Sold BTC on LocalBitcoins and ended up convicted of money laundering in Argentina

Key facts:
  • Garcia was a participant, according to him involuntarily, in a money laundering operation.

  • The fact is framed within the case “Bobinas blancas”, which dates from 2017.

The Argentine Emmanuel Garcia was sentenced to 5 years in prison and the payment of a fine for the “Bobinas blancas” case. Yesterday, September 9, the Oral Court of Bahía Blanca found him guilty of the crime of laundering proceeds from drug trafficking, using bitcoin (BTC). For the case, six other defendants, both Argentine and Mexican, also received sentences.

Until 2017, Garcia acted as a BTC trader and promoted his services on the peer-to-peer trading platform LocalBitcoins. As such, he operated with this cryptocurrency and his modality was cash dealing, without bank accounts.

As is usual in informal cryptoasset trading, this trader did not require any identification or proof of origin of funds from his counterparties.

His activities as an informal bitcoin broker came to an end in July 2017. The Superintendence of Dangerous Drugs, in compliance with an order of the federal judge Adrián González Charvay raided his home and seized in the operation USD 160 thousand in cash.

Since then and until his recent conviction, García was prosecuted as a participant in the aforementioned “White Coils” case. CriptoNoticias detailed that, in June 2017, 1,862 kilograms of cocaine were seized in steel coils, in a warehouse in Bahía Blanca, in the south of the Province of Buenos Aires. According to the Prosecutor’s Office, it is so far the largest seizure of narcotics in Argentina from an international drug trafficking organization.

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For the prosecutor in the case, Gabriel González da Silva, García did not act as an accessory to the criminal gang, but his actions were part of the criminal structure.

According to the text of the indictment, which was reproduced by the local press, García, “from an uncertain date, but at least until June 18 of this year [2017],” carried out “determined actions by placing money belonging to the criminal organization in the financial market.” The indictment adds that this was done so that these funds “lost track and eventually entered the financial system with an illicit appearance” and it is clarified that all this was done “without requiring any receipt or record”.

The Public Prosecutor’s Office of Argentina has reported that this is the first time that the laundering of

funds through BTC in that South American nation.

acusado-lavado-dinero-criptomonedas-trafico-drogas-argentina acusado-lavado-dinero-criptomonedas-trafico-drogas-argentina According to the prosecutor of the case, Emmanuel García would have been part of the criminal set-up of the “Bobinas Blancas” case. Source: Infobae. ”

What happened to me could have happened to anyone

” According

to a publication

of the Revista Argentina de Derecho Penal, signed by the specialist Manuel Santos, the link between García and the drug traffickers was as follows: the traffickers needed to introduce illicit profits in dollars to Argentina without generating alerts in the Mexican and Argentine financial systems. To that end, they contacted Garcia and sent him BTC, which were settled in dollars in Argentina.

On the part of the now convicted, the explanation he always provided was that he was simply a P2P trader. In 2018, he was present at the YouTube channel “No Soy Satoshi

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“, organized by members of the bitcoiner community in Argentina. There, Garcia said that what happened to him, could have happened to anyone else.

They break the door of my house in the raid, they arrest me, and I say “why is that?”. They get to me because after a complaint from the DEA they tap the phones [of the Mexican defendants], they track them and on one of the phones there are 5 or 6 messages from me saying “see you at the usual place”.

Emmanuel Garcia, a former bitcoin P2P broker convicted of money laundering. Garcia-defiende-acusaciones-solo-comerciante-p2p Garcia-defiende-acusaciones-solo-comerciante-p2p Garcia (at the head of the table) said he was simply a former bitcoin P2P trader, during his appearance on “I Am Not Satoshi” in 2018. Source: I Am Not Satoshi / youtube.com

Garcia comments that, during the raid, 133 police officers entered his home and that it was very violent. He assures that he was always cooperative with justice, that he told the whole truth in the inquiries, and that he explained in detail how he carried out the operations of buying and selling bitcoin.

During the judicial process, García’s defenders had requested the dismissal of the accused, arguing that his cryptocurrency trading activity does not constitute any crime.

The judge’s response to that argument,

according to the website of the Public Prosecutor’s Office, was that “García received bitcoins from abroad, from members of the narco-criminal organization and that, on the other hand, he delivered currency to members of the organization who were in Argentina, guaranteeing to operate outside the banking system and under the anonymity of their interventions. According to the Justice, these facts were considered “as constituting the crime of laundering of assets of illegal origin”.

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The defense also raised the irrelevance of the trial, to which Gonzalez Charvay responded:

“Drug trafficking is a human drama all over the planet and so is money laundering, especially in this country that has more than 50 percent poverty, largely thanks to these people who develop illegal economic maneuvers that ultimately harm workers.”

Adrián González Charvay, federal judge of Campana, Argentina.

According to the aforementioned judicial magazine, in agreement with the Court’s decision, although they admit that the matter is debatable, García’s argument, “does not seem solid”. For them, cryptocurrencies are a “complex technology, no doubt, at least from the point of view of a criminal lawyer” because, they say, “it puts in check the systems of prevention of money laundering, not only of our country, but of the whole world”.

Globally, as this media outlet has reported, an estimated USD $2.25 billion from illicit sources was laundered with BTC and cryptocurrencies last year. Still, according to the SWIFT financial holding company, this is a tiny figure when compared to the volumes of money laundered through traditional methods.