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Author Topic: Sellers in Illinois, US  (Read 519 times)
mediafeener
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September 02, 2016, 03:47:47 PM
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Hi, are folks who sell coins in illinois registering as a "licensed money transmitter"? I just got into selling coins (low volume right now) and I came across an article from a while back of a guy in Normal who was sentenced to 4 years in prison for selling coins because he wasn't licensed. Has me a little worried. Do I need to register as a licensed money transmitter? Are other folks in Illinois getting licenses?
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thejaytiesto
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September 02, 2016, 03:58:10 PM
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What kind of money was the guy that got put into prison for 4 fucking years? That's insane if he was selling small amounts. I guess that if you are selling like less than 300 bucks a month it does not matter and you don't even need to report that to the IRS, but im not sure how selling Bitcoin works, I have sold less than 300 bucks of my BTC ever so I didn't even bother looking into it since im holding long term.

What is "low volume"? how much are you going to be selling a month?

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September 02, 2016, 04:05:44 PM
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I am not an accountant,  but I would think that if you do it for personal reasons as opposed to actually running a business,  there's a huge difference.   You can sell whatever you want as long as it's not illegal to own, but when you start selling things for a living, then the government has to regulate you.  Specifically I don't think you need a license.  I live in Connecticut and haven't had trouble.   I don't sell a whole lot though.



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mediafeener
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September 02, 2016, 04:14:18 PM
 #4

looks like it was $3MM in 18 months!

http://www.pantagraph.com/news/local/crime-and-courts/b-n-man-sentenced-for-illegal-bitcoin-operation/article_30069152-125b-5ef1-8d19-e8f8176678de.html

Right now I'm only doing about $5k volume per month, but I'd like to get up to doing like $50k volume per month.
Senor.Bla
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September 02, 2016, 05:04:23 PM
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looks like it was $3MM in 18 months!

http://www.pantagraph.com/news/local/crime-and-courts/b-n-man-sentenced-for-illegal-bitcoin-operation/article_30069152-125b-5ef1-8d19-e8f8176678de.html

Right now I'm only doing about $5k volume per month, but I'd like to get up to doing like $50k volume per month.

you will have a hard time explaining this to the law if you try so sell this amount as private and not a business. and if you are running a business handling other peoples money then there is always some kind of licence necessary. to be sure ask a layer (you should be able to afford it) or become a fulltime criminal, be aware of it and face the consequences.

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September 02, 2016, 06:17:09 PM
 #6

Hi, are folks who sell coins in illinois registering as a "licensed money transmitter"?

Some are.  Some aren't.  It depends on the specifics of what they are doing, and why. (and whether they care about following the law).

Back in early 2015 the Illinois Department of Financial & Professional Regulation ( http://www.idfpr.com/ ) released a notice indicating that Illinois residents didn't need a state license to buy and sell bitcoins.

Quote
Notice Regarding Virtual Currency Licensure
The Illinois Department of Financial and Professional Regulation (IDFPR) has not yet made a determination as to the requirement of licensure of virtual currency (also known as crypto currency) providers, converters and/or exchangers, or dispensing machines (ATMs) but continues to review the matter. IDFPR is not accepting applications for virtual currency licensure at this time.

IDFPR recommends that all parties interested in virtual currency issues regularly monitor IDFPR's website for further updates. IDFPR will not penalize Applicants/Licensees for any virtual currency activity conducted in the State of Illinois during the deliberative process should it be determined that licensure is required.

That was about 18 months ago, so you may want to contact them and make sure that their stance on the issue hasn't changed since then

Keep in mind, that's ONLY the state's stance on the matter.  Illinois is a part of a larger government known as The United States of America, and the USA has their own regulations completely separate from the Illinois State regulations.

The US agency known as FinCEN (Financial Crimes Enforcement Network) has indicated that if you want to operate a business that exchanges U.S. currency for Bitcoins (or vice-versa), you need to register with them as a Money Service Business.  Supposedly, if you are just buying or selling for personal use, you don't need to register. Once you register with them, you will be required to abide by all the legal AML and KYC regulations that any other Money Service Business is required to abide by (including but not limited to filing SAR and CTR reports when necessary).

So, the question you need to figure out is:
Will the government decide that your activities are a "business" or will they decide you are simply purchasing or selling for "personal use"?

As BurtW can testify to, what the government decides isn't always reasonable.

See here:
http://www.jmwagner.com/
and here:
http://www.burtw.com/

I used to buy and sell in the Chicago area, but then decided that the risk was too high.  The governenment isn't certain exactly how to regulate bitcoin related transactions, and eager enforcement professionals looking to make a name for themselves (or some extra cash for their department) can make a lot of crazy assumptions about you.  Then you're stuck paying a lot of money to try and defend yourself in court for an activity that you thought was providing a legitimate, useful, and valuable service to your community.

It really all depends on the specifics.  The devil's in the details.  If you want to be sure that you are doing everything appropriately, you probably need to talk to a lawyer that is familiar with the laws in the area.

Note that, regardless of whether you need to register or not, you'll want to be especially careful not to engage in anything that could be described as "money laundering":

There have been bitcoin sellers arrested and accused of "participating in money laundering" because they were told that the bitcoins they were selling were being bought to pay a ransomware ransom, and the seller didn't contact the authorities. Since they were helping the criminals receive payment (by selling bitcoins to the victim) they were charged.

There have been bitcoin sellers arrested and accused because the buyer (who turned out to be an undercover cop) claimed at the time of the exchange that they would be using the bitcoins for an illegal activity (buying stolen credit card numbers, buying drugs online, etc). They seller went ahead with the exchange anyhow, and was then arrested.

Also, please be careful and very aware of your surroundings at all times.  Be ready to walk away from any transaction no matter how profitable it might seem if anything feels "off" at all.  Criminals and scammers will attempt to use greed as a tool to manipulate you.
 
There have been buyers (and sellers) that have been robbed by their "customer".  One buyer I know of went to meet up at a crowded bar. The "seller" failed to show up and instead sent a txt saying that he couldn't make it and would have to meet some other time.  When the buyer went to return to his car the "seller" was waiting in the dark parking lot with a gun. He knew exactly where the buyer would be, and exactly how much cash the buyer would have on him since he had set up the meeting.

I've done a LOT of research into this in Illinois and contacted my State Representative, Illinois Department of Financial & Professional Regulation, the State's Attorney's office, my District Attorney, and a few other government agencies trying to get answers back in 2014.  Feel free to contact me if you want to discuss this further.

mediafeener
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September 02, 2016, 11:23:34 PM
 #7

Wow DH, that is a wealth of information. I couldn't have asked for a better response. Thanks a ton. Gives me a lot to think about right now. I'll heed the warning and probably talk to a lawyer if I decide to continue.
Cryptonitex
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September 03, 2016, 01:57:53 AM
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The point of BitCoin is anonyms transactions, so let's not meet up with real people because we can't always trust them.
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September 03, 2016, 02:26:05 AM
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With the pathetic financial condition our state is in, you'd think law enforcement would have other priorities than to crack down on cryptocurrency users. (Unless it is profitable for the government to seize their assets, I suppose. But I rather doubt it is given the bureaucracy of the court system.)

Luke 12:15-21

Ephesians 2:8-9
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September 03, 2016, 03:38:26 AM
 #10

Hi, are folks who sell coins in illinois registering as a "licensed money transmitter"? I just got into selling coins (low volume right now) and I came across an article from a while back of a guy in Normal who was sentenced to 4 years in prison for selling coins because he wasn't licensed. Has me a little worried. Do I need to register as a licensed money transmitter? Are other folks in Illinois getting licenses?

How much bitcoin do you have right now that you fear being caught by the cops. If its a small amount them there is no problem but if you have a huge volume then its better to get a license and permit to sell. Just cooperate with the law and your taxes will benefit the society. So just a suggestion just secure permits if you are afraid of going to prison, being legal is the best way.

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