Why it matters
The AML compliance community is still wrestling to understand the full implications of an indictment filed against two men who allegedly operated a Bitcoin exchange that had not been registered as a money services business with the Financial Crimes Enforcement Network. The charge of operating an unregistered MSB itself was almost mundane for an industry under heavy law enforcement scrutiny. Instead, the questions surround the charge that the individuals failed to file Suspicious Activity Reports (SARs) on activity involving customers who needed Bitcoin to pay Ransomware to prevent encryption of their computer data by hackers. The indictment also alleges that the two defendants had undue influence on a federally insured credit union that handled the exchange’s banking operations for a period of time, including the decision to provide a banking relationship to a payment processor for the Bitcoin exchange, and that they tried to “trick” major financial institutions about the nature of their business.
According to the recently unsealed criminal complaint filed in New York federal court, Anthony R. Murgio and Yuri Lebedev operated Coin.mx, a Bitcoin exchange that charged consumers a fee to exchange Bitcoins for cash. The indictment charged the two with operating