I don't see anything wrong over here. That dude was operating an exchange without a license. He would have gotten it if he has applied for it. Not sure why he didn't. Maybe he probably wasn't aware? Or he was aware and was up to something.
I hope he gets a proper justice if he is wasn't aware and has no ill intention. But, if he does had some ill intentions, he is going to get screwed under the money laundering law.
I think if it was just a license problem the sentence wouldn't be so tough. The point is that he was being investigated for a long time already and federal agents collected irrefutable evidences of his awareness about money laundering when dealing crypto currency with his customers.
He also admited that, like we can see on the link below:
Well, he did allegedly help to launder up to 25M$ through his Bitcoin ATM network. Apparently, an undercover agent managed to purchase 14,500$ at a given ATM during September 2018, failing the ATM owner to file the necessary reports for the sums. If that was not enough, he also transacted similar amounts with some other undercover agents in person (allegedly workers from a "karaoke bar" that went the extra mile for their customers), also failing to file the necessary reports. Twice shy ...
https://www.justice.gov/usao-cdca/pr/oc-man-admits-operating-unlicensed-atm-network-laundered-millions-dollars-bitcoin-andMohammad generally did not inquire as to the source of the clients’ funds and on many occasions he knew the funds were the proceeds of criminal activity. Mohammad admitted that he knew at least one Herocoin client was engaged in illegal activity on the dark web.
Federal intelligence seems to be very attentive to crypto businesses. If someone is willing to work on this field it's better to follow all the government's requirements, especially the ones regard money laundering practice.