Bitcoin Trader Convicted For Crypto Money Laundering

Crime, News | April 2, 2018 By:

An Arizona resident has been convicted for using bitcoin to launder the proceeds of drug deals.

On March 28, the US Attorneys Office from the District of Arizona and the Justice Department has convicted a crypto trader named Thomas Costanzo – a.k.a. Morpheus Titania – who exchanged over $164,000 worth of bitcoin on Localbitcoins, a peer-to-peer bitcoin exchange website. He was found guilty of five counts of money laundering.

Court documents state that the investigation stemmed from over two years of transactions. In April 2017, Costanzo was convicted of illegal possession of firearms, as well as marijuana. An investigation and a raid by the US Department of Homeland Security (DHS) resulted in the seizing of illegal drugs that he possessed, financial documents, bitcoin transactions, and gadgets.

While Costanzo was held in custody following the raid, searches conducted by federal agents at the time raised suspicions that he was using cryptocurrencies to launder proceeds for drug dealers. Federal agents identified an advertisement Costanzo posted on Localbitcoins. In the advertisement, Costanzo said that he was willing to engage in cash transactions up to $50,000. When undercover federal agents approached Costanzo and told him that they were drug dealers, Costanzo provided them with bitcoin and told them it was a great way to limit their exposure to law enforcement.

Costanzo allegedly received approximately $164,700 in cash from the undercover agents and exchanged it for bitcoin in order to conceal and disguise the nature, location, source, ownership, and control of the drug proceeds. The law enforcement team also stated the Costanzo used bitcoin to purchase narcotics over the Internet, as well as offering an online bitcoin exchange service for others purchasing drugs without implementing know-your-customer (KYC) authentication procedures.

Each of the five convictions for money laundering carries a maximum penalty of 20 years in prison, a $250,000 fine, or both. The bitcoin involved in the final transaction is also subject to forfeiture by the US. Sentencing is set before District Judge G. Murray Snow on June 11.