Trader Pleads Not Guilty in Landmark Case: UK’s First Illegal Crypto ATM Prosecution

In a case that could set a precedent in the United Kingdom, a 37-year-old trader has pleaded not guilty to charges related to operating an illegal cryptocurrency ATM business

Habibur Rahman, a 37-year-old trader from East Ham, London, has pleaded not guilty to charges related to operating an illegal cryptocurrency ATM business and laundering approximately $395,000 in criminal cash. This marks the first time an individual has been prosecuted in the UK for operating unregistered crypto ATMs.

Rahman’s legal troubles began in April 2023 when Kent Police executed a search warrant at his mobile phone shop in Chatham. During the search, officers seized multiple cryptocurrency ATMs, including one prominently displayed in the shop. The Financial Conduct Authority (FCA), the UK’s financial regulatory body, mandates that all operators of crypto ATMs must be registered with the agency, a requirement that Rahman allegedly disregarded.

Money Laundering

Following the seizure of the ATMs, Rahman was arrested and subsequently charged with running an unregulated business and illegally converting cash into cryptocurrency between April and June 2022. Prosecutors allege that Rahman laundered £300,000 (approximately $395,000) by converting it into cryptocurrency through these unregistered ATMs.

Rahman’s initial court appearance took place at Medway Magistrates’ Court, where he entered a plea of not guilty to all charges. The case has since been transferred to Maidstone Crown Court, with the next hearing scheduled for November 7th.

The FCA has been actively cracking down on unregistered cryptocurrency operations, highlighting the inherent risks associated with these businesses. Matthew Long, the FCA’s director of payments and digital assets, issued a stark warning to the public, stating that using unregistered crypto ATMs could potentially expose individuals to criminal activity and financial losses. “If you are using one of these machines, you could be handing your money to criminals,” Long emphasized.

This landmark case follows another recent FCA enforcement action against Olumide Osunkoya, a London-based trader who pleaded guilty to operating an illegal network of crypto ATMs that processed over $3 million in transactions. Osunkoya’s conviction marked the UK’s first successful prosecution related to illegal crypto ATM operations.

The FCA’s increased scrutiny of the cryptocurrency sector, particularly unregistered activities, reflects a broader initiative to enhance regulatory oversight and protect consumers from the growing risks associated with cryptocurrencies. The outcome of Rahman’s case could have significant implications for the future regulation of crypto ATMs and other cryptocurrency-related businesses in the UK.

As the use of cryptocurrencies continues to expand, the FCA is expected to maintain its vigilant approach to ensure that the sector operates within a robust regulatory framework, safeguarding consumers and maintaining the integrity of the financial system.

Crypto Fraud On the Rise

Unfortunately, the crypto industry continues to attract fraud and scammers. The FBI’s 2023 IC3 Cryptocurrency Report highlights over 69,000 cryptocurrency-related complaints, with losses exceeding $5.6 billion, a 45% increase from 2022. 

Source: FBI

Investment frauds accounted for 71% of all losses. Other scams include tech support, extortion, and government impersonation. Criminals exploit crypto’s decentralized and irreversible nature for fraud and money laundering. 

Source: FBI

The report stresses rapid complaint reporting and provides tips for avoiding scams. Older victims reported the highest losses, especially from confidence-enabled investment fraud. Read the full report here.