Cryptolaundering: First-Ever Conviction for Using Bitcoins to Launder Money

A Federal Criminal Court of the city of Bahía Blanca convicted 7 defendants in connection with the largest cocaine seizure in Argentine history in a case dubbed “the White Coils.”

Six defendants were convicted for drug trafficking. However, the singularity of the case lies in the conviction of a cryptocurrency trader accused of using bitcoins to launder the criminal organization’s money.

The trader in question offered offline bitcoin-trading services that bypassed payment platforms and exchanges. Essentially, he either received cryptocurrency transfers abroad for which he paid cash in Argentina or received cash and subsequently transferred bitcoins to a foreign beneficiary.

Federal authorities held that the trader had to have known the money was obtained illegally. Therefore, the operator had deliberately contributed to the laundering of criminal proceeds.

The operator received a 5-year sentence and a USD 3,747,200 fine (equal to eight times the amount of the relevant operations). The Court also ordered that assets used in furtherance of the criminal activities be confiscated.

The case highlights the importance of customer due diligence, even in the context of unregulated activities.