenced Friday in U.S. District Court in Seattle to 20 days in jail and more than $1 million in forfeitures for operating an unlicensed money transmission business, according to a release from the Department of Justice.
Homeland Security Investigations agents in Blaine saw Louis Ong, 37, running cash through a bill counter while sitting in his car in May 2017, according to the release.
He was arrested in July 2017, after a series of bitcoin for cash sales with an undercover agent from Homeland Security Investigations.
According to the release, Ong repeatedly told the agent, who was posing as a member of a drug trafficking group, that he did not want to know the source of the cash so that he could have “plausible deniability.”
Even after Ong registered as a money transmitter, the release said, he made little effort to comply with regulations about reporting suspicious transactions.
After Friday’s sentencing hearing, U.S. District Judge Robert S. Lasnik imposed three years of supervised release and said Ong will likely be unable to return to the U.S. from Canada.
“The dark web is not a free pass for crime and mayhem,” U.S. Attorney Annette L. Hayes said in the release. “As this defendant knew full well, the laws and rules apply to crypto currency dealings just as they do to other types of financial transactions. I commend Homeland Security Investigations for their ongoing work to police the Internet – including the dark web — to root out those who undermine public safety for all of us.”
According to records filed in the case, federal law enforcement responded in December 2016 to an ad Ong placed to buy and sell bitcoin — a cryptocurrency that can be used for purchases on the dark web and elsewhere.
Later in December, and again in February and March 2017, Ong traveled to the Seattle area to exchange cash for bitcoin. At various times the undercover agents specifically told him that the funds they were exchanging for bitcoin came from drug trafficking, according to the release, but Ong said he didn’t want to hear the source.
In May 2017, the agents informed him he needed to register as a money remitter with FinCEN, a bureau of the U.S. Treasury whose mission is to safeguard the financial system from illegal use and money laundering.
Ong registered with FinCEN, and informed Homeland Security that he had done so. However, even after registering he failed to follow FinCEN regulations requiring the reporting of suspicious transactions — including three more with undercover agents, according to the release.