In its first such enforcement action taken against a peer-to-peer (P2P) cryptocurrency exchanger, the Financial Crimes Enforcement Network (FinCEN) has meted out a $35,000 fine to Californian Eric Powers for willfully violating the Bank Secrecy Act’s (BSA) registration, program, and reporting requirements in his operation as a P2P exchanger of convertible virtual currency. He is also barred from operating anything that constitutes a money service business under FinCEN, including remittance services.

In its press release (Apr 18), FinCEN said that over the course of almost two years from December 2012 to September 2014, Powers made an estimated 1700 transactions buying and selling Bitcoin in the name of his clients without registering with FinCEN. He processed several suspicious transactions without filing any Suspicious Activity Report (SAR), and conducted business related to the illicit darknet marketplace “Silk Road”. He also served customers through The Onion Router (TOR) without determining customer identity or whether funds were from illegal activity.

Furthermore, Powers advertised his services on public sites like bitcointalk.org, and helped users of defunct crypto exchange Mt. Gox to finalize their digital transactions.

Powers also completed more than 200 transactions involving the transfer of more than $10,000 in fiat without filing a Currency Transaction Record (CTR). Some 160 Bitcoin purchases worth about $5 million were transacted in cash transactions with people from an online forum, mostly done in public places such as coffee shops.

Powers was also found guilty of knowing what FinCEN compliance requires, but did not take any active steps to meet them.

“We will take enforcement action based on what we have publicly stated since our March 2013 Guidance—that exchangers of convertible virtual currency […] are money transmitters and must register as MSBs,” FinCEN director Kenneth A. Blanco said of the case.