Defendant Sentenced for Operating Unlicensed Bitcoin Exchange

A McLean County man has been sentenced to four years in prison for operating an unlicensed internet Bitcoin exchange, announced U.S. Attorney Jim Lewis.

Chief U.S. District Judge James E. Shadid sentenced John D. Powell, 55, of Normal, Ill., to 48 months in prison for operating an unlicensed Bitcoin exchange on the internet. Powell was also ordered to serve three years of supervised release following his incarceration.

Powell’s Bitcoin exchange business allowed individuals increased anonymity by exchanging cash anonymously for Bitcoin, allowing individuals to conduct transactions anonymously. Investigators found that Powell received more than $3,000,000 from individuals during an 18-month period ending in February 2014, even though he had not registered, as required by law, as a money service business with either the State of Illinois or the United States.

The case was prosecuted by Assistant U.S. Attorney Bradley W. Murphy. The investigation was conducted by the Internal Revenue Service Criminal Investigation and the U.S. Postal Inspection Service.

On July 31, 2014, Powell entered an open plea of guilty to two counts of operating an unlicensed money service business. Following the sentencing hearing, Powell was remanded to the custody of the U.S. Marshals Service.

Powell had been placed under pretrial release supervision with conditions, including that the defendant not use or unlawfully possess illegal drugs. However, in support of revocation of Powell’s pretrial release, the petition cited four occasions from July 29 to September 11, 2014, when the defendant submitted to testing for a prohibited substance and tested positive for cannabis.

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