In the cryptocurrency community, many traders and investors are interested in how regulatory agencies react to the ever-evolving markets. In a historic move, the Financial Crimes Enforcement Network (FinCEN) has assessed a civil money penalty against Eric Powers, a cryptocurrency trader.
Specifically, Powers has apparently violated the Bank Secrecy Act (BSA). The BSA of 1970 is a US law that requires financial institutions to keep cash records in order to fight money laundering, tax evasion, and other criminal activities. It was signed into law by President Richard Nixon in October 1970, and requires institutions to submit reports such as currency transaction reports (CTRs), where cash transactions exceeding $10,000 in one day must be reported.
Powers, a California resident, failed to comply with the BSA from 2012-2014, and never registered himself as a “money transmitter”. He also conducted around 160 transactions of Bitcoin Core (BTC) worth around $5 million in total.
He admits the violations, as well, and that they “were willful”. Specifically, Powers was fined $35,000 for operating an illegal BTC exchange and is also barred from providing money transmission services.
Powers also advertised his services on various well-known cryptocurrency forums, including Bitcointalk.org and bitcoin-otc.com. He also AML compliance in online conversations, which the agency points out “demonstrates his awareness of the relevant BSA requirements”.
Powers conducted over 200 transactions worth over $10,000, but didn’t file a single CTR. Powers also used the infamous drug marketplace “Silk Road”, and regularly used The Onion Router (TOR) in order to conduct business, without determining whether proceeds came from illegal activity, as well.
The FinCEN director, Kenneth Blanco, was clear about how these regulations help to regulate the overall financial sector,