According to a press release published by the U.S. Attorney’s office for the Southern District of California, Morgan Rockoons, a resident of Las Vegas, has been sentenced to 21 months in federal prison.
Fraudulent Real Estate
The release, which was published earlier this week, revealed that Rockoons had made over a thousand trades on LocalBitcoins with about 644 people as of October 2017, while collecting as much as 36 percent commission on trades.
As his business wasn’t registered, he continued trading, even receiving acclaim as the largest trader in the region. This status put him on the radar of local law enforcement, which went on to indict him in November 2017. The following year, he was taken into custody.
However, Rockoons was released on bail shortly after, going on to promote Bitcointopia- an illegal real estate scheme- on the Internet and on social media platforms.
Rockoons allegedly sold land in exchange for Bitcoin, hailing his platform, Bitcointopia, as a place where “Bitcoin is legal tender.” He allegedly sold 500-1,000 Acre plots for 0.5 BTC per acre on Bitcointopia.
The release confirmed, “Victims who sent Rockcoons Bitcoin never received their title to land as promised. To date, agents have identified at least 10 victims of Rockcoons’ fraud.”
Rockoons was summarily arrested in October 2018, and in March 2019, he pleaded guilty to operating an exchange without registering with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury.
Per the release, “He also admitted to devising a scheme to defraud individuals in connection with the purported sale of real estate in Elko County, Nevada, that he did not own.”
After his guilty plea, he was given his 21-month prison term, as well as an order to remit all profits from his illegal businesses, which were reported to total $80,600.
Is LocalBitcoins just a criminal conduit?
The case puts yet another spin on some of the criminal activities going on Finland based LocalBitcoins. Back in March, Michell Espinoza, a native of Florida, was hit with new charges concerning an ongoing cryptocurrency money laundering case.
Espinoza’s Bitcoin trading business got on the radar of Miami police back in 2016. Detectives tracked him to LocalBitcoins, arranging to meet with him multiple times for the purchase of Bitcoins. According to reports, the police officers had informed Espinoza of their intent to use Bitcoins to purchase credit card numbers from hackers on the Dark Web.
Before the transaction could occur, he was arrested. Espinoza was charged with the illegal transfer of Bitcoins and on two money laundering counts.
While the first trial was dismissed based on the grounds that Bitcoin wasn’t money, the Third District Court of Appeal overturned the decision, determining that Espinoza defaulted by not registering his transaction with the Office of Financial Regulation in Florida. The felony charges were subsequently reinstated, although a trial date is yet to be set.
Unlicensed money transmitter business licensing and failure to perform AML checks and due diligence seems to be top of the list of crimes slammed on most LocalBitcoins traders in the U.S. On its part, LocalBitcoins has taken steps to reduce the incidence of crime on the site by now requiring the submission of personal ID for high volume trades on the platform.
The platform also announced in March, that it will soon be under the supervision of the Financial Supervision Authority in Finland, as the country makes plans to provide a legal status for crypto and bring the sector under new and improved Anti-Money Laundering (AML) laws.