Federal authorities arrested the founder of Coindawg, a bitcoin ATM operation, and charged him with money laundering, saying he helped steal pandemic loans and used the ATMs to launder the proceeds.
Charles Riley Constant was part of a scheme to claim more than $1 million in bogus loans, prosecutors said. He laundered about $700,000 of the money back to co-conspirators through bitcoin purchases and stole the remaining $300,000 himself, pumping the money into his Coindawg ATMs, a federal agent said in court documents.
Mr. Constant was arrested Wednesday.
“He converted the bulk of the crime proceeds into Bitcoin for his co-conspirators and used a portion of the rest to start his own lucrative cryptocurrency ATM business,” Damian William, the U.S. attorney for the southern district of New York, said in announcing the charges.
Authorities said the Small Business Administration loans were filed under false identities and for nonexistent companies.
The money was paid into and moved through accounts controlled by Mr. Constant, and he doled out $700,000 of the money in bitcoin to others involved in the scam, prosecutors said.
With some of the remaining money, he bought the Coindawg ATMs, which he placed in Texas and Oklahoma, churning more than $3 million in cryptocurrency withdrawals while charging a 15% transaction fee.
Authorities seized 18 of the ATMs as part of the investigation.