On July 22, 2020, the U.S. Department of Justice announced that Kais Mohammad, a.k.a. “Superman29,” agreed to plead guilty to federal criminal charges that he operated an illegal virtual-currency money services business that exchanged up to $25 million – including on behalf of criminals – through in-person transactions and a network of Bitcoin ATM-type kiosks.
According to his plea agreement, from December 2014 to November 2019, Mohammad owned and operated Herocoin, an illegal virtual-currency money services business. As part of his business, Mohammad offered Bitcoin-cash exchange services, charging commissions of up to 25 percent – significantly above the prevailing market rate – for doing so. the DOJ said that, in a typical transaction, he met clients at a public location and exchanged currency for them. Mohammad generally did not inquire as to the source of the clients’ funds and on many occasions he knew the funds were the proceeds of criminal activity. Mohammad admitted that he knew at least one Herocoin client was engaged in illegal activity on the dark web. Mohammad later purchased and advertised on the internet a network of Bitcoin ATM-type kiosks, which were located in malls, gas stations and convenience stores in California
The DOJ said that, during the time of Herocoin’s operation, Mohammad, a former bank employee, intentionally failed to register his company with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Mohammad admitted he was aware that he was required to – but chose not to – develop and maintain an effective anti-money laundering program, file currency transaction reports for exchanges of currency in excess of $10,000, conduct due diligence on customers, and file suspicious activity reports for transactions over $2,000 involving customers he had reason to suspect were involved in criminal activity. With respect to his Bitcoin ATM network, Mohammad further admitted that he did not have a program in place that would have allowed him to obtain identifications for customers conducting multiple transactions of up to $3,000 or verify that any identification provided was the person conducting the transaction.
Upon pleading guilty, Mohammad will face a statutory maximum sentence of 30 years in federal prison. As part of the plea agreement, Mohammad agreed to forfeit cash, cryptocurrency, and 17 Bitcoin ATMs that he operated as part of his business.