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Bitcoin Dealer Crosses U.S. Border, Arrested for Money Laundering

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A Bitcoin trader resident in Rosarito, Mexico, is now facing charges in the United States relating to his crypto-currency dealings. Jacob Burrell Campos, 21, originally from San Diego, is well-known among the expatriate American online poker community in the Mexican beach resort town. He was detained Aug. 13 at the Otay Mesa entry point as he attempted to cross the border from Mexico to the United States.

About Campos' Crypto Business

Flow Chart

According to the authorities, Campos regularly bought and sold Bitcoin for a profit. He purchased the digital coin first from the U.S.-headquartered Coinbase exchange and then, after Coinbase closed his account for failing to verify his identity, from Hong Kong-based Bitfinex.

Logos of Bitfinex and CoinbaseCampos Sourced His Bitcoins From These Two Exchanges

The indictment against Campos claims that he wired money to Bitfinex on 28 separate occasions for a total of more than $900,000. With this money and additional funds from elsewhere, he supposedly purchased over $3 million in bitcoins in more than 2,600 transactions.

Jacob then sold these coins in exchange for MoneyGram transfers, bank transfers, and cash with allegedly “no questions asked.” Jacob extracted a 5% fee for this service. Law enforcement claims that Jacob Burrell Campos conducted transactions with more than 900 U.S. persons worth in excess of $750,000.

What Did Jacob Do Wrong?

Red Question Mark

In the eyes of the U.S. government, Jacob's extensive crypto dealings were of such magnitude that his operations constituted a money-transmitting business. Therefore, he was obliged to register with the Treasury Department and comply with all associated regulations, which he did not do. Notably, he didn't report any suspicious transactions involving cash as the law requires.

Furthermore, Jacob stands accused of attempting to launder more than $1 million by moving it, a little bit at a time, into the United States with the help of others. Supposedly, he was careful to bring sums less than $10,000 across the border on each crossing so as to avoid the reporting requirements associated with moving more than $10,000 at one time. However, attempting to circumvent the rules by splitting up money movements into smaller sums is known as “structuring” and is itself a crime.

About the Charges

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The indictment against Jacob Burrell Campos contains 31 separate counts. They, along with the maximum punishments attached to them, are:

 

  • 1 count of conducting an unlicensed money transmitting business - Five years' imprisonment and $250,000 fine
  • 1 count of failure to maintain an anti-money laundering program - 10 years' imprisonment and $500,000 fine
  • 28 counts of international money laundering - 20 years' imprisonment and $500,000 fine for each count
  • 1 count of conspiracy to structure transactions - 5 years' imprisonment and $250,000 fine

Campos is thus liable for prison sentences of hundreds of years along with fines amounting to $15 million. Criminal forfeiture rules may also mean that he “shall forfeit to the United States of America, pursuant to Title 18, United States Code, Section 982(a) (1), any property, real and personal, involved in such offenses, and any property traceable to such property.”

However, we must note that these are the maximum possible penalties if he's convicted of every charge against him. More likely, he'll be found guilty of only a few of them, and he could possibly plea bargain down to lesser offenses.

Judge Karen S. CrawfordFederal Magistrate Judge Karen S. Crawford

Because he has citizenship in three countries and no significant ties binding him to the United States, Jacob was deemed a flight risk at his hearing and was denied bail. Judge Karen S. Crawford also found that Campos had “a disdain and unwillingness to comply with U.S. laws.”

About Jacob Burrell Campos

Man With Question Mark

Jacob Burrell Campos appears to be a young man with a healthy distrust of traditional financial bodies and governments. On his social media accounts, he has often posted comments critical and suspicious of top-down political programs, and his messages have a strong libertarian bent. He seems to be a natural supporter of crypto-currency, which makes it understandable that he would try to bring this technology to as many people as possible by selling it with a modest surcharge.

Jacob Burrell CamposPhoto From Instagram Account of Jacob Burrell Campos

Jacob's involvement with blockchain projects appears to extend beyond just trading them though. His Facebook page says that he's a programmer for Edge Wallet, an app that lets users manage multiple digital coins from a single interface with one set of account credentials.

ProfRB's Opinion

Gears Inside Man's Head

While Jacob may have acted inappropriately and even idiotically by engaging in such a large volume of crypto transactions without following the correct procedures, we feel that the feds are being overly harsh in charging him with such serious crimes. The Justice Department contends that he “'blew a giant hole' through the legal framework of U.S. anti-money laundering laws by soliciting and introducing into the U.S. banking system close to $1 million in unregulated cash.”

However, $1 million seems like chump change to us in the overall scheme of things. In 2017, the U.S. government spent $3.98 trillion, running a deficit of $665 billion in the process. $1 million by comparison is more like the annual expenditures of a small-town public library or the revenue of a Mom-and-Pop cash-based business. How such a trivial sum represents “a giant hole” in anything is beyond us.

Clearly, Jacob is at fault for failing to adhere to the law and especially for the boneheaded decision to structure his money transfers. But we believe that the massive fines and lengthy prison time with which he could be penalized are a bit too much for the severity of his missteps.

Poker Players Beware

Caution

Though reports from people who know him indicate that he wasn't involved in the world of poker to any great extent, Jacob did display a combination of traits that's by no means rare among card game fans. He's intelligent, mistrustful of authority…and subject to making poorly thought-out decisions that get him into trouble.

Just look at the story of Bryan Micon who opted to run his BTC-friendly internet poker room, Seals With Clubs, from within the State of Nevada. He eventually got arrested and had to close down the site. Or consider WSOP bracelet winner Luke Brabin's attempts to run an online poker site serving Australians from inside the borders of The Land Down Under. Brabin was convicted under the provisions of the Interactive Gambling Act and had to pay a $10,000 fine before the even stricter Interactive Gambling Amendment 2016 was passed.

Bryan MiconBryan Micon Thought Evading Nevada Gaming Law Was Elementary. He Was Wrong.

We advise all our readers to remain in full compliance with the law. This includes paying all the taxes you owe on gambling winnings and crypto-currency profits. Resist the temptation to split up any of your transactions so as to fall below the $10,000 reporting requirement because this can be seen as ipso facto evidence of wrongdoing even if you have no ill intent. And whatever you do, don't you even think about running an unlicensed gaming enterprise or financial services firm.

It would be nice if we weren't constrained by the over-vigilant nanny staters within the government, but then again, if wishes were horses, beggars would ride. For the present, discretion is the better part of valor. There's plenty you can do on your own in private to increase the arena of human freedom without dipping your toe into the dangerous waters of felonious activity.

Play Bitcoin Poker Today!

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Something you can do right now to promote the use of Bitcoin and avoid meddlesome restrictions on gambling is play online poker for bitcoins. Among all 50 states, only Washington State has statutes on the books making it illegal for regular players to enjoy cards over the internet. Even in Washington, this law is never actually enforced. To find out more about your options for BTC poker, consult our list of the best Bitcoin internet poker sites.