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ARTICLE · 04 MAY 2026

Second Circuit Affirms Broad Interpretation Of Federal Money Transmitter Laws For Crypto Exchanges

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The US Court of Appeals for the Second Circuit recently expanded federal anti-money-laundering exposure for cryptocurrency exchanges, ruling that in-person bitcoin-for-cash transactions may constitute money transmitting under federal law.

United StatesTechnology
Drew C. Harris
Drew C. Harris
Maahi Saini
Maahi Saini

The US Court of Appeals for the Second Circuit recently held that in‑person exchanges of bitcoin for U.S. currency may constitute "money transmitting" under federal law, significantly expanding potential exposure under federal anti‑money‑laundering statutes for cryptocurrency exchange activities.

Mustafa Goklu operated a bitcoin‑for‑cash exchange business in the New York area, advertising the business on LocalBitcoins and charging commissions for converting cryptocurrency to US currency. Over several months, he completed multiple in‑person exchanges with an undercover DEA agent, totaling roughly $130,000, and continued doing so even after being told the bitcoin originated from drug trafficking. The DEA subsequently arrested Goklu, and he was convicted of money laundering under 18 U.S.C. § 1956 and operating an unlicensed money transmitting business under 18 U.S.C. § 1960.

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