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C. Aliens

Prison for Former Bitcoin Exchange CEO

On March 21, 2017, the U.S. Attorney’s Office of the Northern District of Ohio announced Daniel Mercede’s sentencing information. Mercede, a 29-year-old Bay Village man pleaded guilty to access device fraud, bank fraud, and operating an unlicensed money exchanging business. Law enforcement pursued him after he used stolen credit card to operate a massive ticket fraud scheme. Throughout the course of the investigation, law enforcement learned that he owned and operated a Bitcoin exchange and use it as an outlet for laundering the fraud proceeds.

Mercede, a self proclaimed entrepreneur, used stolen credit cards on ScoreBig and purchased several hundred thousand dollars worth of event tickets. He resold the tickets across the US in “Baltimore, Buffalo, Los Angeles, Miami, New York, Philadelphia, Pittsburgh, Seattle, St. Louis and Washington D.C. — on StubHub, receiving the funds by check or through PayPal,” the press release explained.

He ordered tickets and shipped them to either his or his parents’ house Chagrin Falls, Ohio. Between 2014 and 2016, he attempted to purchase to fraudulently gain $3 million via the ticket fraud scheme and other, smaller ventures. He ultimately earned $424,222—all of which he must repay in the form of restitution.

“Mr. Mercede was motivated solely by greed,” Acting U.S. Attorney David A. Sierleja said. “He has shown himself to be a serial scammer and identity thief who is a clear economic danger to the community. Prison is the proper place for him.” While a five-minute Google search session hardly revealed his motivation, it vividly portrayed the “serial scammer” qualifier that Attorney Sierleja used.

Once money from Mercede’s ventures started flowing in, he needed a way to wash the money. He primarily used abandoned residences to receive funds but still need a way to explain the disproportionate level of income for someone later described as effectively unemployed. He became active on BTCJam and other, similar projects or communities and eventually “created” his own Bitcoin exchange.

The exchange, Cryptocoin Capital Management, quickly achieved the reputation as a scam exchange. And since Mercede openly acknowledge on Facebook, LinkedIn, and other sources that he alone ran CCM, his name and reputation took a hit.

Coindesk spoke with him and the following paragraph painted enough of a picture of the company that only few needed more information.

 

“‘I can get some crazy returns right now,’ said Mercede, who cited a trade this weekend where he purchased 20 BTC at $375 and resold the units at $560 to a client within hours. CCM has been executing similar trades for amounts up to 50 BTC per trade a number of times in September, according to Mercede.”

Frank S. Turner II, Acting Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office said that “Daniel Mercede perpetrated a complex scheme involving identity theft and the illegal use of an unlicensed bitcoin exchange service that was driven by insatiable greed and a blatant disregard for the tremendous damage inflicted on innocent victims.” He continued “be assured that IRS Criminal Investigation, together with our law enforcement partners and the U.S. Attorney’s Office, will hold those who engage in similar behavior fully accountable.”

Law enforcement and government authorities were not fond of the lavish lifestyle the 29-year old-lived. He took, according to them, extravagant vacations and bought expensive jewelry. Perhaps one of the most notable purchases sat in the man’s driveway. He purchased two Audis with the fraudulently earned money.

All of the items obtained through the ticket fraud will be sold to pay part of the restitution the judge ordered Mercede pay – the full $424,222. In addition, Mercede will spend 79 in prison.

 

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