United States v. Lord

Michael and Randall Lord (defendants) operated a Louisiana business that sold Bitcoin in exchange for cash, credit card payments, or other payment forms. After receiving payment from a customer, the Lords would buy Bitcoin from another online Bitcoin exchange called Coinbase and then transfer the Bitcoin to the customer after taking a commission. In the spring of 2014, Coinbase informed the Lords that they were required to register with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) because they were acting as Bitcoin exchangers. In July, the Lords falsely told Coinbase that they were registered with FinCEN. In fact, the Lords did not register until November. In November 2015, the United States indicted the Lords for, among other things, violating 28 U.S.C § 1960 by operating an unlicensed money-services business. Per the United States, the Lords violated § 1960 because they (1) did not have a Louisiana money-services license and (2) did not comply with federal regulations requiring money-services businesses to register with FinCEN. The Lords pleaded guilty to violating § 1960. However, before sentencing, the Lords moved to withdraw their guilty pleas based on Louisiana’s confirmation that Louisiana did not require the Lords to obtain a state license. The United States opposed the Lords’ motion, arguing that the Lords’ guilty pleas were supported by the Lords’ failure to register with FinCEN.