Bitcoin trader jailed for money laundering

A peer-to-peer Bitcoin trader from the US state of Arizona is starting a lengthy prison sentence this week for laundering drug money with Bitcoin.

Thomas Mario Costanzo, a.k.a. Morpheus Titania, 54, was sentenced by US District Judge G. Murray Snow to 41 months’ imprisonment, with credit for time served since his arrest in April 2017.

Federal agents initiated an investigation of Costanzo in 2014, after identifying an advertisement he posted on a peer-to-peer Bitcoin exchange website, stating that he was willing to engage in cash transactions up to $50,000. When undercover agents approached Costanzo and told him that they were drug dealers, he 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 the cryptocurrency to individuals who were buying drugs via the internet.

At the sentencing hearing, Judge Snow 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.

Earlier this month, a former Bitcoin trader and exchange operator from Los Angeles, known as the Bitcoin Maven, was sentenced to one year in federal prison after she admitted to operating an unlawful money transmission business.