California Man Laundered up to $25m Through Bitcoin ATMs

~3 min read | Published on 2020-07-23, tagged Money-LaunderingPleaded-Guilty using 515 words.

An Orange County man admitted laundering up to $25 million through a network of unlicensed Bitcoin ATMs and in-person exchanges. The defendant, Kais Mohammad, knew many of his customers laundered the proceeds of crime through his Bitcoin exchange network.
Kais Mohammad, 36, of Orange County, California, pleaded guilty on July 22 to one count of operating an unlicensed money transmitting business, one count of money laundering, and one count of failure to maintain an effective anti-money laundering program.

HeroCoin ATMs

According to information revealed in court, Mohammad operated Herocoin, a Bitcoin ATM network, between December 2014 and November 2019. United States prosecutors described Herocoin as an “illegal virtual-currency money services business.” He also exchanged a significant amount of Bitcoin for cash through LocalBitcoins under the username “Superman29.” Mohammad exchanged Bitcoin for cash at a much higher rate than the industry standard, according to prosecutors. He advertised a 25% rate for transactions up to $25,000.

The HeroCoin logo displayed on the comapny's ATMs and social media profiles

On Twitter, the Herocoin account confirmed a 20% rate plus a $5 fee per transaction in response to an outraged user.
PEOPLE NEED TO KNOW THAT HEROCOIN charges 20% plus 5 dollar “fee” per transaction. For example: $155 deposited into a HeroCoin ATM will get $120 worth of coins in your wallet. IMO charging 25% to convert CASH into digital currency is OFFENSIVE.

@HeroCoinBTC in response to @EsmeGregson:
Hello, yes, that is our current rate which is displayed in the total price of BTC on the machine before purchase as well as the $5 transaction fee. We have deleted our tweet from over a year ago of our prior rates to avoid any confusion.

Mohammad failed to register Herocoin with the Financial Crimes Enforcement Network (FinCEN) as required by law. Mohammad registered the company in 2018 after FinCEN had contacted him about the status of his company. Even after being contacted by FinCEN, Mohammad failed to comply with their regulations, including Anti-Money Laundering (AML) measures and Know Your Customer (KYC). He similarly failed to report transactions above a certain dollar amount as required by law.

A functioning HeroCoin ATM

On September 12, 2018, federal investigators in an undercover capacity purchased $14,000 in Bitcoin from one of the defendant’s ATMs. Mohammad never reported the transaction. Between February and August 2019, Mohammad regularly exchanged Bitcoin for cash with undercover agents who claimed they had an illegal source of income. The agents told Mohammad they worked for a bar that employed women to provide sexual favors to patrons. On August 28, 2019, Mohammad exchanged $16,000 in Bitcoin for one of the undercover agents. He did not report any of the transactions with the agents.
Mohammad admitted exchanging between $15 million and $25 million during the operation of the Herocoin ATMs and the “Superman29” LocalBitcoins account. He admitted he failed to ask his customers about the source of their funds. He also admitted to knowing that at least one of his clients conducted illegal activity on the darkweb.
He agreed to forfeit the Bitcoin ATMs, an undisclosed amount of cash, and an undisclosed amount of cryptocurrency. He faces a maximum sentence of 30 years in prison.

Comments (11)


should have paid his dues. smh could have gone long term with this.


And with this everyone should know why Coon Base isn’t safe. It’s hard to understand why the government let this story out written the way it is. LBC, CoinBase, any of these type of services have now proven their hands are tied to the US government. BitCoin has never ever been “anonymous”.


Dam! I used to trade with that guy on a weekly. Always under $10k. He accepted any crypto, specially XMR. Which is why i used to dump anywhere around $3-$5k on the guy for cash money. Just saying. Always use an Uber/Lyft. Always meet in a public place. Always take the scenic route home. Hodl.


@LoyalLlama and the 25\% fee were worth it?


`fent dealers get less than 30 years SMFH.


Sounds like he would have been ok, if he didn't sale to people stating this was for illegal activity, and if he would have registered as a money transmitter and at the least, loosely comply.. he would be still be doing things. the article is damn near saying.. give us our tax money.. if he did this shit all semi above board; he would be in a lot better position


^^this is correct. It honestly amazes me that he was able to operate so long with actual BTC atms without following basic laws... And yeah as far as selling p2p- although technically illegal they only make a deal about it if you keep selling after the cop admits he's a criminal. What fucking dipshit would tell the exchanger that he acquired his coin through illegal means? And when someone says this to you, as a seller, DO NOT SELL THEM CRYPTO. They're either a cop or a dumb fuck and either way it's not worth it


John, are you again bitcoin for any other purpose than illegal activity?... Bitcoin is a far superior than debt notes and good for much much much more than you getting your drugs


Against* not again. Typo


A hero for sure


Assuming he was dealing with some people doing some pretty nasty things, but 30 years for moving around money like they do every day? Some grade A bull shit