Bitcoin Forum

I've noticed that I can buy bitcoins at market rate on coinbase.com and then resell them on localbitcoins.com for plus 12% of market value. Obviously, there is a little work involved. Dealing with numerous emails, small transactions, etc, and the potential for fraud.

However, it's not a lot of work, mainly just pushing the escrow release button 4-5 times a day after verifying deposits into my bank account.

Since I can sell around $1200 in coin per day, minus 1 percent for localbitcoins and 1 percent for coinbase, I can net about $120 per day, which is currently more than my day job.

Now, if something seems too good to be true, it generally is. In other words, the profits seem too easy for the work involved, that I worry that I'm missing something? I would think that the ease of profit would encourage more people do to it, thus making more competitive prices on localbitcoins and driving the price down.

What am I missing?

Will the feds eventually bust down my door for being a money changing business without a license? 
Will my bank eventually notice that I'm selling bitcoins and suspend my bank account?
Will the IRS notice what I'm doing and charge me with tax evasion if I don't report my profits at year's end?
Will I eventually get scammed somehow from a buyer, thus slashing my profits?
Will something else unforeseen happen to dissolve all profits?

My biggest worry would be if you do it too much you'd be considered a money changing service, or whatever it's called and get in trouble with the Feds. I don't think the bank can take your money. They'd just close the account if they knew it was for bitcoins.

The profit comes at a cost known as risk.


The Feds (probably FinCEN) might come after you for failing to file a SAR, they might come after you for Failure to register as a MSB, and if you aren't careful, they might try to collar you for Money Laundering.

Many states also have regulations requiring you to get a license from the state as either a money service business or possibly a money transmitter.  You'll have to check with your own state to determine if that would be necessary.


They might, but even if they don't, they might notice an unusual amount of cash deposits as well as the fact that the cash deposits are coming from all over the country.  An internal investigation may lead them to believe that your activities are considered "high risk".  Even if they don't realize that you are engaged in bitcoin business, they might decide that whatever you are doing is more risky than their risk assessment team is willing to accept.  As such, they may cancel all your accounts with them and it may be difficult to convince other banks to consider you.


Easy way to solve that problem.  Report your profits and pay your taxes.


If you're careful, and you make sure you know what you're doing, scams shouldn't be a problem.  However, it certainly is a possibility.  Another possibility is that localbitcoins could shut down and run off with all the bitcoins you've stored at their site (or be hacked and have all your bitcoins stolen from them).  It's been known to happen in the past with other well known and well respected sites.


There are several other risks, but probably one of the more significant that you haven't mentioned yet is the possibility that you buy bitcoins from Coinbase, and before you get a chance to sell them, the market crashes resulting in selling the bitcoins for less than you paid for them.

Assuming your goal is $120/day (and lets call it 5 days a week), you're talking about moving around 6k every week back and forth.

Luckily your bank will shut you down before the government does, but probably not before you end up on every watch list there is. You might be able to pull it off longer with multiple accounts, that will likely raise flags when 1) the credit bureau (not exactly, its a separate not quite like FICO and shit that banks use for accounts) reports back that you opened a bunch of accounts 2) when all these banks report 1099-INT's to the IRS.

Add on top the traditional risk (reversals, freezes, assorted other unforeseen losses), it seems like a shitty way to make a buck.

You could sell gluten free cookies at farmers market for fucks sake and make more than $600 a week, don't get drawn into shit arbitrage because it doesn't sound like work.

This.  The number of personal bank account which have $6K per week (>$300K annually) in cash deposits is essentially 0%.  I don't care if you are banking with NorthWest Incompetence they are going to notice $300K in cash deposits.   

I sell USB sticks on ebay...

Costs me $0.10 per 4GB stick... sells for $5.00

Why people want those so bad, I have no idea. School?

800 pcs. a month makes for great returns. ($3360) Plus a great seller rating, with minimal losses. (Easy to just print-up a label and have the post come to pick them up in bulk.)

Best way to make money with BTC, is just buy some low. Hold and forget them for about two years... or ten... or twenty... (Not sure how old you are. :P)

Depends on where you're located.  There are regional variations.  Some areas have been as tight as 4%, others as loose as 20%.  It really depends on how much local competition there is.

There's an old saying, "Pigs get fat on bitcoin, but too much bitcoin and you'll become a fat hog. Fat hogs get slaughtered."

In other words, don't get greedy;
1. Pay your taxes.
2. Check your state laws. Florida's limit is $300. Other states are usually $1000. Do not change more than these amounts with the same person in the same day. https://www.ffiec.gov/bsa_aml_infobase/documents/FDIC_DOCs/BSA_Manual.pdf (https://www.ffiec.gov/bsa_aml_infobase/documents/FDIC_DOCs/BSA_Manual.pdf)
3. Do not deposit or withdraw more than $10,000 cash from your bank. http://en.wikipedia.org/wiki/Currency_transaction_report (http://en.wikipedia.org/wiki/Currency_transaction_report)
4. If your customer says he wants to do something illegal with the BTC, refuse to do business with him. Remember, money laundering is obfuscating the source of the money which was illegal. The 2 men arrested in Florida was told by their customer that they wanted to use the bitcoin to buy stolen credit cards. ests-may-be-first-state-prosecution.html]http://www.bloomberg.com/news/2014-02-09/miami-[Suspicious link removed]ests-may-be-first-state-prosecution.html (http://www.bloomberg.com/news/2014-02-09/miami-[Suspicious link removed)
5. Do the transaction in a bank so that you won't get robbed and the bank tellers can tell you if the fiat are real or fake.

If you break these rules because you're greedy, then you only have yourself to blame. Don't be greedy!

You dont have the necessary licenses to be a money transmitter.  Do this long enough and you'll probably get arrested.

In my country is much easier, you don't have to get money transmitter license, you simply register a company and you can start making money selling bitcoins on LB :) (https://www.youtube.com/watch?v=KX80cKbGzao)

This is sharp business and very straight transaction. I think the only issues you will be having will be your bank who on noticing the frequency of the inflow will ask some question which your attention might be needed. You may likely be in some problems if your country is yet to adopt cryptocurrency so check and confirm the position of your country on crypto before you will be in a big problem.

If it does work for you and you profit a lot from that then you shouldn't stop it and continue on what ever you are doing because not all does that.

absolutely because it becomes a good opportunity for you to benefit while still profitable, so don't ever stop while still earning income from it

How long have you been doing this for? You mentioned the risk of being scammed but maybe you didn't factor this in. All it takes is losing 1 BTC and suddenly you're back 25 days with regards to your $120 profit per day.

is your country an African country?
I am very sure of the rules in most African countries don't "break" business and at the same time have Zero tolerance for illegal businesses, fraud, money laundering , etc.