Mesa Bitcoin Trader Gets Prison For Money Laundering

money,money laundering

A Mesa bitcoin trader, Thomas Mario Costanzo, a.k.a. Morpheus Titania, 54, was sentenced to 41 months’ imprisonment, with credit for time served since his arrest in April 2017 after being found guilty by a federal jury on March 28, 2018, of money laundering.

According to the DOJ, federal agents initiated an investigation of Costanzo in 2014, after identifying an advertisement he posted on a peer-to-peer bitcoin exchange website. In the advertisement, Costanzo advertised that he was willing to engage in cash transactions up to $50,000. When undercover federal agents approached Costanzo and told him that they were drug dealers, Costanzo provided them with bitcoin and told them it was a great way to limit their exposure to law enforcement.

The jury found that over a two-year period, Costanzo took $164,700 in cash-including a final $107,000 transaction in April 2017-from the agents (whom he believed to be heroin and cocaine traffickers) and exchanged it for bitcoin in order to conceal and disguise the nature, location, source, ownership, and control of the drug proceeds. The evidence at trial also showed that Costanzo used bitcoin to purchase drugs from others and that he provided bitcoin to individuals who were buying drugs via the internet.

At the sentencing hearing the judge also ruled on the forfeiture of the 80.94512167 bitcoins provided by Costanzo to the undercover agent as part of the final $107,000 money laundering transaction. The current value of the forfeited bitcoins is more than $600,000. Costanzo had previously claimed an interest in 49.99363132 of the seized bitcoins, and his interest was forfeited at the sentencing hearing.

Separately, the government has also reached a resolution with a third party to the forfeiture proceedings who had supplied Costanzo with the remaining bitcoins and who had been under investigation for engaging in an unlicensed bitcoin trading business. In particular, Dr. Peter Steinmetz has agreed to forfeit the remaining 30.95149035 bitcoins, and to also forfeit an additional $54,000 in U.S. currency; the government has agreed not to prosecute Dr. Steinmetz for his prior bitcoin trading activity; and Dr. Steinmetz agrees that going forward, and for the next two years, he will only purchase or sell virtual currency on exchanges registered with the Financial Crimes Enforcement Network, also known as FinCEN.

The investigation in this case was conducted by Internal Revenue Service Criminal Investigation, the Drug Enforcement Administration, U.S. Immigration and Customs Enforcement Homeland Security Investigations, and the Scottsdale Police Department

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