Analysis of the Coin.MX Trial Underway | dinbits


This one is going to get interesting quickly. Trial has begun for the Coin.MX exchange, a platform that shot themselves in the ass and resulted in the arrest of several including founder Anthony Murgio. 

Sparks are already beginning to fly and one thing is becoming apparent, it's going to be every man for himself atop every finger pointed at Murgio who has plead guilty to charges of bribery and fraud. If the other defendants have anything to do with it, he'll be guilty of all of their charges as well and the finger pointing is in full force.

The Cast

Before we get to far into this, lets refresh the memory on the cast of this comedy/drama.


Anthony Murgio 
Coin.MX Founder

Status: Plea Bargain

Arrested July 21st, 2015, Murgio has since plead guilty to three counts, including conspiracy to operate an unlicensed money transmitting business and conspiracy to commit bank fraud. 

He is currently awaiting sentencing.




Trevon Gross
Pastor
Former Chairman of the Board, HOPE FCU

Status: On Trial

Currently on trial. Accused of accepting over $150,000 in bribes as the Chairman of the Board of the credit union that served primarily low-income local residents in New Jersey.

Gross is pointing the finger at Murgio.  


Trevon Gross charges:
  1. Receipt of commission for procuring loans (receipt of corrupt payments as an officer of a financial institution)
  2. Receipt of corrupt payments with intent to influence an officer of a financial institution
  3. Conspiracy to operate an unlicensed money transmitting business; make & receive corrupt payments; obstruct an examination of a financial institution & make false statements
  4. Receipt of commission for procuring loans (receipt of corrupt as an officer of a financial institution)


Michael J. Murgio
School Board Member
Father of Anthony Murgio 

Status: Plea Bargain, Sentenced

Murgio Sr. lied to the National Credit Union Administration. He's already pled guilty to the charge. Remember kids, it's a federal offence to lie to a financial institution.  He was sentenced to 1 year probation and a $12,000 fine on January 27th.




Ricardo Hill 
Coin.MX Marketing Manager 
Business Development Coordinator

Status: Plea Bargain

Plead guilty to seven counts on January 17 including bank fraud, wire fraud and conspiracy to operate an unlicensed money-transmitting business


Jose M Freundt 
Coin.MX Secretary.

Status: Plea Bargain

Freundt plead guilty to conspiracy to operate an unlicensed money transmitting business, operating an unlicensed money transmitting business and conspiracy to corruptly make payments to an officer of a financial institution, each of which carries a maximum sentence of 5 years in prison; and (oh there's more) one count of corruptly making payments to an officer of a financial institution, one count of conspiracy to commit wire fraud, and one count of wire fraud, each of which carries a maximum sentence of 30 years in prison. 

Yuri Lebedev

Coin.MX Operator

Status: On Trial

Apparently the technical brains of the operation, Yuri, like Gross, is currently on trial. He faces some serious charges:
  1. Conspiracy to make corrupt payments (two counts)
  2. See #1 (2nd count)
  3. Conspiracy to make corrupt payments with intent to influence an officer of a financial institution
  4. Making corrupt payments with intent to influence an officer of a financial institution
  5. Conspiracy to operate an unlicensed money transmitting business; make & receive corrupt payments; obstruct an examination of a financial institution & make false statements
  6. Receipt of commission for procuring loans (making corrupt payments with intent to influence and officer of a financial institution)
  7. Attempt and conspiracy to commit wire fraud & bank fraud
  8. Fraud by wire, radio, or television
  9. Bank fraud

The Plot

Now this is where it gets rather ridiculous and these guys define the term idiot. 

They put all of the pieces in place to operate completely legally with the exception of actually operating legally. Something that likely would have cost them a couple grand to setup and actually saved them some reporting (assuming they even did reporting, which apparently they didn't).

On the surface Coin.MX appeared to be a legitimate and legally operating bitcoin exchange where customers could buy bitcoin with credit and debit cards.

If you weren't around or don't remember Coin.MX, they likely had the strictest KYC program of any exchange, to the point is was hard to fathom that they were not following the rules. The had legal agreements, privacy policies, rules, limited, identification verification, 3D-Secure validation, and basically anything and everything under the sun to know who you were and exactly how many Satoshi you purchased.

The problem was they just didn't file some paperwork and failed to file reports.

The brain farts didn't stop there however, instead of using a processor and a bank to take payments for bitcoin, they decided to bribe a credit union and for what reason? Nobody knows and it makes absolutely no sense unless they really are guilty of everything above because unless they were knowingly doing something illegal, there was simply no reason to bribe anyone for anything. 

It makes finger pointing and thoughts of not-guilty pleas just silly to think about. That's possibly why the first 4 defendants just gave up to begin with.

Last Call 

The last two however, refuse to go down without a fight and they're wizard defense is to blame it all on Murgio. 

Sounds potentially valid, however, under this line of thinking both a technical guru that ran the internet operation at Coin.MX and the Chairman of the Board at a Credit Union that was bribed have to both convince a jury that they were so ignorant that despite the fact they already had everything implemented and operational to comply with federal law and despite the fact that there was absolutely no reason to "hide" the fact they were selling bitcoin, that they simply had no clue why they masked their products, hid things from the bank, and didn't report a damn thing.

I mean if you're really that dumb then you better hope for a true jury of your "peers" because this is going to be a hard one to swallow when they both likely knew what was being hidden and Gross would have to admit he was completely incompetent due to the mandatory AML training someone in his position would have had to have taken.

This is not to say that's not exactly what happened, just saying it's going to be a hard sell.

Same goes for Coin.MX as a whole. With everything setup as it was, there was no reason for them to ever had been operating illegally. It's just plain stupid and it's hard to believe anyone could be that stupid and as a defendant, one would have to convince a jury of that very stupidity.

In reality, either they really were that stupid or they know they were aiding terrorist funding and/or money laundering and chose the course they did in an attempt to fly under the radar.

It comes down to which scenario a jury is going to buy. The defense is going to have to paint a picture of two very dumb and clueless men who were victimized by a brainwashing mastermind. Like I said, it's a hard sell.

Verdict?

It's too early to know how this will end up but the mudslinging Murgio's way has already began. Both men have accused Murgio of single-handedly doing it all while they sat innocently by and while they were unknowingly breaking the law.

Which leads to another issue. Federal law doesn't allow unknowingly operating an unlicensed money transmission or unregistered money services business as a valid defense. Regardless of if they really were that dumb or not, they can and likely will be found guilty for those charges and both men are charged with "Conspiracy to operate an unlicensed money transmitting business". 

Whereas federal law states (18 U.S. Code § 1960) that one who "knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business" is committing a crime, it goes on to state:

(1) the term “unlicensed money transmitting business” means a money transmitting business which affects interstate or foreign commerce in any manner or degree and—
(A) is operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law, whether or not the defendant knew that the operation was required to be licensed or that the operation was so punishable;
(B) fails to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code, or regulations prescribed under such section; or

Not to mention these two have this part to worry about as well:

(C) otherwise involves the transportation or transmission of funds that are known to the defendant to have been derived from a criminal offense or are intended to be used to promote or support unlawful activity;

It appears as though Gross and Lebedev already have an uphill climb and given the the hefty $12,000 fine and year probation or Sr. Murgio for the lesser offense of lying to a credit union, they may be in some serious trouble along with the rest of the clan who have already plead guilty. 

The finger pointing at Murgio makes allot of sense and he may well be the one to blame, but unfortunately for Gross and Lebedev ... the federal law just doesn't care.




Article by dinbits
Image Credits:
Banner Image by dinbits.com staff
Portrait credits:

A. Murgio - WPTV.com
M. Mugio - WPTV.com
T. Gross - http://www.cutoday.info
R, Hill - LinkedIn.com


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