Las Vegas resident accused of bitcoin money laundering

Updated February 21, 2018 - 7:51 pm

A Las Vegas resident may be the first in the state to get arrested on charges of money laundering using bitcoin.

Morgan Rockcoons, 30, was detained at his home on Feb. 9 on charges of money laundering and operating an unlicensed money transmitting business for selling bitcoin to an undercover officer. Rockcoons will be arraigned Thursday in San Diego, California.

Rockcoons allegedly accepted $14,500 from the undercover officer in exchange for $9,200 worth of bitcoin.

His Las Vegas-based lawyer David Chesnoff said it’s the first case he has seen of this nature. There have been several similar arrests in the U.S. in recent years, including in Arizona, Colorado, New York, Florida and Louisiana, according to cryptocurrency news site CoinDesk.

The indictment accuses Rockcoons of knowingly assisting the undercover officer to conceal profits from the illegal sale of hash oil, a controlled substance containing THC , by converting it into bitcoin. The process of converting cash earned from illicit activities into legitimate assets is called money laundering.

The transactions took place between Dec. 30, 2016, and Jan. 8, according to court documents.

Rockcoons has taken to social media to denounce his arrest and deny the charges against him. He calls the arrest an attack on the entire bitcoin community. He has asked fellow cryptocurrency fans to support him Thursday in court as well as send him bitcoin to pay for his legal fees.

“The United States government is doing everything it can to take away all rights to use bitcoin,” he wrote Tuesday on Twitter about his arrest. “I am doing all I can to fight this in federal court. I need moral and financial support immediately.”

Posts about his arrest have been retweeted hundreds of times and garnered as many comments. The reaction by bitcoin followers, though, has been mixed. Several pointed out that his story of innocently trading bitcoin did not add up.

“It’s not about selling bitcoin for cash or vice versa. It’s about using proceeds from marijuana sales to purchase/sell bitcoin. That is money laundering folks,” wrote Twitter user @cryptomakto.

Found on localbitcoins.com

Rockcoons, founder of Bitcoin Inc., a company he says makes hardware and software, told the Review-Journal the episode started when he received a text message in 2016 from an unidentified individual seeking to buy bitcoin.

Rockcoons said the individual had found his number on Localbitcoins, a peer-to-peer trading site similar to eBay that matches individual buyers and sellers of bitcoin. The individual turned out to be an undercover officer.

Localbitcoins allows buyers and sellers to advertise prices and transact in private, even meeting in person to complete a deal, just as they might do when trading stamps or baseball cards.

Most cryptocurrencies are sold on exchanges, which require individuals to submit identification, such as a driver’s license and social security number, in order to transact on their platforms. Exchanges share that information with the Internal Revenue Service and other government agencies.

Localbitcoins does not require identification, making the site more anonymous and ripe for people seeking to launder money.

“(Cryptocurrency) wallet addresses that aren’t linked to a person’s identity are a black hole and nightmare for authorities. They’re a dream for those interested in laundering money,” said Ryan David Williams, a Bay Area-based lawyer specializing in cryptocurrency law.

Therefore authorities have been targeting the popular site to catch people helping move illicit money, said Scott Emick, who buys and sells bitcoin on the platform.

Emick, who is based in Cleveland, Ohio, said he often gets “strange” requests from people seeking to transact in bitcoin. He suspects many of those unusual requests may be setups by officials. Emick said he demands to see identification before transacting with people and files a suspicious activity report when the situation calls for it.

Las Vegas resident and Localbitcoins trader John Williams said he has been asked to convert as much as $50,000 and trade for drugs by unidentified people.

“I refuse them all. I’m guessing somewhere around half were stings,” said Williams.

The number of U.S. citizens buying and selling cryptocurrencies on Localbitcoins has fallen significantly over the past four years amid arrests, said Emick, who has been using the platform since 2014. Finland-based Localbitcoins could not immediately respond to a request for growth in U.S. users.

Officials have arrested Localbitcoins traders in sting operations in Florida, Michigan, Missouri and New York, according to Coindesk.

Set up

Rockcoons claims the undercover officer requested the bitcoin to buy equipment for the production of medical cannabis, not to conceal ill-gotten gains.

“So this is what they are trying to call money laundering — buying medical equipment in a state where medical cannabis is legal,” he said in a Twitter message to the Review-Journal.

Reno-based lawyer Tyson Cross said undercover officers can charge people like Rockcoons with just operating an unlicensed money transmitting business. However, they will often mention the cash is from illicit trade to make a stronger case in court.

“This is a pattern of theirs. The specifically mention it’s the proceeds from illegal business,” said Cross, who specializes in cryptocurrency law.

Rockcoons claims he told the buyer he would not sell more than the $10,000 limit, transferring them $9,200 worth of bitcoin. Cash transactions exceeding $10,000 must be reported to government agencies. The officer sent him $14,500 in cash.

“I demanded under $10,000 like I do for all trades. They said they needed only nine bitcoin and they sent $14,500 to try to entrap me. I still only sent $9,000 plus of bitcoin,” he said in a Twitter response on Monday. Bitcoin was worth about $1,000 at the time.

Williams, the Bay Area-based lawyer, said Rockcoons should have been alarmed by the premium the undercover officer was willing to pay for the bitcoin.

“A reasonable person would have suspected something is wrong here,” said Williams.

Some cryptocurrency users on Twitter agreed.

“Your story does not add up. Quit trying to make a political movement out of your misdeeds,” wrote a Twitter user by the name Enigma Seven in response to Rockcoons’ claim.

Rockcoons said he was later invited in September to San Diego by someone claiming to be an investor. Upon arriving, he was taken to a Department of Homeland Security office and questioned for three hours, he told the Review-Journal

The officials demanded he reveal the identification of the people he traded cryptocurrencies with or face arrest, Rockcoons claims. He refused.

Lauren Mack, a Department of Homeland Security spokeswoman in California, said the agency doesn’t comment on cases in progress.

Several individuals have sent Rockcoons bitcoin to help cover his legal costs, according to a screenshot he posted of the deposits. He says he is paying his lawyers in bitcoin. Chesnoff declined to say whether he will be paid in bitcoin.

Contact Todd Prince at 702 383-0386 or tprince@reviewjournal.com.Follow @toddprincetv on Twitter.

ad-high_impact_4
Local
Lights FC coach Eric Wynalda lost his home in California wildfire
Eric Wynalda, coach of the Las Vegas Lights FC soccer team, talks about losing his home in the deadly California wildfires during an interview in Las Vegas, Nevada, on Nov. 17, 2018. (Ron Kantowski/Las Vegas Review-Journal)
Women face issues from Essure birth control implants
DeVonna "Kat" Normand said she had complications from the Essure birth control implants. Normand uses her Sin City Heat show at 22.3 TakeOver Vegas Radio internet radio station in Las Vegas as a platform to raise awareness about Essure and connect with other women who have used the device. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Truancy and Clark County schools
Tony Stark, one of 23 attendance officers with the Clark County School District, have a tall order tracking down students who aren't in school.
North Las Vegas Water Meters
Randy DeVaul shows off the new water meters that the city is installing.
Project 150 Thanksgiving 2018
About 100 volunteers for Project 150 box Thanksgiving meals for high school students and their families in Las Vegas on Wednesday, Nov. 14.
Three Square’s Maurice Johnson Talks About Food Waste
Three Square’s director of operations Maurice Johnson talks about food waste.
Parade preparation nears completion
Downtown Summerlin prepares for its annual holiday parade.
Clark County Wetlands promotes 2019 Wetland Walker Program
This year the park will be celebrating the Northern Flicker. The program is designed to teach about that bird, and encourage people to visit the Wetlands and walk the same distance the bird migrates each year.
Poet’s Walk Henderson introduces storytelling
Residents enjoy a storytelling activity.
Downtown Summerlin hosts its annual Festival of Arts
People crowd to Downtown Summerlin for the 23rd annual Summerlin Festival of Arts in Las Vegas, Sunday, Oct. 14, 2018. (Caroline Brehman/Las Vegas Review-Journal)
Clark County educators debate alternative grading systems
Spring Valley High School principal Tam Larnerd, Spring Valley High School IB coordinator Tony Gebbia and retired high school teacher Joyce O'Day discuss alternative grading systems. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Grandparents on the fire that killed three family members
Charles and Doris Smith talk about the night an apartment fire took the lives of three of their family members. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
New York artist Bobby Jacobs donated a sculpture to the Las Vegas Healing Garden
Bobby Jacobs, an artist from upstate New York, has spent much of the past year creating a sculpture of two separate angel wings. He donated the sculpture to the Las Vegas Healing Garden. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Weather will cool slightly through the end of the week
The weather will cool slightly through the end of the week., but highs are still expected to be slightly above normal for this year. (Bizuayehu Tesfaye/Las Vegas Review-Journal) @bizutesfaye
Mayor announces new public-private partnership
Mayor Carolyn Goodman announced the creation of the Mayor’s Fund for Las Vegas LIFE, a public-private partnership that will allocate money to the city’s neediest.
Fremont9 opens downtown
Fremont9 apartment complex has opened in downtown Las Vegas. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Fall fairytale gets cozy at Bellagio Conservatory
Bellagio Conservatory introduces its fall-themed garden titled "Falling Asleep." (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
What the house that Ted Binion died in looks like today
Casino heir Ted Binion died in this Las Vegas home in 1998. Current home owner Jane Popple spent over $600,000 to restore and modernize the home. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Rescue Mission employees terminated
Don James, a former employee for the Las Vegas Rescue Mission, talks about the day his team was terminated. (Erik Verduzco/Las Vegas Review-Journal)
Raiders Cupcakes at Freed's Bakery
Freed's Bakery will have Raiders-themed cupcakes available in store and for order during football season. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
51s fans say goodbye to Cashman Field
Las Vegas 51s fans said goodbye to Cashman Field in Las Vegas, Monday September, 3, 2018. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
51s owner Don Logan's last weekend at Cashman Field
Don Logan, owner of the Las Vegas 51s, gives a tour of Cashman Field before the team's final weekend using the field. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Crime
Man killed during road-rage incident
Las Vegas police are looking for two men involved in the shooting death of a man outside a 7-Eleven story at Bonanza Road and Maryland Parkway on Nov. 12, 2018. (Las Vegas Metropolitan Police Department)
16-year-old shot in North Las Vegas
A 16-year-old was hospitalized but was expected to survive after a shooting in North Las Vegas, near Centennial Parkway and Fifth Street, on Tuesday, November 13, 2018. North Las Vegas police spokesman Aaron Patty gives an update. (Katelyn Newberg/ Las Vegas Review-Journal)
3-year-old boy shot in North Las Vegas
North Las Vegas Police Officer Aaron Patty talks about an accidental shooting that left a 3-year-old boy “fighting for his life” on Nov. 10, 2018.
Senior Citizen Carjacking Attack -- 3 Suspects Sought
Las Vegas Metropolitan Police detectives are seeking the public's assistance in identifying the three attackers who carjacked and beat a 78-year-old man near Fremont and east Charleston on Tuesday. (LVMPD)
Henderson Police Department Chief Latesha Watson Talks Change
11-year-old girl shot, killed in North Las Vegas
An 11-year-old girl is dead after she was struck by gunfire Thursday night during a shooting in North Las Vegas
North Las Vegas police on deadly shooting
North Las Vegas police spokesman Eric Leavitt briefs the media about a shooting that left an 11-year-old girl dead on Nov. 1, 2018. (Katelyn Newberg/Las Vegas Review-Journal)
Stephan Bonnar DUI Arrest
Stephan Bonnar arrested for DUI in Nevada.
Family members of murder victims talk about their loss
Family members of murder victims talk about their loss. Susan Nash, 52, was killed in a shooting along with her daughter and one of her three sons on Sunday night. Bizuayehu Tesfaye/Las Vegas Review-Journal @bizutesfaye
Sayegh Cold Case Turns 40
Cary Sayegh was abducted from the playground of the Albert Einstein Hebrew Day School in Las Vegas in 1978. His body has never been found. (File Photo)
Review held in death of man after encounter with Las Vegas police
The mother of Tashii Brown, who died after an encounter with Las Vegas police on the Strip, not satisfied after public review of evidence. (K.M. Cannon/Las Vegas Review-Journal)
Vehicle of Interest in January Homicide
Las Vegas police released footage Friday of a “vehicle of interest” from a deadly shooting in January. (Las Vegas Metropolitan Police Department)
Hostage escapes clutches of robber before shooting
Metropolitan Police Department footage shows a man wearing a motorcycle helmet, identified by police as 27-year-old Mario B. Trejo, with one arm wrapped around a woman’s neck and held a handgun to her head.
Sunset Park Vigil
A small group of people gathered in Sunset Park to remember the three children recently killed in the area.
TOP NEWS
News Headlines
Add Event
Home Front Page Footer Listing
Circular
You May Like

You May Like