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December 5, 2017

Detroit man sentenced for operating unlicensed Bitcoin business in Maine

Courtesy / Bitcoin.com
Courtesy / Bitcoin.com
In a precedent-setting case involving an unlicensed Bitcoin business whose owner advertised and completed some transactions in Maine, a Detroit man and his company were sentenced in U.S. District Court for the District of Maine on Monday for violations of federal law.

In a precedent-setting case involving an unlicensed Bitcoin business whose owner advertised and completed some transactions in Maine, a Detroit man and his company were sentenced in U.S. District Court for the District of Maine on Monday for violations of federal law.

U.S. Attorney Halsey B. Frank for the District of Maine stated in a news release that Sal Mansy, 41, of Detroit, and TV TOYZ LLC, a Michigan corporation, were sentenced for "operating an unlicensed money-service business."

Mansy was sentenced to a year and a day in prison and three years of supervised release. TV TOYZ LLC was sentenced to three years of probation.

The defendants were also ordered to forfeit about $118,000 worth of cash and bitcoin. Guilty pleas were entered on May 17, 2017.

In a telephone interview with Mainebiz this morning, Assistant U.S. Attorney Michael J. Conley said the case was prosecuted in Maine because Mansy's Detroit company had advertised in Maine and had engaged in wire-payment transactions with Maine customers without registering his money-service business with the Financial Crimes Enforcement Network, a branch of the U.S. Treasury Department.

According to court documents, between August 2013 and June 2015, Mansy bought and sold about $2.4 million worth of the Bitcoin virtual currency online for profit. He then funneled his bitcoin transactions through the business bank account of TV TOYZ, a corporation he owned and operated.

It is against federal law for a money-service business to exchange or transfer bitcoin currency without registering, Conley said.

The U.S. Attorney's Office stated in its news release that Mansy was aware that he was required to register with FinCEN and that a year-long investigation into his activities culminated in June 2015 with a search of his Detroit residence and the seizure of about $118,000 worth of cash and Bitcoin.

"It's the first in Maine and among the first in the country," Conley said of the successful prosecution of Mansy and his company for operating an unlicensed bitcoin business. "It's fairly novel. We don't expect it to cease. The attraction of Bitcoin is the anonymity [it provides to buyers and sellers]."

An October 2015 report by the Congressional Research Service stated that Congress "is interested in Bitcoin [which first appeared as an online currency in 2009] because of concerns about its use in illegal money transfers, concerns about its effect on the ability of the Federal Reserve to meet its objectives (of stable prices, maximum employment, and financial stability), and concerns about the protection of consumers and investors who might use Bitcoin."

"Bitcoin raises a number of legal and regulatory concerns, including its potential for facilitating money laundering, its treatment under federal securities law and its status in the regulation of foreign exchange trading," the report stated.

The U.S. Attorney's Office for the Maine District reported that the investigation was conducted by the Portland and Detroit, Mich., offices of U.S. Immigration and Customs Enforcement's Homeland Security Investigations and the Saco Police Department.

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October 2015 report by the Congressional Research Service

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