A Washington man, Kenneth Warren Rhule, has been charged by the Homeland Security Investigations (HSI) in an eight-count complaint for illegally operating a money exchange service that involves Bitcoin.
The 26-year-old made his initial appearance in U.S. District Court in Seattle on March 10, on the criminal complaint. He was charged with five counts of laundering of monetary instruments, conducting an unlicensed money transmitting business, and one count of conspiracy to make and distribute marijuana.
The attention of law enforcement was drawn to Rhule in April 2018 as someone who was running an unlicensed bitcoin exchange service, which was known as "Gimacut93." He repeatedly met with undercover agents who posed to criminals that wanted to launder funds.
The undercover agents, through their conversations with Rhule, made it seem as if they were laundering finds which are related to fi human trafficking activities, which Rhule consented. He offered to exchange bitcoin to cash for them, saying the cash was proceeds of criminal acts.
At a point, Rhule advised the agents on virtual currencies and how they can be able to hide the source of their money. Meanwhile, he didn't ask the agents questions regarding the "know your customer" rule.
In addition to running an unlicensed financial exchange business, Rhule reportedly operated a marijuana products business without a license in the state. He also exchanged tons of marijuana products for cryptocurrency, following electronic messages reviewed in the case.
Meanwhile, the charges levied on Rhule are only allegations; hence, he is presumed innocent until he is proven guilty in the court of law, beyond a reasonable doubt. The case is reportedly being investigated by the Homeland Security Investigations, together with the Drug Enforcement Administration.
If confirmed guilty, Rhule might end up being in prison, given that operating an unlicensed money transmitting business in the states, is punishable by five years imprisonment. Also, money laundering instruments are punishable by about 20 years of imprisonment.
Conspiracy to produce and distribute the involved amount of marijuana is punishable by a compulsory five years imprisonment, as well as about 40 years in prison.
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