Bitcoin Exchange Operator Gets A 3-Year Jail Term for Running Unlicensed Business

The U.S Department of Justice (DOJ) confirms a California-based Bitcoin exchange operator has now been sentenced to three years in federal prison after being found guilty of “operating an unlicensed business”. According to the reports of the DOJ, the man exchanged no less than $13 million in bitcoin and cash — which was mostly for drug traffickers, and has now agreed to forfeit various assets, including seized cryptocurrency.

Bitcoin Exchange Operator Sentenced to 3 Years in Prison

In an announcement made by the U.S. Department of Justice (DOJ), the man identified as Hugo Sergio Mejia, has been sentenced to 36 months in federal prison. His sentence for operating an unlicensed business that has exchanged more than $13 million in cash and bitcoin, especially for drug traffickers.

The 50-year-old Mejia ran his crypto exchange business between May 2018 to September 2020. But while he charged commisions for his services, he never bothered about registering his business with the Financial Crimes Enforcement Network (FinCEN). Furthermore, he created many companies as covers for his real business activity. Some of those companies include World Secure Data, Worldwide Secure Communications LLC, and The HODL Group LLC, the Department of Justice explained.

Mejia’s undoing began when he met with a client who was working with law enforcement. The duo met on several occasions between May 2019 and March 2020 “to exchange bitcoin for tens of thousands of dollars in cash.”

As time went on in the business relationship, particularly around March 2020, the client who worked with law enforcement clearly told Mejia that “his primary customer was a methamphetamine buyer in Australia who purchased methamphetamine every four to six weeks and sold it in Australia for five times more than the average price in the United States” the DOJ explained.

In total, Mejia and the client who was working with law enforcement conducted at least five bitcoin-cash and cash-bitcoin transactions, totaling above $250,000 in worth.

Mejia has now agreed to forfeit all the assets gained from his illegal transactions, to the government as part of his plea agreement. The assets seized include about $95,587 worth of cryptocurrencies, silver coins and bars, and also $233,987 in cash seized from across his residences in Santa Ana and Ontario.

The IRS Criminal Investigation and Homeland Security Investigations handled the case and were helped by the Costa Mesa Police Department.