“Detroit Man Sentenced to a Year and a Day for Operating an Unlicensed Bitcoin Business”, boasts Department of Justice U.S. Attorney’s Office, District of Maine, in a press release dated December 4. An action involving many different agencies and bureaus over two states resulted in the arrest, plea, and jailing of Sal Mansy for not registering his peer-to-peer bitcoin sales and profit with the requisite agency.
Peer-to-Peer Bitcoin Sales and Profit Targeted
Localbitcoins is a peer-to-peer exchange allowing buyers and sellers of cryptocurrencies to safely trade, and generally to get rid of or ahold of fiat paper. Increasingly, this service in particular is being targeted by U.S. federal law enforcement authorities who, in spite of lawmakers’ pronouncements about bitcoin not being a currency, are invoking currency statutes to prosecute bitcoiners.
Detroit’s Sal Mansy is the third such case. Mr. Mansy was investigated for a year as he exchanged bitcoin through Localbitcoins. The Department of Justice, US Treasury Department, Financial Crimes Enforcement Network, U.S. Immigration & Customs Enforcement’s Homeland Security Investigations, and the Saco Police Department were set upon Mr. Mansy as a result.
Mr. Mansy is said to have trafficked in 2,400,000 USD worth of bitcoin during a two-year stretch, beginning summer of 2013. Over a one-year period, through June of 2015, agents traded with Mr. Mansy two times in slightly more than 6 bitcoin then worth roughly 2,000 USD in total.
They were able to pin exactly one count of violating “18 U.S.C. § 1960 by unlawfully operating an unlicensed money transmitting business, in this case, a business dealing in the virtual currency Bitcoin,” court documents claim.
As a result, he faced upto five years in prison and a quarter of a million dollar fine.
Three Localbitcoiners in a Row, Two from Michigan
This is the third case in a row now of this nature, and two are from Michigan. Detroit and the word blight are almost synonymous these days, so federal law enforcement’s targeting of Mr. Mansy is doubly curious: he appeared to be one of few residents making things happen financially in Detroit. Go figure.
Mr. Mansy used his company, Tv Toyz, to store his bitcoin profits, triggering all manner of allegations of money laundering, fraud, and lack of money-service business license. Mr. Mansy will service a year and a day (an oddly snide sentence to probably catch attention), and has been ordered to pay 118,000 USD in cash and bitcoin. He’ll serve an additional three years of supervised release.
News.bitcoin.com scoured court documents for accusations of fraud such as purchasing illegal items through gains etc but came up with nothing. Mr. Mansy will now be considered a felon and give up four years of life for bitcoin “transactions without registering his money-service business with Fincen (the Financial Crimes Enforcement Network, a branch of the U.S. Treasury Department),” as it is “against federal law for a money-service business to exchange or transfer Bitcoin without registering,” authorities are insisting.
This year saw at least two other cases: Bradley Stetkiw, also of Michigan, profiled in these pages, was arrested after trading with agents within the Localbitcoins platform; and Jason Klein, who authorities insist also ran an unlicensed money business. Both men are awaiting their sentences.
What do you think of prosecuting such bitcoiners? Let us know in the comments section below.
Images courtesy of Pixabay, Fincen, Locabitcoins, Kevin Bauman.