This is How Superman29 Laundered Millions in Bitcoin and Got Caught
Kais Mohammad, a 36-year-old resident of Yorba Linda in California who nicknamed himself 'Superman29', has pleaded guilty to federal criminal charges of running Herocoin, an unlicensed cryptocurrency services business that exchanged up to USD 25 million through in-person transactions and a network of Bitcoin (BTC) ATM-type outlets. Some of the customers of the man, who charged a commission of up to 25% for his services, included criminals who used his business to launder money.
'Superman29', who is a former bank employee operated his business between December 2014 and November 2019, advertising his operations online, and attracting transactions worth up to USD 25,000, the US Department of Justice said in a statement.
It added that, in “a typical transaction, he met clients at a public location and exchanged currency for them. Mohammad generally did not inquire as to the source of the clients’ funds and on many occasions he knew the funds were the proceeds of criminal activity. Mohammad admitted that he knew at least one Herocoin client was engaged in illegal activity on the dark web.”
As his business grew, Mohammad later bought and advertised online a network of Bitcoin ATM-type kiosks located in shopping malls, gas stations and convenience stores in Los Angeles, Orange, Riverside and San Bernardino counties. These outlets enabled his customers to use cash to buy and sell bitcoin in exchange for cash that was dispensed onsite.
“Mohammad processed cryptocurrency deposited into the machines, supplied the machines with cash that customers would withdraw, and maintained the server software that operated the machines,” the statement said.
The US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) contacted Mohammad in July 2018, requesting that he registers his company. 'Superman29' complied, but he continued to violate US money laundering and financial due diligence regulations. In 2019, he agreed to exchange money for undercover agents posing as karaoke bar patrons. The agents told Mohammad they employed South Korean women “who entertained men in various ways, including engaging in sexual activity”. As he agreed to exchange cash that originated from illegal activities, 'Superman29' provided law enforcement with self-implicating evidence.
Mohammad was charged in a three-count criminal information, and he agreed to “plead guilty to one count of operating an unlicensed money transmitting business, one count of money laundering, and one count of failure to maintain an effective anti-money laundering program,” the department said. “Upon pleading guilty, Mohammad will face a statutory maximum sentence of 30 years in federal prison. As part of the plea agreement, Mohammad has agreed to forfeit cash, cryptocurrency, and 17 Bitcoin ATMs that he operated as part of his business.”
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