An Indian-American from Westwood, California agreed to plead guilty to federal criminal charges for owning and operating an unlicensed money transmitting business where he exchanged up to $25 million in cash and virtual currency for individuals, including Darknet drug dealers and other criminals, some of whom used his Bitcoin ATM kiosk.
This is believed to be the first federal criminal case charging an unlicensed money remitting business that used a Bitcoin kiosk, according to the Justice Department.
Kunal Kalra, 25 – who was also known as “Kumar,” “shecklemayne” and “coinman” – was charged Aug. 23, 2019) in a four-count criminal information filed in United States District Court and is expected to make his initial court appearance next month, a press release from the Justice Department U.S. Attorney’s Office for the Central District of California.
According to a plea agreement also filed the same day, Kalra agreed to plead guilty to four felonies: distribution of methamphetamine, operating an unlicensed money transmitting business, laundering of monetary instruments, and failure to maintain an effective anti-money laundering program.
Court documents quoted from in the Justice Department press release, Kalra operated a virtual currency exchange business where he exchanged U.S. dollars for Bitcoin and vice versa, from May 2015 through October 2017.
He charged commissions for exchanging dollars for Bitcoin, and he only dealt with high-volume customers willing to exchange at least $5,000 per transaction.
Kalra also admitted in his plea agreement that he exchanged Bitcoin for cash from criminals, including those who received Bitcoin from selling narcotics on the Darknet.
Prosecutors say Kalra established bank accounts in the names of others, including fake businesses, which allowed him, for a time, to conceal his illicit business activities, court papers state. Kalra also admitted to operating a kiosk – essentially an ATM – where his customers could exchange Bitcoin for cash and vice versa.
Kalra profited from every transaction conducted on the ATM.
Customers who sought to do an exchange using this ATM were not required to provide their identities and Kalra did not install a camera or implement any features requiring customers to identify themselves, the plea agreement states.
Kalra also admitted that in 2017 he exchanged approximately $400,000 in cash for Bitcoin for an undercover agent who contacted him online and later met him in person on multiple occasions at a coffee shop in Los Angeles.
In this sting operation, the undercover agent told Kalra that his virtual currency were proceeds of drug trafficking, and Kalra continued with various transactions, according to the plea agreement.
In June 2017, Kalra sold nearly two pounds of methamphetamine to an undercover law enforcement official in exchange for $6,000. Kalra and the undercover agent later met at a coffee shop in Signal Hill to exchange $50,000 in Bitcoin for cash, which the undercover agent represented to Kalra was the proceeds of the sales of the methamphetamine that Kalra had sold to the agent, the plea agreement states.
Law enforcement seized nearly $889,000 in cash from Kalra’s bank accounts and vehicle, as well as approximately 54.3 Bitcoin and other cryptocurrencies.
The maximum possible sentence Kalra could receive for these charges is life in federal prison.
Kalra also faces federal criminal charges in San Antonio, Texas, that were filed earlier this month. That case alleges Kalra conspired to commit money laundering for a drug trafficking network that sold fraudulent prescription tablets, including some laced with methamphetamine and fentanyl. In the plea agreement filed today, Kalra agreed to plead guilty to those charges in Los Angeles federal court.