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Payza Indicted in Cryptocurrency Money Laundering Scheme

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By George Khoury, Esq. on March 27, 2018 6:56 AM

Despite all the hype, the cryptocurrency game seems to be filled with risks beyond just the usual risk of financial loss that comes along with any investment activity. And beyond the security issues that come along with decentralized, non-fiat currencies, users also need to be careful about who they choose to handle their digital transactions.

The cryptocurrency payment processor Payza was recently charged, criminally, with operating an unlicensed money transmitting business, conspiracy to launder money, as well as conspiracy to operate an unlicensed money transmitting business. These charges stem from allegations that the service and its co-founders, the Patel brothers, over a six year period of time, helped to launder $250 million worth of proceeds from child pornography, ponzi schemes and other illegal activities.

Tales From the Cryptocurrency

It's likely not that surprising for lawyers to hear that a crypto payment processor is getting popped for money laundering. Curiously though, according to the recent charges, Payza had received numerous cease and desist letters from various states as a result of operating without the required state licensing. Although the U.S. website for Payza was seized by the DOJ, a new .eu website popped up to resume activity.

Payza maintains that the charges are meritless and are mere accusations rather than evidence of guilt. Interestingly, Payza is based in the UK and does most of business in Asia, South America, and the Middle East. Also, surprisingly, after the arrest of one of the Patel brothers, the service went forward with its plan to support an additional cryptocurrency, Dash, in addition to Bitcoin, Ethereum, and Ripple.

Of Payments and Processors

While Bitcoin has come a long long way from when it first starting gaining traction, as cryptocurrencies continue to gain widespread acceptance, governments will increasingly demand transparency.

When it comes to transmitting cryptocurrencies, users should take the time to ensure that their payment processors are in compliance with both federal and state licensing requirements. The U.S. Attorney's office warns that crypto-payment processors that do not comply with federal and state laws could be "acting as a cover for other illegal activity." For attorneys, when it comes to accepting cryptocurrencies, there could be a lot more at stake than just getting paid.

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