FinCEN Issues First Penalty Against P2P Cryptocurrency Exchange
18 Apr 2019

The U.S. Treasury Department’s financial intelligence unit fined a California man for running an unlicensed Bitcoin money services firm, marking the bureau’s first-ever monetary penalty against a peer-to-peer virtual currency exchange.

The $35,000 fine against Eric Powers of Kern County, Calif. comes six years after the Financial Crimes Enforcement Network (FinCEN) first published rules requiring entities that buy and sell virtual currencies to register as a money services businesses (MSB) under US anti-money laundering laws.

On Thursday, the bureau accused Mr. Powers of managing a Bitcoin exchange between 2012 and 2014. During that period, Powers conducted over 1,700 transactions for clients but failed to comply with AML obligations, including filing suspicious transactions on customers using the cryptocurrency on the now-defunct darknet marketplace Silk Road, FinCEN said.

Powers separately failed to identify clients using his services through The Onion Router (TOR), an open-source software platform that provides anonymity to its users, according to FinCEN. More than 200 of the transactions identified by the bureau involved face-to-face exchanges of $10,000 or more that occurred at times in coffee shops or other public locations,

FinCEN noted in a statement on the enforcement action that, in addition to paying the fine, Powers agreed to an industry bank prohibiting from providing money transmission services or otherwise acting as an MSB.

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