Arizona Bitcoin dealer Thomas Mario Costanzo, who worked under the pseudonym Morpheus Titania, has been sentenced to 41 months in prison for five counts of money laundering, supposedly to facilitate drug trafficking. His case reveals how far police can go to take down a Bitcoin dealer.
Costanzo’s legal problems started in 2015 with a felony conviction for marijuana possession, a substance which is now legal in most of the United States. In April 2017, police raided his apartment, on suspicions that he was operating an unlicensed money transmitter business via selling Bitcoin. They found no incriminating evidence besides three boxes of bullets. Since he had a felony conviction for marijuana, he was arrested for the bullets, even though it was a personal amount that most other Americans are allowed to possess.
Evidence indicates that Costanzo was a cryptocurrency enthusiast, who had a good reputation as a Bitcoin dealer, and went as far as selling Bitcoin ATMs and Bitcoin mining rigs. When police raided his apartment, they found all of this but there was no evidence they could arrest him for.
Undercover police were said to approached Costanzo, telling him that they were drug traffickers and that they wanted Bitcoin. It is undisclosed just how far these conversations went but some view this move to be tantamount to entrapment.
Further, the police bought Bitcoin from Costanzo for two years before arresting him, indicating that the undercover agent probably developed a friendship with Costanzo.
An undercover agent organized a BTC 80 deal, worth USD 1 million or more depending on when the transaction occurred, and that’s when they arrested Costanzo. The court has ordered the Bitcoins be forfeited, calling it a forfeiture for illegal activity.
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