Trading Bitcoin tends to attract a lot of attention from the authorities these days. This is especially true when trading it in a peer-to-peer fashion. One man’s Bitcoin trading activity will land him in jail due to five money laundering charges.
A Major Blow for P2P Bitcoin Trading
Arizona-based Thomas Costanzo was found guilty of five counts of money laundering in Phoenix last week. It is a very troublesome development, as this individual was involved in peer-to-peer Bitcoin trading. At the same time, we have seen multiple allegations of Bitcoin being a tool for money laundering already.
Costanzo was trading very large amounts of Bitcoin in a peer-to-peer fashion. Although Bitcoin trading is not illegal in Arizona – or any U.S. state – as of right now, his activities raised a lot of questions. This is mainly due to Costanzo exchanging up to $50,000 worth of Bitcoin for cash per trade. It is evident that type of behavior will eventually warrant a thorough investigation of some sort.
It did not take long to launch this investigation in 2014. It seems Costanzo was advertising his services on a peer-to-peer Bitcoin exchange, most likely LocalBitcoins. Undercover agents approached Costanzo as a way to vet his services. However, they identified themselves as drug dealers looking to clean some dirty money, which did not seem to bother Costanzo all that much.
In fact, he told the undercover agents that using Bitcoin would help them evade detection by law enforcement agencies. That clearly showed malicious intent, which made it easier for the judge to render a verdict in this case. Over a period of two years, Costanzo exchanged over $160,000 in cash for Bitcoin, all of which came from the undercover agents. That evidence was presented during the trial, and it was the biggest nail in the coffin for this Bitcoin trader.
To make matters worse, further evidence shows Costanzo used Bitcoin to buy drugs from others, and he also supplied BTC to people looking to buy drugs off the internet. It was almost a small crime ring operated by just one person, even though it is safe to say that greed simply got the best of him. With five convictions of money laundering against him, Costanzo will probably spend a lot of time in jail.
Indeed, Costanzo currently faces up to 100 years in jail, a $1.25 million fine, or a combination of both. The investigators also seized all of Costanzo’s Bitcoin holdings when he was arrested. Similar to previous incidents, that Bitcoin balance will be subject to forfeiture and most likely be auctioned off to the highest bidder at some point.