One of the negative things we often hear about cryptocurrencies is how they can be used by criminals to carryout fraudulent activities, such as money laundering.
In Nevada, that worst-case scenario may have played out, and the person nabbed for breaking the law is not your average “Joe Blow.”
He’s the founder of Bitcoin Inc. – Morgan Rockcoons. He was arraigned Thursday for a money laundering scheme involving a weed transaction and Bitcoin.
Weed, Bitcoin, and money laundering
The U.S. Southern District Court of California brought the charges against Rockcoons, who also goes by the names Morgan Rockwell and Metaballo.
He was arrested on two counts:
- Money laundering
- Operating an unlicensed money transmitting business
For these crimes, the indictment calls for Rockcoons to forfeit property if convicted.
The charges, and subsequent arrest, occurred around the end of 2016. At that time, the indictment outlining the charges was sealed, and stamped, “not for public view.”
The indictment became public as Thursday’s arraignment date neared.
The indictment states that between Dec. 30, 2016 and Jan. 8, 2017, Rockcoons made drug deals with an undercover agent suspected to have been with the U.S. Department of Homeland Security.
Specifically, the indictment states that Rockcoons exchanged 9.998 bitcoin, which was worth about $9,208 at the time, with an undercover agent for $14,500 in fiat.
He allegedly fell for the undercover’s story that the proceeds of the deal would go toward the manufacturing and distribution of so-called hash oil. This oil contains tetrahydrocannabinols, or THC, and it is the principal psychoactive constituent of cannabis, or weed. It’s listed as a controlled substance under Schedule I by U.S. federal law.
To Twitter, the accused go to vent, rally support
Rockcoons is adamant that he didn’t commit any crimes. Like so many convinced they are being unjustly accused, he took to social media to make his case.
On Friday Feb 9, I was arrested in my home by Department Of Homeland Security over a #Bitcoin transaction from nov 2016 and am released under a personal recognizance bond. I am being charged with:
18 USC 1956 – Money Laundering Instrumenthttps://t.co/4w7NJIi4jw
Asset Forfeit pic.twitter.com/5kINtbxH17
— Morgan (@NODEfather) February 14, 2018
In another tweet, he said “I never have violated laws especially financial ones always study and following the evolution of Bitcoin regulation and financial law. This was Homeland Security fully…”
Then there was the tweet in which he blamed the U.S. government, saying it “is doing everything it can to take away all rights to use Bitcoin.
Rockcoons also shared his side of the story with the Las Vegas Review Journal. Rockoons, who’s Bitcoin Inc. makes hardware and software, told the Review-Journal that the drama started when he received a text message in 2016 from an unidentified individual seeking to buy Bitcoin.
He told the media outlet that he had been invited to journey to San Diego in September 2016 by someone claiming to be an investor. Upon arriving, he was taken to a Department of Homeland Security office and questioned for three hours, he told the Review-Journal.
Also, according to the Review-Journal, the officials demanded he reveal the identification of the people he traded cryptocurrencies with or face arrest. But Rockcoons claimed he refused.
The Review-Journal reported:
Rockcoons said the individual had found his number on Localbitcoins, a peer-to-peer trading site similar to eBay that matches individual buyers and sellers of bitcoin. The individual turned out to be an undercover officer.
In the days leading up to the arraignment, Rockcoons tweeted continuously for support from the Bitcoin community. He even asked them to show up for the court appearance.
“I am doing all I can to fight this in federal court. I need moral and financial support immediately.”