The US Department of Justice (DOJ) sentenced a father and son duo in Washington to five years in federal prison for running an illegal $13 million marijuana business alongside a Bitcoin-for-cash money laundering scheme.
According to a DOJ press release, Kenneth Warren Rhule (28) and Kenneth John Rhule (47), agreed to exchange Bitcoin for cash and offer advice on how to use digital currency to hide funds.
The pair also operated an unlicensed manufacturing and distribution facility in Monroe, selling marijuana products for cash or cryptocurrency to customers across the country while failing to pay state taxes. The Rhules’ business generated over $13 million in sales and a $2.5 million net profit.
The law enforcement first knew someone using the screen name “Gimacut93” was running an unlicensed bitcoin exchange business in 2018. So, they sought an undercover agent to meet Kenneth Warren on multiple occasions, primarily in some Starbucks.
The agent pretended to be a human trafficker looking to launder money. Rhule, knowing the money being involved in criminal activity, exchanged $142,000 in Bitcoin for cash with the agent without a KYC.
The US DOJ charged the father and son following an investigation by the Department of Homeland Security and the Drug Enforcement Administration in 2020.