Crypto ATM Operator Charged with Fraud and Money Laundering

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30 Sept 2024

A UK-based crypto ATM operator faces charges of fraud and money laundering, raising concerns about the regulation of crypto ATMs in the UK.

The UK has seen a significant legal development in the cryptocurrency space, as the Financial Conduct Authority (FCA) pressed charges against Olumide Osunkoya, the operator of an unregistered network of cryptocurrency automatic teller machines (ATMs). This case marks the first time a person in the UK has been charged with operating a crypto ATM network, and it underscores the ongoing efforts to regulate and oversee the crypto industry.

The Rise and Fall of a Crypto ATM Network

Olumide Osunkoya's crypto ATM network processed approximately £2.6 million ($3.4 million) in cryptocurrency transactions over the course of nearly two years, from December 2021 to September 2023. However, this operation was deemed illegal by UK authorities due to the network's unlicensed status.

According to the FCA, Osunkoya is accused of violating the country's Money Laundering Regulations (MLRs) under the 2017 statute, which aims to combat money laundering, terrorist financing, and fund transfer crimes.

In addition to these violations, Osunkoya faces charges of forgery, counterfeiting, and possession of criminal property under the Proceeds of Crime Act 2002. He is also alleged to have created and used false documents in his operations. These combined charges reflect the seriousness of the legal action being taken against unregulated crypto operations in the UK.

The case is seen as a turning point for how crypto ATMs, which allow users to buy and sell cryptocurrency with cash, are monitored in the country. FCA's executive director of enforcement and market oversight, Therese Chambers, emphasized the risks involved with such operations.

In a statement, she declared: "If you’re using a crypto ATM, you are handing your money directly to criminals. Criminals can exploit crypto ATMs to launder money globally." This stark warning serves as a reminder of the need for tighter regulatory controls on cryptocurrency exchanges and related services in the UK.

Regulatory Crackdown on Crypto ATMs in the UK

The UK's regulatory stance on cryptocurrency has grown increasingly stringent in recent years, particularly regarding crypto ATMs. In March 2022, the FCA ordered the closure of all unregistered crypto ATMs operating in the country. Since then, authorities have been systematically enforcing these shutdowns, and Osunkoya's case highlights their continued commitment to bringing violators to justice.

Gidiplus Limited, the company owned by Osunkoya, had applied to become a registered crypto asset exchange provider in November 2021, in an attempt to legitimize its operations. However, this application was denied by the FCA, and the company lost its appeal soon after. Despite this, the network continued to operate, processing millions in crypto transactions during the period.

Osunkoya is set to appear in court on September 30, 2024, marking a critical step in what could be a landmark legal case for the cryptocurrency industry in the UK. The FCA's actions serve as a stern warning to other unregistered crypto ATM operators and businesses within the UK.

Broader Implications for the Crypto Industry

This case sheds light on the broader issue of cryptocurrency regulation in the UK. While cryptocurrency has long been touted for its potential to revolutionize finance, it has also raised concerns among regulators due to its association with money laundering, fraud, and other illicit activities. The FCA's enforcement actions are part of a global trend toward stricter regulation of crypto-related businesses.

As of now, no crypto ATMs are legally registered in the UK, further illustrating the harsh regulatory environment for these services. The FCA has made it clear that any business operating a crypto ATM without registration is subject to legal action, and the consequences for violators can be severe.

In another recent case, a single crypto ATM operator, Habibur Rahman, was arrested earlier in 2023 for similar violations. He allegedly laundered £300,000 ($392,000) in criminal proceeds through his ATM, which was also unregistered. Rahman is currently awaiting trial, and his case, alongside Osunkoya’s, highlights the scale of the issue.

What’s Next for Crypto ATM Regulations?

With Osunkoya's case pending, the future of crypto ATM operations in the UK remains uncertain. However, it is evident that UK authorities are not backing down in their pursuit of regulatory compliance within the crypto sector. The FCA continues to scrutinize unlicensed operations, and further crackdowns on crypto ATMs can be expected as part of a broader effort to regulate the space.

For crypto enthusiasts and businesses operating in the UK, this case serves as a stark reminder of the importance of adhering to the country’s regulations. The FCA has made it clear that those found violating these laws will face significant legal repercussions.

This shift toward increased regulation may ultimately benefit the industry in the long run by building public trust in cryptocurrency. As the FCA continues to strengthen its oversight of the sector, legitimate businesses may find themselves better positioned to thrive, while illegal operations face the full weight of the law.

Conclusion

The charges brought against Osunkoya for running an unlicensed crypto ATM network signal a crucial moment in the UK's cryptocurrency regulatory landscape. The case highlights the importance of ensuring that cryptocurrency operations comply with the law and underscores the risks associated with illegal crypto ATM networks. As the FCA continues to take action against violators, the crypto industry in the UK will need to adapt to an increasingly stringent regulatory environment.