Bitcoin Trader Sentenced To 41 Months In Prison For Crypto Money Laundering

Crime, News | August 3, 2018 By:

Thomas Costanzo, an Arizona resident accused of operating an “unlicensed money transmitting business” as a bitcoin trader, was sentenced by a US District judge to 41 months’ imprisonment. The sentence will credit time already served to consider Costanzo’s prison-time since his arrest in April 2017.

In 2014, US federal agents initiated an investigation of Costanzo – a.k.a. Morpheus Titania – after identifying an advertisement he posted on Localbitcoins, a peer-to-peer bitcoin exchange website, saying 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 allegedly told them that bitcoin “was a great way to limit their exposure to law enforcement.”

During the the trial, which concluded in March this year, the jury found that over a two-year period, Costanzo took $164,700 in cash, including a $107,000 single transaction swapped into bitcoin from undercover federal agents. The evidence presented at the trial also showed that Costanzo used bitcoin to purchase drugs from others and that he provided bitcoin to individuals who were buying drugs via the Internet.

In addition to 41 months’ imprisonment, US District Judge G. Murray Snow also ruled on the forfeiture of the 80.94512167 bitcoins ($600,000 USD) provided by Costanzo to the undercover agents as part of the money laundering transaction. Costanzo had previously claimed an interest in 49.99363132 of the seized bitcoins, and his interest was forfeited at the sentencing hearing.

Last month, LocalBitcoins trader Theresa Lynn Tetley, better known as the “Bitcoin Maven,” was sentenced to 12 months and a day in prison, a $20,000 fine, and three years supervision for allegedly running an illegal money transmitting business that exchanged bitcoin for cash. Tetley reportedly made at least $300,000 a year from trading bitcoin on Localbitcoins, with a transaction volume of $6 million to $9.5 million between 2014 and 2017.