New York: A 25-year-old Indian-origin man has agreed to plead guilty to federal criminal charges for owning and operating an unlicensed money transmitting business where he exchanged up to USD 25 million in cash and virtual currency for individuals, including drug dealers and other criminals.
Kunal Kalra, also known as 'Kumar', 'shecklemayne' and 'coinman', was charged in a four-count criminal information filed in the US District Court in Los Angeles. He is expected to make his initial court appearance next month.
Homeland Security Investigations (HSI) criminal investigators seized nearly USD 889,000 in cash from Kalra's bank accounts and vehicle, as well as approximately 54.3 bitcoins and other cryptocurrencies.
The maximum possible sentence Kalra could receive for these charges is life in federal prison.
Kalra also agreed to plead guilty to four felonies of distribution of methamphetamine, operating an unlicensed money transmitting business, laundering of monetary instruments, and failure to maintain an effective anti-money laundering programme.
This case is believed to be the first federal criminal case charging an unlicensed money remitting business that used a Bitcoin kiosk and was investigated by US Immigration and Customs Enforcement's (ICE) Homeland Security Investigations and the Drug Enforcement Administration.
According to the court documents, from May 2015 through October 2017, Kalra knowingly operated a virtual currency exchange business where he exchanged US dollars for bitcoins and vice versa. Kalra charged commissions for exchanging dollars for bitcoins, and he only dealt with high-volume customers willing to exchange at least USD 5,000 per transaction.
Kalra admitted in his plea agreement that he exchanged bitcoins for cash from criminals, including those who received the virtual currency from selling narcotics on the Darknet.
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.
He also admitted to operating a kiosk essentially an ATM where his customers could exchange bitcoins 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 USD 400,000 in cash for bitcoins for an HSI undercover agent who contacted him online and later met him in person on multiple occasions at a coffee shop in Los Angeles.
The HSI agent told Kalra that his virtual currency were proceeds of drug trafficking, and Kalra continued with various transactions.
In June 2017, Kalra sold nearly two pounds of methamphetamine to an HSI undercover agent in exchange for USD 6,000. Kalra and the HSI agent later met at a coffee shop in Signal Hill to exchange USD 50,000 in bitcoins for cash, which the agent represented to Kalra was the proceeds of the sales of the methamphetamine that Kalra had sold to the agent.
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.