A US man has been sentenced to six years in federal prison and fined $1.5 million after being convicted of Bitcoin laundering operations using an illegal Bitcoin crypto exchange. The ruling was handed down by Judge Richard Stearns in Boston Federal Court on May 22.
US Man Jailed 6 Years for Bitcoin Laundering Plot
Trung Nguyen, from Danvers, Massachusetts, was found guilty of running an unlicensed money-transmitting Bitcoin exchange named National Vending between September 2017 and October 2020. Authorities said Nguyen ran the business under the guise of a vending machine company to hide the true nature of his operations. In addition to his prison term, Nguyen will serve three years of supervised release and must forfeit $1.5 million in assets tied to the scheme.
Prosecutors revealed that Nguyen learned various techniques through an online course to avoid regulatory control. These included avoiding the word “Bitcoin,” inventing fake suppliers, and misrepresenting his business activities to banks and regulators. His clients reportedly included scam victims who were lured into converting large sums of cash into Bitcoin, and a drug dealer who laundered $250,000 through ten different transactions in 2018.
Nguyen did not even register with the US Treasury’s Financial Crimes Enforcement Network (FinCEN), which is a mandate under federal anti-money laundering laws. Moreover, he did not file mandatory Suspicious Activity Reports (SARs) or Currency Transaction Reports (CTRs), even for cash deposits exceeding $10,000.
His operations came to a halt after undercover law enforcement officers posed as clients. Nguyen met them in person, accepted large amounts of cash, and transferred equivalent amounts in Bitcoin, taking a commission of just over 5%. According to the ruling, he used encrypted communication tools and deliberately structured deposits across various bank branches to avoid detection.
Nguyen was indicted in May 2023 and initially pleaded not guilty to all charges. But, in November, a jury found him guilty of operating an unlicensed money transmission service and one count of money laundering. He was acquitted on a second money laundering charge.
The greed of making quick gains has become a growing problem in the crypto industry, which in turn, fuels the motives of many bad actors. A recent example is the Cetus Protocol, which suffered a major security breach resulting in the theft of approximately $223 million. In light of this, Cetus has proposed a settlement with the attacker, offering to treat them as a white-hat hacker and forgo legal action if the stolen funds are returned under agreed terms.
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