Missouri Techie Guilty of Bitcoin Sales Without a License

Crime, News | May 3, 2017 By:

A Missouri tech entrepreneur has pleaded guilty in federal court to running an illegal money transmitting business in which bitcoins were exchanged for cash. Jason Klein, the founder of Logic Forte and Datality Networks, copped the plea to federal charges before US Magistrate Judge David Rush.

Klein admitted guilt to conducting an unlicensed and unregistered money transmitting business. The Attorney General’s office indicated that bitcoin “are not illegal in and of themselves and have legitimate uses.”

In his plea deal, Klein admitted that his transactions occurred through the in-person exchange of United States currency and an electronic transfer of bitcoin to and through Missouri, and elsewhere, through the use the Internet. Additionally, each of the transactions above included a fee that Klein, or another, charged the UCAs, and the total amount of fees paid to Klein, and another individual, were not less than $2,122.68. At no point during the time period of February 6, 2015 to July 27, 2016 was the defendant a licensed money transmitter with the state or with the Financial Crimes Enforcement Network.

Through these actions, the court papers allege that on or between February 6, 2015, and July 27, 2016, the defendant, acting with another, “knowingly and willfully conducted, controlled, managed, supervised, directed, and owned all and part of a money transmitting business affecting interstate commerce, to wit, a bitcoin exchange service, operated under username “jrklein.”

Don Ledford, a spokesman with the US Attorney’s Office, said the Klein guilty plea was strictly to federal charges. “Because he is being prosecuted in federal court, he would not be charged again with the same offense in state court.”

 

Klein’s plea admitted he represented himself as a bitcoin exchanger, but was not a licensed money transmitter.

Between Feb. 6, 2015, and July 27, 2016, Klein, acting with another unnamed person, met with two undercover federal agents on numerous occasions to exchange bitcoin for cash. His plea agreement cites five separate transactions in which money ranging from $1,000 to $15,000 was exchanged in person for an electronic transfer of bitcoin. Each of the transactions included a fee that Klein or another person charged the undercover agents, for a total of $2,122 in fees.

Klein faces a sentence of up to five years in federal prison without parole.  No date has been set for sentencing.