Money-laundering ‘Bitcoin Maven’ receives one-year prison sentence

A federal judge sentenced Theresa Tetley, also known as the “Bitcoin Maven,” to one year in federal prison for operating an illegal money business. Federal prosecutors charged the former stockbroker with operating an unregistered money transmission business and laundering Bitcoin in at least one case that comes from proceeds from narcotics activity.

As part of her sentence, U.S. District Judge Manual Real also ordered Tetley to forfeit 40 Bitcoins — worth approximately $270,000 — along with nearly $300,000 in cash and 25 gold bars. Federal authorities were already in possession of those assets after they had seized them last year as part of the investigation.

The former stockbroker made more than $300,000 each year as a result of trading Bitcoin, court documents revealed, by running a Bitcoin-for-cash exchange service. However, Tetley did not register her business with the Financial Crimes Enforcement Network (FinCEN), and she also did not implement any mechanism to prevent money laundering. Tetley promoted her business on localbitcoins.com, and the government alleged that she had exchanged between $6 million to $9.5 million for customers, charging higher rates than competitors who were registered with FinCEN.

“As a result of operating this unregistered business, Tetley facilitated laundering for one individual who is suspected of receiving Bitcoin from unlawful activity, such as sales of drugs on the dark web,” the government said in a case that was prosecuted by Assistant United States Attorney Puneet Kakkar of the Organized Crime Drug Enforcement Task Force Section. “In the course of her business, Tetley also conducted an exchange of Bitcoin-for-cash for an undercover agent who represented that his Bitcoin were the proceeds of narcotics trafficking.”

Tetley was arrested following a March 2017 sting operation where a Drug Enforcement Agency officer had approached Tetley posing as a drug dealer. In that instance, Tetley had agreed to exchange the agent’s Bitcoin, which was represented to come from trafficking drugs, for $300,000 in cash that delivered in two Trader Joe’s paper shopping bags. The government also alleged that Tetley exchanged more than $6 million for William Farber, a man that was charged last year for running a drug ring, the Los Angeles Times reported.

The Justice Department argued that Tetley should be sentenced to a longer term because she had knowledge that the funds came from illegal means. During her sentencing, Tetley asked for leniency, NBC Los Angeles reported. “But I screwed up epically,” she told the court. “It quickly became a business — and I broke all sorts of laws. I have learned my lessons.”

Even though the case against Tetley is said to be the first of its kind in the Central District of California, there have been similar cases in other parts of the country.