The United States cracked an illegal Bitcoin remittance case and the criminals face 5 years in prison

Golden Finance News - On May 4, a man in Nixa, Missouri, pleaded guilty in a U.S. federal court to conducting an unlicensed cash remittance business through Bitcoin transactions, namely illegal Bitcoin remittances.

(A U.S. federal court found an illegal Bitcoin remittance business guilty. Image source: Golden Finance)

Jason R. Klein, 37, waived his right to a grand jury and pleaded guilty Tuesday before U.S. Magistrate Judge David Rush to conducting an unlicensed and unregistered money transmitter business.

Klein admitted that he conducted cash remittance business through Bitcoin transactions on the Internet. However, according to federal and local laws, Klein did not obtain a license or operating permit related to the remittance business, so this Bitcoin remittance behavior was illegal.

Breaking up illegal Bitcoin remittance operations

An undercover federal investigator responded to an online ad posted by Klein, who told the investigator that he charged a 10 percent commission for every $1,000 in bitcoin transactions.

Between February 6, 2015, and July 27, 2016, Klein approached two other undercover federal investigators and repeatedly used Bitcoin to transfer cash. Klein's confession documents list five separate transactions in which amounts ranged from $1,000 to $15,000. These U.S. dollars were exchanged for Bitcoin and then transferred. Klein received a total of $2,122 in fees from these Bitcoin transfers.

(U.S. federal regulations sentenced Klein to five years in prison. Image source: Golden Finance)

Under federal law, Klein faces up to five years in prison without the possibility of parole.

Bitcoin background

Bitcoin itself is not illegal, it has other legal uses. Bitcoin is a distributed electronic currency that exists entirely on the Internet. Bitcoin is not issued by any government, bank or company, but is automatically generated and controlled by computer software running on a "peer" network.

(The decentralized nature of Bitcoin has given rise to the Bitcoin remittance business. Image source: Golden Finance)

Users usually have to obtain bitcoins from a bitcoin "trader". In exchange for a commission, the bitcoin trader accepts payment in some conventional form of currency, including cash, and converts the corresponding amount of currency at an exchange rate. This convenience has led to the emergence of bitcoin remittance business.

Traders also accept payment in Bitcoin and convert Bitcoin into regular currency, again charging a commission for this service.

Once a user obtains Bitcoin from a trader, the Bitcoin will be stored in a designated Bitcoin wallet "address". An "address" is similar to an account number in a bank account, while a "wallet" is similar to a safe in an account. Bitcoin remittances use this principle to circumvent bank regulations, high fees, and long waiting times.

Once a Bitcoin user funds his wallet, the user can then transfer Bitcoins from his Bitcoin wallet to another user's Bitcoin wallet over the internet for financial transactions.