Firoz Patel, the inventor of the cryptocurrency app, will spend three and a half years in jail for concealing 450 Bitcoin after being convicted of money laundering.
A Canadian founder of a crypto payments app has been sentenced to an additional three and a half years in prison by a US judge for his efforts to conceal the 450 Bitcoin that he was required to forfeit after being convicted of money laundering.
In September, Payza founder Firoz Patel pleaded guilty to one count of obstruction of an official proceeding before federal court judge Dabney Friedrich in Washington, DC. The Department of Justice announced the sentence on February 6.
Patel attempted to conceal and launder 450 Bitcoin, which are presently valued at over $43.5 million. He concealed the Bitcoin from a federal court that was overseeing his 2020 case, in which he found guilty to conspiracy to operate an unlicensed money-transmitting business and to Launder Money.
Patel was sentenced to three years in prison and two years of supervised release in 2020 for operating Payza. Prosecutors claimed that the company processed cryptocurrency payments in the United States without a license and served money launderers, multilevel marketing, Ponzi, and pyramid fraudsters.
Patel was also required to identify and surrender any property he had acquired from operating Payza as part of his 2020 sentence. However, he claimed that he only had $30,000 in a retirement account.
The DOJ stated that Patel began collecting Payza’s BTC shortly after his sentencing and prior to his imprisonment. He attempted to deposit the BTC with Binance, but the crypto exchange flagged and subsequently closed his account in April 2021.
Prosecutors claimed that he subsequently established an account at Blockchain.com in his father’s name and attempted to transfer the Bitcoin there. However, the exchange also flagged the deposit and blocked the funds. Patel subsequently instructed a business associate of Payza to provide the exchange with a false identification in order to defrost the funds.
Prosecutors claimed that Patel became aware of their investigation into the 450 BTC while serving his three-year sentence and enlisted a person to impersonate a counsel as his release date approached.
According to the Department of Justice, Patel employed the fictitious attorney to deceive prosecutors for an extended period of time in order to escape the United States and evade further prosecution. However, investigators discovered the scheme and indicted him once more prior to his release.
Judge Friedrich also mandated that Patel forfeit the 450 BTC that Blockchain.com currently possesses, as well as serve three years of supervised release and forfeit over $24 million. In addition to his new prison sentence, Patel remains under supervision.
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