DOJ Charges Crypto Exchange Operator For Impersonating Silk Road Money
The United States Department of Justice has indicted the operator of crypto exchange AurumXchange on charges of money laundering and siphoning off millions of dollars from the darknet market, Silek Rode said.
In an Oct. 28 statement, the DOJ said 53-year-old Maximiliano Pilipis operated AurumXchange and transferred more than $30 million in 100,000 transactions to the exchange, the indictment said.
From 2011 to 2013, American Ross Ulbrich, under the pseudonym Dread Pirate Roberts, ran Silk Road as a marketplace on the Tor network, allowing users to anonymously buy and sell products that were used by thousands of drug dealers.
In the year Phillips operated the exchange without a license from 2009 to 2013, the same year the FBI shut down Silk Road.
Phillips collected millions in cash to facilitate these transactions, including 10,000 bitcoins (BTC), worth $1.2 million at the time, the DOJ reported.
Related: $2B in Silk Road Bitcoin Seized by DOJ to New Wallet
Authorities also accuse Phillips of ignoring federal registration requirements for crypto exchanges by failing to register with the U.S. Treasury and reporting the exchange's activity to the federal government.
It said Know Your Customer (KYC) rules were not implemented in violation of Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations.
After AurumXchange was shut down, authorities said Phillips split and transferred the bitcoins and other assets he earned from operating AurumXchange to “disguise the proceeds of crime.”
He was then accused of converting the crypto into US dollars that was used for real estate investments in Arcadia and Noblesville, Indiana.
One of the Phillips Report properties in Noblesville, according to real estate listings, is currently held by a bank. Source: Redfin
In the proceeding, officials said Phillips' properties received hundreds of thousands of dollars in income in 2019 and 2020 and did not file tax returns.
A federal grand jury returned an indictment replacing Phillips on five counts of felony charges and failure to file tax returns.
If convicted, he could face up to ten years in prison and a fine of up to $250,000.
However, a federal district court judge will ultimately decide Phillips' fate based on sentencing guidelines and other legal factors, meaning the sentence could be lighter.
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