$1.3 million seized from crypto dealer in illegal exchange crackdown

March 15, 2024 Robert Abruzzese, Courthouse Editor

Alfonse M. D'Amato United States Courthouse in Central Islip.
Photo: Americasroof via Wikimedia Commons

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David Scotese, a 54-year-old resident of Murrieta, California, pleaded guilty to running an unlicensed crypto exchange and agreed to forfeit more than $1.3 million in cryptocurrency, cash, and precious metals. The plea was entered in federal court in Central Islip before U.S. District Judge Joan Azrack, with Scotese facing up to five years in prison at sentencing.

The case was announced by a coalition of law enforcement agencies, including the United States Attorney for the Eastern District of New York, Breon Peace, and officials from the IRS-Criminal Investigation, Homeland Security Investigations New York, the NYPD and the United States Postal Inspection Service.

“With his guilty plea today, Scotese is taking responsibility for operating a money exchanging and transmitting business in defiance of the critical legal requirements that are intended to secure our financial system from corruption by drug traffickers and other criminals,” U.S. Attorney Breon Peace said.

“This prosecution should serve as a warning to other ask-no-questions, black-market money transmitting businesses that FinCEN registration and regulatory compliance are not mere technicalities but a necessary part of our collective efforts against crime and that we will prosecute unlicensed money transmitters who flout these rules,” Peace continued.

Since 2016, David Scotese has operated online as a crypto exchanger without registering with FinCEN or getting a state license, violating laws meant to prevent money laundering. At his arrest, he had more than $130,000 in cash and valuable assets from this illegal business. Scotese has now agreed to forfeit these, including significant coins, precious metals and cryptocurrency holdings.