US law enforcement agencies have seized 18 cryptocurrency ATMs in Texas and Oklahoma, which were purchased using fraudulent loans from the Small Business Administration (SBA). The SBA loans were intended to provide financial assistance to small businesses affected by the Covid-19 pandemic. According to the US Department of Justice (DOJ), Charles Riley Constant, also known as Chuck Constant, used the loans to buy bitcoin from a New York-based cryptocurrency exchange.
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The DOJ arrested Constant on charges related to his alleged involvement in the theft and laundering of more than $1 million in fraudulently obtained SBA loans, including using the proceeds to buy cryptocurrency ATMs. Constant's Coindawg LLC website and ATMs were also seized during the operation.
Constant and his accomplices created fake identities and businesses to obtain seven Economic Injury Disaster Loans from the SBA, according to the DOJ. The money was intended to help businesses financially impacted by the Covid-19 pandemic. However, Constant reportedly used approximately $700,000 of the fraudulently obtained funds to buy bitcoin from the cryptocurrency exchange.
Coindawg, which was started using the fraudulently obtained loans, has already exchanged over $3,000,000 worth of cryptocurrency, charging a transaction fee of 15%, as per the DOJ.
Constant, who is 54 years old and resides in Allen, Texas, has been charged with one count of conspiracy to commit money laundering, one count of theft of public money, and one count of interstate receipt of stolen money. If convicted, he faces a maximum sentence of 20 years in prison for conspiracy to commit money laundering and 10 years each for theft of public money and interstate receipt of stolen money.
The DOJ's seizure of the Coindawg crypto ATMs highlights the ongoing efforts of law enforcement agencies to clamp down on illicit financial activities involving cryptocurrency. It also serves as a reminder to businesses to be cautious while applying for government-backed loans and to maintain transparency in all financial transactions to avoid any legal complications.
