A U.S. federal judge has sentenced Firoz Patel, the founder of crypto payments platform Payza, to an additional 3.5 years in prison after he attempted to conceal 450 Bitcoin (BTC) worth $43.5 million from authorities. This sentencing follows his 2020 conviction for operating an unlicensed money-transmitting business and laundering illicit funds.
Patel’s Initial Conviction and Asset Forfeiture Order
In 2020, Patel was sentenced to three years in prison and two years of supervised release after pleading guilty to:
- Conspiring to operate an unlicensed money-transmitting business.
- Laundering funds through Payza, which processed crypto payments without a license and was used by money launderers, Ponzi schemes, and pyramid scammers.
As part of the sentence, Patel was ordered to identify and forfeit any property acquired through Payza, but he falsely claimed he only had $30,000 in a retirement account.
The 450 Bitcoin Laundering Attempt
Before going to prison, Patel gathered Payza’s hidden Bitcoin holdings and tried to launder the assets through multiple exchanges:
- Failed Binance Transfer – Patel attempted to deposit the 450 BTC into Binance, but the exchange flagged the transaction and shut down his account in April 2021.
- Fake Blockchain.com Account – Patel then opened a Blockchain.com account under his father’s name and attempted to transfer the Bitcoin there. This account was also flagged and frozen.
- Identity Fraud Attempt – To regain access to the frozen Bitcoin, Patel instructed a Payza associate to provide fake identification to the exchange in an attempt to unfreeze the funds.
Patel’s Plan to Escape Prosecution
While serving his original sentence, Patel discovered that prosecutors were investigating his hidden Bitcoin stash. As his release date approached, he:
- Hired a fake lawyer to deceive prosecutors and delay further legal action.
- Plotted to flee the U.S. upon release to avoid additional prosecution.
However, U.S. authorities uncovered the scheme, leading to a fresh indictment before his scheduled release.
New Sentencing and Forfeiture Order
On Feb. 6, Washington, D.C. federal judge Dabney Friedrich sentenced Patel to:
- 41 months (3.5 years) in federal prison.
- Three additional years of supervised release.
- Forfeiture of over $24 million, along with the 450 BTC that remains frozen in Blockchain.com’s custody.
Lessons from the Case: Crypto and Financial Crime Enforcement
Patel’s failed laundering attempts highlight the increasing role of crypto exchanges in detecting illicit activity. Both Binance and Blockchain.com flagged and froze suspicious transactions, reinforcing the importance of:
- Strict Know Your Customer (KYC) and Anti-Money Laundering (AML) policies.
- Regulatory oversight to prevent illicit use of digital assets.
- Exchanges cooperating with authorities to track and seize illegally obtained funds.
Conclusion
Firoz Patel’s latest sentencing reinforces the U.S. government’s strong stance against crypto-related financial crimes. His attempts to conceal and launder Bitcoin not only failed but resulted in an even longer prison term.
As authorities continue tightening crypto regulations, this case serves as a warning to those attempting to exploit digital assets for illicit activities—demonstrating that even blockchain transactions can be traced and blocked by vigilant exchanges.
