Bitcoiner sentenced to federal prison warns users involved in OTC trading

“Transferring Bitcoin p2p is a federal crime,” Mark Alexander Hopkins, known by the moniker ‘Dr Bitcoin’ or Rizzn, said after announcing the fine in their case to social media followers.

Hopkins on Sunday’s Twitter thread he said. They were sentenced to 6 to 15 months in a federal penitentiary in Texas after pleading guilty to operating a crypto business without a license. According to Reason, the U.S. Financial Crimes Enforcement Network, or FINCN, used a 2019 interpretation of the law — 18 USC 1960 — originally enacted in 1992 to prosecute them for illegally operating the “money transmission business.”

“This means that any time anyone with crypto is sold p2p (i.e. not on an exchange) they will be legally liable under this law as it is currently interpreted,” Rizzn said. “In practice, this is a universal law. I was initially suspected of being the kingpin of this particular scam, and when it turned out I wasn’t, they were able to easily build a case that I wasn’t federally registered before selling bitcoins.

In the year Bitcoiner, who said he joined the site in 2011, claims he was “one of hundreds of thousands of OTC traders in 2019” amid a bad actor involved in an illegal lottery scheme using the trading group to make fraudulent purchases of Bitcoin (BTC). Rizon said on behalf of his party that he facilitated fiat-to-crypto exchanges — which hinted they were unaware he was being investigated for crimes — targeted by U.S. authorities.

I fully cooperated with the 15 armed FBI agents who raided my home in October 2019. After being attacked in 2020, I couldn’t find a crypto-fluent lawyer […] I was told that if I pleaded the 18 USC 1960 charges, any action against my family would be dismissed.

According to Rizzn, “They are fully registered as Bitcoin sellers by FinCEN,” but the Department of Justice is still targeting them for their involvement in illegal transactions. Acting US Attorney Prerak Shah said at the time that Hopkins “ignored federal law and allowed fraudsters to use Bitcoin to operate under the radar of law enforcement” and did not take steps to verify the sources of funds involved in the transactions – $550,000 and $1.5 million at the time. Rizon has argued most of the Justice Department’s claims, including Know Your Customer and anti-money laundering practices.

“Here’s what makes this important to focus on and address: I’m nobody.” he said. Riz.

“I’m not Ross. I was not on the dark web. I’m not Edward. I didn’t work for the NSA. I’m not Julian. I did not break a national secret. I’m just a regular bitcoiner.

Before going to jail, Bitcoiner called for regulatory transparency between state and federal levels in the US, ostensibly to ensure other crypto users don’t face similar enforcement action.

“In the same way that the feds and the states differ on the use of cannabis, the feds and the states differ on the use of p2p crypto,” Rizzn said. “Delaware, Texas, and Wyoming are actively promoting the use of p2p crypto, producing hundreds of thousands of criminals (like me!) every day. b) Reinstating the excessive regulation in the first place.”

Related: The Central Bank of Russia will strengthen regulation of P2P transactions, including those in crypto.

FinCen filed a similar lawsuit against a California resident in April 2019, alleging that they willfully violated money transfer laws while operating a P2P crypto and fiat exchange. However, he was charged in that case with only a $35,000 fine and a ban on the same financial activity — not jail time.