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Author Topic: How to NOT be a victim of a sting operation  (Read 7212 times)
BCB
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February 07, 2014, 11:20:34 PM
 #21

Yep.

The complaint against the guy who was arrested a couple weeks ago (not Shrem) said that an undercover informant attempted to buy some Bitcoin and said "I need these Bitcoin because I've got my eye on a sweet bag of cocaine on Silk Road" or some similarly ridiculously stupid thing.

The seller ignored the request and never sold him coins (but they still mention it in the complaint which is interesting)

What guy? Someone on reddit? They still charged him with it even if he ignored it?


No the guy who was arrested same day as Shrem, same, case, same complaint...I don't recall his name

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February 07, 2014, 11:23:47 PM
 #22

Evidently you can buy and sell bitcoin for personal use.  Miner's can also sell bitcoin for personal use (electricity, rent, goods and services etc).  This activity does not require registration with Fincen.

However if you buy and sell bitcoin, "as a business" you could be seen as a "money transmitter" in some states.  The regulations and the clarification of these regulation are VERY vague.  

And if you buy and sell bitcoin with someone who is involved in criminal activity that definitely makes you complicit, even if you have NO knowledge of their activity.  

Wrong again.

I guess you're just pulling this stuff out of your arse. You can buy/sell bitcoin for your own benefit. That includes profit. The catch is it has to be your own benefit, ie, you can't buy/sell on behalf of clients (like exchanges). Again, that's federal.

As for U.S. states it is currently undefined. The arrests in Florida would not have happened, I'll almost guarantee, if there was no mention of criminal intent.

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February 07, 2014, 11:23:53 PM
 #23

.

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February 07, 2014, 11:26:55 PM
 #24

So if I am reading that right would the following scenerio place ebayers in same bucket?

I.E. the folks selling Crypto for USD on ebay = violation?

If that's the case someone should dial ebay, cause they allow for Classified Ads on their site for people wanting to sell Crypto lol

I have seen 100k dogecoin go for 400+ dollars

http://www.ebay.com/itm/271379434523?_trksid=p2055119.m1438.l2649&ssPageName=STRK%3AMEBIDX%3AIT

 ... that means the person handling that transaction is committing a crime if they do it 25 times? (for those that cant multiply 25x400=10k)

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February 07, 2014, 11:28:18 PM
 #25

Evidently you can buy and sell bitcoin for personal use.  Miner's can also sell bitcoin for personal use (electricity, rent, goods and services etc).  This activity does not require registration with Fincen.

However if you buy and sell bitcoin, "as a business" you could be seen as a "money transmitter" in some states.  The regulations and the clarification of these regulation are VERY vague.  

And if you buy and sell bitcoin with someone who is involved in criminal activity that definitely makes you complicit, even if you have NO knowledge of their activity.  

Wrong again.

I guess you're just pulling this stuff out of your arse. You can buy/sell bitcoin for your own benefit. That includes profit. The catch is it has to be your own benefit, ie, you can't buy/sell on behalf of clients (like exchanges). Again, that's federal.

As for U.S. states it is currently undefined. The arrests in Florida would not have happened, I'll almost guarantee, if there was no mention of criminal intent.

Running an unlicensed money transmission in Florida is illegal.
http://www.flsenate.gov/Laws/Statutes/2011/560.125

This is also makes it a federal offence:

"is operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law, whether or not the defendant knew that the operation was required to be licensed or that the operation was so punishable;"
http://www.law.cornell.edu/uscode/text/18/1960


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February 07, 2014, 11:29:50 PM
 #26

So if I am reading that right would the following scenerio place ebayers in same bucket?

Potentially.  It is a matter of "fact and circumstances."

No clear cut rules yet. 
acoindr
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February 07, 2014, 11:31:29 PM
 #27

Running an unlicensed money transmission in Florida is illegal.
http://www.flsenate.gov/Laws/Statutes/2011/560.125

That's what I'm trying to tell you. Bitcoin is not yet defined as money, either by state or federal. Think of it this way: if the people arrested were trading two wheelbarrows full of grass for $30K would they have been in violation as money transmitters?

The only reason they were arrested was because criminal intent was mentioned. Put that together with their high volume and unclear legal area for Bitcoin and the authorities seized their chance to clamp down and provide a chilling effect at the same time.
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February 07, 2014, 11:34:03 PM
 #28

Running an unlicensed money transmission in Florida is illegal.
http://www.flsenate.gov/Laws/Statutes/2011/560.125

That's what I'm trying to tell you. Bitcoin is not yet defined as money, either by state or federal.

This judge disagrees: http://arstechnica.com/tech-policy/2013/08/federal-judge-bitcoin-a-currency-can-be-regulated-under-american-law/

"The Internet unshackled information, Satoshi Nakamoto unshackled money. And money makes the world go round."
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February 07, 2014, 11:36:35 PM
 #29

Running an unlicensed money transmission in Florida is illegal.
http://www.flsenate.gov/Laws/Statutes/2011/560.125

That's what I'm trying to tell you. Bitcoin is not yet defined as money, either by state or federal.

This judge disagrees: http://arstechnica.com/tech-policy/2013/08/federal-judge-bitcoin-a-currency-can-be-regulated-under-american-law/

Yes, I know about the Pirate case. It's different. It does start the outline of some legal precedent, but that's not the same as written law. Judges can't legislate only adjudicate. Also, there are two separate levels (fed/state).
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February 07, 2014, 11:40:00 PM
 #30

pretty much makes LocalBitcoins transactions illegal in Florida.
BULLSHIT.

Laundry may be a charge they attempt to tack on, but they never would have made the sting without the accessory to a crime part... They know better than we do that bitcoin isn't a currency so it can't be laundered.

My whole point was that they were busted because they were selling BTC to criminals. STOP SPREADING FUD, it scares the noobs.

maybe you should read the article again, dipshit.
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February 07, 2014, 11:42:43 PM
 #31

Running an unlicensed money transmission in Florida is illegal.
http://www.flsenate.gov/Laws/Statutes/2011/560.125

That's what I'm trying to tell you. Bitcoin is not yet defined as money, either by state or federal.

This judge disagrees: http://arstechnica.com/tech-policy/2013/08/federal-judge-bitcoin-a-currency-can-be-regulated-under-american-law/

Yes, I know about the Pirate case. It's different. It does start the outline of some legal precedent, but that's not the same as written law. Judges can't legislate only adjudicate, and again there are two separate levels (fed/state).

This was a very specific ruling with regards to a very specific case:

****
It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money.
****

This ruling does not, however, allow the Texas Department of Banking to declare bitcoin a "currency" and regulate it as "currency exchange" instead of "money transmission."
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February 07, 2014, 11:51:53 PM
 #32

This was a very specific ruling with regards to a very specific case:

Yes. That's my point. That can't possibly apply to Bitcoin in its entirety. It's one judge.

This ruling does not, however, allow the Texas Department of Banking to declare bitcoin a "currency" and regulate it as "currency exchange" instead of "money transmission."

It doesn't allow Texas to regulate it as either currency exchange or money transmission. Don't you see? You're thinking exactly like they want you to, which is they can interpret law as they see fit. They cannot unless people allow it. To be involved in money transmission you must be transmitting money. The question then becomes what is money? That has to be defined somehow. Otherwise, like I say what happens with wheelbarrows full of grass cases?

The government will be reluctant to legally write that Bitcoin is money, because when they do it causes an avalanche effect of all sorts of things to apply, legitimacy being just the start. Yet until it is specifically defined as money any charge of money laundering can be successfully challenged. This is what I believe anyway. I'm not a lawyer.
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February 08, 2014, 12:03:38 AM
 #33

To be involved in money transmission you must be transmitting money. The question then becomes what is money? That has to be defined somehow.

I am not a lawyer either but I believe this is where you are incorrect.

virtual currency is "other value that substitutes for currency." 

- at least according to FinCEN.

so unless you or someone can take that to court and challenge it, so that is pretty much the law in the US.
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February 08, 2014, 12:06:02 AM
 #34

I am not a lawyer either but I believe this is where you are incorrect.

virtual currency is "other value that substitutes for currency."  

- at least according to FinCEN.

so unless you or someone can take that to court and challenge it, so that is pretty much the law in the US.

Again, that's FinCEN. That's federal. What happened in Florida pertains to Florida state case law. I don't have to be a lawyer (and neither should you) to know there is a difference between federal and state. That's why, for instance, registering with FinCEN as a money transmitter, which is actually pretty easy, does NOT mean you can operate in all 50 states. It only clears you federally. You must also fit within the legal box of each state separately (which is where it gets expensive/complex). State and federal are separate legal jurisdictions.
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February 08, 2014, 12:57:17 AM
 #35

I am not a lawyer either but I believe this is where you are incorrect.

virtual currency is "other value that substitutes for currency."  

- at least according to FinCEN.

so unless you or someone can take that to court and challenge it, so that is pretty much the law in the US.

Again, that's FinCEN. That's federal. What happened in Florida pertains to Florida state case law. I don't have to be a lawyer (and neither should you) to know there is a difference between federal and state. That's why, for instance, registering with FinCEN as a money transmitter, which is actually pretty easy, does NOT mean you can operate in all 50 states. It only clears you federally. You must also fit within the legal box of each state separately (which is where it gets expensive/complex). State and federal are separate legal jurisdictions.
Damn you 10th Amendment! Grin

On a serious note, there is so much muddiness with this. On one hand, this forces the conversation again about what is "money" in this new age (I recall this being discussed during the .com boom and then later on with game currencies being exchanged and bartered for real money, but I can't remember if anything substantive came of it).

Even the current definition about "virtual currency" is too loose especially when referring to Bitcoins. And the fact that you can be charged if you supply someone who is going to use Bitcoin for nefarious/illegal purposes is quite murky in and of itself. I mean, I don't think the same kind of ruse would be used with USD per se in the sense. Although, the amounts and that sort of thing kinda hinted at quite the egregiousness.
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February 08, 2014, 02:34:17 AM
 #36

Damn you 10th Amendment! Grin

"powers not granted to the federal government"


We may need preemption at the federal level before we see any clarity in this issue.
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February 08, 2014, 02:36:23 AM
 #37

Damn you 10th Amendment! Grin

This is the thing. We need to recognize our legal footing. We are in the right. It's the feds that are out of compliance with the U.S. Constitution.

Gambling is largely considered illegal in the U.S., but it absolutely thrives in Nevada. That's because that state asserted its constitutional authority, feds be damned. This is also starting to happen with states pushing back against federal drug laws, especially regarding marijuana. Even Obama said he will back off states that push back in that way.

Most of us here have no illusion about how disruptive Bitcoin is and how much the feds have incentive to push against it. We need to know about and use every legal and political weapon we have.
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February 08, 2014, 03:22:06 AM
 #38

Damn you 10th Amendment! Grin

This is the thing. We need to recognize our legal footing. We are in the right. It's the feds that are out of compliance with the U.S. Constitution.

Gambling is largely considered illegal in the U.S., but it absolutely thrives in Nevada. That's because that state asserted its constitutional authority, feds be damned. This is also starting to happen with states pushing back against federal drug laws, especially regarding marijuana. Even Obama said he will back off states that push back in that way.

Most of us here have no illusion about how disruptive Bitcoin is and how much the feds have incentive to push against it. We need to know about and use every legal and political weapon we have.

I agree, there is definitely a non-compliance by the federal government. And that disruption is one of the strongest things that we have.
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February 08, 2014, 03:26:35 AM
 #39

I went to the teller at the bank and withdrew some money and told the teller, "ya, I need this to buy drugs". Just a chuckle and a "good luck" as she handed me my money.

Should I report Chase bank?

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February 08, 2014, 05:28:43 AM
 #40


pretty much makes LocalBitcoins transactions illegal in Florida.


Yes it does and yes it is.  Sad but true
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