Canadian who tried to hide 450 Bitcoin from feds gets more prison time

A US judge has sentenced a Canadian crypto payments app founder to another three and half years in jail for trying to conceal the 450 Bitcoin he was ordered to forfeit after being convicted on money laundering charges. 

Washington, DC, federal court judge Dabney Friedrich sentenced Payza founder Firoz Patel to 41 months in jail after he copped to one count of obstruction of an official proceeding in September, the Department of Justice said on Feb. 6.

Patel tried to hide and launder 450 Bitcoin (BTC), currently worth over $43.5 million, which he hid from a federal court handling his 2020 case in which he pleaded guilty to conspiracy to operate an unlicensed money-transmitting business and to launder money.

In 2020, Patel was sentenced to three years in jail plus two years supervised release for operating Payza, which prosecutors said processed crypto payments in the US without a license and served money launderers along with multilevel marketing, Ponzi and pyramid scammers.

As part of his 2020 sentence, he was also ordered to identify and hand over any property he had gained from operating Payza, but Patel claimed he only had $30,000 in a retirement account.

Shortly after his sentencing and before going to jail, the DOJ said Patel began gathering Payza’s BTC and tried to deposit it with Binance, but the crypto exchange flagged and then closed his account in April 2021.

Prosecutors said he then opened an account at Blockchain.com in his father’s name and tried to transfer the Bitcoin there, but the exchange also flagged the deposit and froze the funds. Patel then told a Payza business associate to give fake identification to the exchange in a bid to thaw the funds.

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Prosecutors said Patel became aware of their investigation into the 450 BTC while serving his 3-year sentence and enlisted someone to impersonate a lawyer as his release date drew closer.

The DOJ said Patel hired the fake lawyer to dupe prosecutors long enough so that he’d be released and could then flee the US to avoid further prosecution — but investigators discovered the plot and indicted him again before he was set to be released.

In addition to his new prison sentence, Judge Friedrich also ordered Patel to three years of supervised release and to forfeit over $24 million along with the 450 BTC that Blockchain.com currently holds.

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