Bitcoin Forum

The real risk on LocalBitCoins is something you're not even considering. I am talking to those that sell on LocalBitCoin for face-to-face transactions in cash.

Am I talking about receiving counterfeit bills? No..

Am I talking about being robbed? No..

There is a much bigger, and frankly more concerning, threat. That threat is Law Enforcement sting operations.

I've been selling on LocalBitCoin for a while. Most of the people I meet are speculators, curious newbies and more recently, people paying encrypted data ransoms.

But today was different. But today has happened to me before. Allow me to explain.

Received a text from a potential buyer yesterday. In his text messages he's trying to give the appearance that he's being "discreet", but at the same time divulging information makes it look like he's engaged in something illegal.

<me> Are we still on for today for the Bitcoin?
<him> Yeah, I am waiting on a package from UPS and then I'll be there.
<me> Ok, text me when you're ready.
<him> Ok. After I get this package I have to drop it off near you and make some moves. Then I'll be there.
<me> 12:30pm ok with you?
<him> Once I pick this stuff up, I'll be there. Yeah, 12:30pm is good.

On the surface, this text interaction appears fairly innocuous, right? Not necessarily. I call this the "priming" stage of a law enforcement sting. These texts would be included in the discovery of any court action, and combined with other evidence, start to appear quite incriminating.

So, at 12:30pm I meet this guy. The interaction goes like this.

<me> Nice to meet you.
<him> Same to you.
<me> So you want xxxx of Bitcoin, right?
<him> Yeah..
<me> What wallet do you use?
<him> I have an address for you to send it to.
<me> You don't have a wallet on your phone?
<him> No, I have an address for you to send it to.
<me> Ok, that's fine...we can check Blockchain to confirm that I sent it after it's sent.

<I start logging into my Blockchain phone app...a brief moment of silence. He sets the money on the table, I count it and confirm the bills are legitimate and set it back down on the table.>

<him> So, you know..I can get like whatever.
<me> What do you mean?
<him> I do all sort of different kinds of work. I'm a handyman.
<me> Oh yeah? What kind of handyman work do you do?
<him> You know, if someone needs to get hurt, I can do that.
<me> That's not really something I need.
<him> Oh, ok. I can get like whatever you need though. Weed, ecstasy..whatever.
<me> I'm not involved with that sort of thing. I honestly want nothing to do with it.
<him> You know, if you ever need.

<pause, brief silence>

<me> I gotta be honest with you. Since now I have a reason to believe that you will be using these coins for something illegal, I cannot sell to you. I don't get involved with the stuff that you're talking about.
<him> You serious? I was just saying..
<me> It would be illegal for me to sell you coins if I have any indication that you're going to be using them to purchase anything illegal. Money laundering statutes are vague and law enforcement is out trying to create cases because Bitcoin is a hot topic at the moment.

<he gets this look on his face like, "Oh, fuck. I thought I had a sucker.">

<me> In any event, it was good to meet you.
<him> Ok. You too.

<we part ways>


The recent criminal case in Florida with the "unlawful money transmitter" and money laundering charges is alarming. Read the statement of fact from those cases. YOU WILL BE HELD ACCOUNTABLE FOR WHAT YOU SAY. Cumulatively, if the statements made/text messages/emails/testimony from informant/LE appears to be money laundering, you WILL be indicted/charged. They are creating crime in order to prosecute it. Despicable? Yes...but that's the country we live in now. (Well, if you live in the US)

In my state, there is no legislation regarding Bitcoin sales...yet. According to FinCEN guidance, I do not need a money transmitter license because I am trading on my own account. I am completely compliant with the law as it now exists. People need to bear in mind that the line between legal and illegal in the world of Bitcoin is very thin. Merely making statements about anything illegal while conducting a Bitcoin transaction could potentially result in criminal action. Combine this with the overzealous nature of American law enforcement and you have a very serious concern.

Aside from the legal ramifications, I don't want to sell to people that are going to use it to buy drugs. I want to sell Bitcoin locally because I like meeting like-minded people that share the same interest/curiosity as me. I like having 20-30 minute conversations with newbies answering questions about Bitcoin. The more I spread information about Bitcoin, the more it flourishes and the higher the resulting price. This is my motivation behind selling Bitcoin locally. (Despite the ever-cynical thinking of law enforcement, we're not all looking to "fund terror!")

I just wanted to reiterate what other people should already know: IF YOU'RE SELLING ON LOCALBITCOINS AND SOMEBODY MENTIONS ANYTHING UNLAWFUL (or even gives you any suggestion that they intend to) DO NOT SELL THEM BITCOIN. You will get yourself in very serious trouble.

Law enforcement used to be an honorable profession. Today, it's about statistics, quotas and politics. Right and wrong isn't even a factor. Entrapment laws are intentionally skirted and called something else. These people should be ashamed of themselves.

I was honestly considering using BTC before, but after I read this I've made my mind up. Thank you for the heads up.

I respectfully disagree.

For you and I, online exchanges are a great idea. That's because we know what the scammer signs are.

To the complete newbie, in person is the ONLY smart way. I can't count how many Bitcoin newcomers have told me, "I tried to buy on this or that site and never received my Bitcoin."

In person + cash = 90% guaranteed to receive your coin.

In person + cash + dealing with me = 100% guaranteed to receive your coin.

But today was different.

FBI? No.
CIA? Definitely no.
DEA? Possibly an informant working with them.
Local/State douchebag LE? Most likely.

They are creating crime in order to prosecute it.

This is pretty standard these days.

This is pretty standard these days.

They really do that? Man that's really messed up!!! I know there are strange things going on these days, but that's really mean. I mean.. wow... Really sad and messed up! How can you protect yourself from such a thing?

Also: Where is it illegal to sell Bitcoin in the US? I had no idea it was...

It is illegal to knowingly sell bitcoins to someone who has admitted they will be used for criminal activity. That covers all of the US.

It is illegal to knowingly sell bitcoins to someone who has admitted they will be used for criminal activity. That covers all of the US.

That is not true. You need to follow AML regulations when selling BTC for cash. In a nutshell these include verifying the identity of the person you are dealing with and reporting any transaction over a certain threshold.

Since many/most traders are likely unaware of AML regulations, LE (undercover) will often say they are using the BTC illegally to give the trader a reason to look into the regulations and rules regarding AML.

Thanks for the post, I had something very similar happen. He had addresses on a piece of paper, not even QR codes and admitted they were not his. I felt uncomfortable about the whole thing and declined to sell the coins.

There is a lot of paranoia in this thread. It isn't as bad as people are making it out to be. Face-to-face transactions are safe and easy. Online selling is risky because of chargebacks and fraud. Even cash bank deposits can be reversed.

Just stick to small amounts and stay away from people talking about criminal activity, and you have nothing to worry about.

This is called entrapment and used to be illegal in the old day.

The way that OP handled the situation is prefect.

Once the talk about illegal stuff came up, end the transaction and walk away.

OP is correct about money laundering and law enforcement.   

If he limit his transaction to 500-1000 per sale. The law enforcement may not even bother him.

There is a lot of paranoia in this thread. It isn't as bad as people are making it out to be. Face-to-face transactions are safe and easy. Online selling is risky because of chargebacks and fraud. Even cash bank deposits can be reversed.

Just stick to small amounts and stay away from people talking about criminal activity, and you have nothing to worry about.

I do wish the OP had called the police on the "buyer" just for laughs. Ask to file a report, fake being all concerned etc. Get the feds involved to investigate for added yucks. :D

Even *if* he was not LE, and actually *was* trying to sell me drugs...I still wouldn't tell on him.

I wouldn't ever do that.

I am not my brothers keeper.

Even *if* he was not LE, and actually *was* trying to sell me drugs...I still wouldn't tell on him.

My hatred for the tyranny of our draconian legal system trumps all.

You should have turned the tables on him and told him you know someone looking for a hitman.

Then when he says he can do that, call the cops for conspiracy to murder.

By saying that, you'd be part of the conspiracy.

Actually you wouldn't, saying you know someone isn't illegal. How do you think they set people up in those fake hitman stings?

The person who says "yeah I might know a guy" then rings the police doesn't get arrested.

You should have turned the tables on him and told him you know someone looking for a hitman.

Then when he says he can do that, call the cops for conspiracy to murder.

Once you say "yeah I might know a guy" to the entrapping police officer, you've provided probable cause to arrest for conspiracy to commit murder and prima facie evidence for prosecution, despite your actual intent. Just about every conspiracy defendant claims "but I was just trying to be a good Samaritan!" and they fail.

The only things you should say to entrapping police should be: "I'll discuss it with my lawyers, {the name of the District Attorney} and {a well-known defense attorney}. We'll be in touch, bye."

No, if you said "I know a guy who might be interested" and then promptly called the police/FBI (a different LE agency than this guy worked for obviously) then you could not be prosecuted. You haven't done anything illegal under a conspiracy law because you haven't agreed to a specific act.

How the FUCK could you promptly call the police WHEN YOU ARE IMMEDIATELY PLACED IN HANDCUFFS!? Do you have a cellphone in your brain?

Never mind, from your first post I thought you knew what conspiracy laws meant.

Then you would have replied differently.

As if government is absolutely constrained by laws. Jesus... /brickwall

You're right, they'd arrest you before you'd legally committed conspiracy, and then any prosecutor would simply throw it out right away whilst your lawyer laughed at the charges.

Police know conspiracy laws better than you do, they wouldn't blow their wad too soon.

There are effectively no real punitive consequences for judicial misconduct, malicious prosecution, and false arrest.

Go elsewhere to trick people ignorant of that fact into self-incrimination.

Oink.

You're a fuckin retard

I bet you say that to every civilian who exercises their right against self-incrimination.

I think cops are fucking retards too usually, but when they're trying to set someone up for conspiracy they're smarter than you.

...

Law enforcement used to be an honorable profession. Today, it's about statistics, quotas and politics. Right and wrong isn't even a factor. Entrapment laws are intentionally skirted and called something else. These people should be ashamed of themselves.