United States District Judge Manuel L. Real of the Central District of California sentenced the so-called “Bitcoin Maven” to one year in prison for illegally laundering bitcoin. In order to enforce a prison stay, Judge Real sentenced convicted the money launderer to 12 months and a single day, forcing prison time instead of jail time.
Theresa Lynn Tetley, 50, worked for years as a stockbroker before turning to bitcoin as a source of income. She called herself “Bitcoin Maven” or “bitcoin.maven” on platforms such as LocalBitcoins.com (LBC) and exchanged between $6-9 million in bitcoin, according to information revealed in court. On her LBC account, she has more than 100 confirmed trades with 194 confirmed partners. The profile says she had exchanged between 250 and 500 bitcoin. And kept a 100 percent feedback score while exchanging cash for bitcoin.
Exchanging cash for bitcoin or bitcoin for cash (a cash-for-bitcoin business) is not illegal. And the business itself was not what landed Tetley in hot water with the Drug Enforcement Administration. During the course of her cash-for-bitcoin operation on LBC, she routinely ignored guidelines from the Financial Crimes Enforcement Network (FinCEN). She failed to implement anti money-laundering mechanisms and ignored FinCEN’s “Know Your Customers” regulations.
The FinCEN violations, though, came second to the fact that Tetley had not registered her cash-for-bitcoin business with FinCEN. She pleaded guilty to operating an unlicensed money exchanging business and one count of money laundering. Her crimes, though, according to the Prosecutor’s Office, extended beyond simply illegally turning cash into bitcoin. And she did not simply ignore money laundering laws; court documents revealed that she knowingly exchanged money for a suspected drug dealer.
Later, the Drug Enforcement Administration investigated Tetley. An undercover DEA agent posed as a drug dealer in need of clean money. The DEA agent made his fictional profession known to Tetley. He portrayed himself as a darknet drug dealer who needed an easy way to turn bitcoin into cash without going through legitimate services—such as Coinbase or Abra—that complied with US money laundering laws.
Tetley laundered the undercover agent’s money. He sent her bitcoin “from the proceeds of drug distribution” in exchange for United States currency. She took a steep cut of the illicitly earned assets and charged “rates higher than institutions that were registered with FinCEN.” During sentencing, Judge Real pointed to her high rates as an indication that she knew the value of the service she had been providing traders who needed clean money. The attorney for the United States made a similar claim. “Providing cash in envelopes in coffee shops and restaurants, is no way to conduct legitimate business,” the U.S. Attorney said.
The judge ordered the 366 day prison sentence; another 36 months of supervised release; a forfeiture of $292,264 in U.S. currency; a forfeiture of 40 Bitcoin; a forfeiture of gold bars; and a $20,000 fine.
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