Cyber Crime: LOUIS ONG Sentenced For Operated Unlicensed Bitcoin Trading



Cyber Crime
Canadian Who Operated Unlicensed Bitcoin Trading Business Sentenced

Canadian Who Operated Unlicensed Bitcoin Trading Business Sentenced

Defendant Engaged in Bitcoin Exchanges with Undercover Agents despite Knowledge the Money was Drug Trafficking Proceeds

A Vancouver, British Columbia man was sentenced today in U.S. District Court in Seattle to 20 days of incarceration and more than $1 million in forfeitures for Operating an Unlicensed Money Transmission Business, announced U.S. Attorney Annette L. Hayes.

LOUIS ONG, 37, was arrested in July 2017, after a series of bitcoin for cash sales with an undercover agent with Homeland Security Investigations. ONG repeatedly told the agent, who was posing as a member of a drug trafficking group, that he did not want to know the source of the cash so that he would have ‘plausible deniability.’ Even after ONG registered as a money transmitter, he made little effort to comply with regulations about reporting suspicious transactions. At the sentencing hearing, U.S. District Judge Robert S. Lasnik imposed three years of supervised release and noted that ONG will likely be unable to return to the U.S. from Canada.

“The dark web is not a free pass for crime and mayhem,” said U.S. Attorney Annette L. Hayes. “As this defendant knew full well, the laws and rules apply to crypto currency dealings just as they do to other types of financial transactions. I commend Homeland Security Investigations for their ongoing work to police the Internet – including the Dark Web -- to root out those who undermine public safety for all of us.”

According to records filed in the case, in December 2016, federal law enforcement responded to an ad ONG had placed regarding buying and selling bitcoin – a cryptocurrency that can be used for purchases on the dark web and elsewhere. Later in December, and again in February and March 2017, ONG traveled to the Seattle area to exchange cash for bitcoin. At various times the undercover agents specifically told ONG that the funds they were exchanging for bitcoin came from drug trafficking. ONG repeatedly told them he did not want to hear that so that he had ‘plausible deniability.’

In May 2017, ONG was observed by other HSI agents in Blaine, Washington running cash through a bill counter while sitting in his car. The agents informed him he needed to register as a money remitter with FinCEN, a bureau of the U.S. Treasury whose mission is to safeguard the financial system from illicit use and money laundering. ONG registered with FinCEN, and informed Homeland Security that he had done so. However, even after registering he failed to follow FinCEN regulations requiring the reporting of suspicious transactions – including three more with undercover agents.

ONG was arrested in the midst of his sixth financial transaction with undercover law enforcement agents. After each of the exchanges for bitcoin, law enforcement used licensed cryptocurrency exchanges to return the government funds to cash. As part of his plea agreement, ONG is forfeiting both cash and bitcoin now valued at more than $1 million.

ONG was indicted on August 16, 2017 and pleaded guilty on February 15, 2018. He was released on bond to reside with his sister in Los Angeles, California after being held for 20 days at the Federal Detention Center at SeaTac.

While on home restrictions in Los Angeles, ONG volunteered with a variety of homeless organizations and today tearfully told the court he now realizes “how his actions (as an illegal money transmitter) facilitated more people being exposed to addictive substances.”

The case was investigated by Homeland Security Investigations and is being prosecuted by Special Assistant United States Attorney Joe Silvio. Mr. Silvio is an attorney with Homeland Security Investigations who is specially designated to prosecute cases in federal court.

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