A Santa Monica resident has pleaded guilty to breaking federal law by allowing his cryptocurrency-cash exchange company to help scammers and drug traffickers launder millions of dollars in criminal proceeds through his business, operating numerous Bitcoin kiosks in locations such as Santa Clarita, according to a press release from the U.S. Attorney’s Office, Central District of California.
Charles James Randol, 33, pleaded guilty to a single count charging him with failure to maintain an effective anti-money laundering program, according to the Sept. 5 press release.
Randol could serve five years in federal person.
The information and plea agreement were filed on Sept. 5.
According to his plea agreement, from October 2017 to July 2021, Randol owned and operated a virtual-currency money services business that eventually was known as Digital Coin Strategies LLC, according to the press release. This company offered cryptocurrency-cash exchange services for a commission.
The cryptocurrency exchange business offered services in multiple avenues: meeting in-person for anonymous transactions, controlling and operating out of kiosks in Santa Clarita, Los Angeles, Glendale, Huntington Beach, Santa Ana and Riverside, and conducted Bitcoin-for-cash transactions for unknown individuals who mailed large amounts of U.S. currency to him.
Randol’s business was registered with the Financial Crimes Enforcement Network, a bureau of the United States Treasury Department, according to the press release.
“Randol admitted in his plea agreement, he repeatedly violated federal law and his company’s own AML policies by facilitating suspicious currency exchange transactions and taking steps to conceal them from law enforcement, including by failing to file required currency transaction reports and suspicious activity reports,” read the press release.
Randol conducted in-person cash transactions that exceeded $10,000 on numerous occasions with anonymous individuals.
“In his plea agreement, Randol admitted to engaging in three specific transactions from October 2020 to January 2021 in which he exchanged a total of $273,940 in cash for Bitcoin without requesting a name, proof of identity, Social Security number, or any other information about the buyer or the source of the funds being exchanged,” read the press release. “Such transactions violated the Bank Secrecy Act and his company’s AML policy.”
Criminals were also able to structure and launder funds through his Bitcoin kiosks, located inside malls, gas stations and convenience stores.
“The setting on Randol’s kiosks allowed customers to structure funds to avoid currency reporting requirements by creating numerous accounts and by engaging in successive transactions involving up to $3,000,” read the press release. “He also set up one or more ‘test’ accounts that contained no customer information, which he allowed customers to use to complete kiosk transactions.”
Randol hired a compliance officer for “Digital Coin Strategies” in September 2020.
The compliance officer advised Randol to cease the used of these accounts, according to the press release. He seemingly ignored the advice.
The FBI and Homeland Security Investigations investigated the matter with assistance from Federal Deposit Insurance Corporation Office of Inspector General and the United States Postal Inspection Service, according to the press release.
Assistant United States Attorneys Ian V. Yanniello of the General Crimes Section and James E. Dochterman of the Asset Forfeiture and Recovery Section are prosecuting the case.