A Westwood man agreed Friday to plead guilty to federal criminal charges for owning and operating an unlicensed money transmitting business where, according to prosecutors, he exchanged up to $25 million in cash and virtual currency for individuals, including Darknet drug dealers and other criminals, some of whom used his Bitcoin ATM kiosk.
Kunal “Kumar” Kalra, 25 — also known as “shecklemayne” and “coinman” — agreed to plead guilty to four charges: distribution of methamphetamine, operating an unlicensed money transmitting business, laundering of monetary instruments, and failure to maintain an effective anti-money laundering program, according to the U.S. Attorney’s Office.
Prosecutors said it is the first federal criminal case charging an unlicensed money remitting business that used a Bitcoin kiosk.
According to court documents, from May 2015 through October 2017, Kalra operated a virtual currency exchange business where he exchanged U.S. dollars for Bitcoin and vice versa. Kalra charged commissions for exchanging dollars for Bitcoin, and he only dealt with high-volume customers willing to exchange at least $5,000 per transaction, federal prosecutors allege.
Kalra admitted in his plea agreement that he exchanged Bitcoin for cash from criminals, including those who received Bitcoin from selling narcotics on the Darknet.
Kalra established bank accounts in the names of others, including fake businesses, which allowed him, for a time, to conceal his illicit business activities, according to court papers.
Kalra also admitted to operating a kiosk — essentially an ATM — where his customers could exchange Bitcoin for cash and vice versa. Kalra profited from every transaction conducted on the ATM, where customers were not required to provide their identities, and Kalra did not install a camera or implement any features requiring customers to identify themselves, the plea agreement states.
The defendant also admitted that in 2017, he exchanged $400,000 in cash for Bitcoin for an undercover agent who contacted him online and later met him in person on multiple occasions at a coffee shop in Los Angeles. The undercover agent told Kalra that his virtual currency were proceeds of drug trafficking, and Kalra continued with various transactions, according to the plea agreement.
In June 2017, Kalra sold nearly two pounds of methamphetamine to an undercover law enforcement official in exchange for $6,000, according to the government. Kalra and the undercover agent later met at a coffee shop in Signal Hill to exchange $50,000 in Bitcoin for cash, which the undercover agent represented to Kalra was the proceeds of the sales of the meth that Kalra had sold to the agent, the plea agreement states.
Law enforcement seized nearly $889,000 in cash from Kalra’s bank accounts and vehicle, as well as 54.3 Bitcoin and other cryptocurrencies, prosecutors said.
Kalra is expected to make his initial federal court appearance in downtown Los Angeles next month. The maximum possible sentence he could receive for the charges is life in federal prison.
He also faces federal criminal charges in San Antonio, Texas, that allege he conspired to commit money laundering for a drug trafficking network that sold bogus prescription tablets, including some laced with methamphetamine and fentanyl.
In the plea agreement, Kalra also agreed to plead guilty to those charges in Los Angeles federal court, according to the U.S. Attorney’s Office.