Florida men arrested for trading bitcoins!!!!

[seriouscoin]

Sounds like textbook entrapment...not that that matters to the USA Police State.

How could that be entrapment.  These guys were advertising on a public website to buy and sell bitcoins. Nothing illegal about that.  However if these guys would have said, wait, if you want to buy $30K i have to take your name and dob and ss# and address and telephone and I have to file a Currency Transaction Report with FinCEN, then there would have been no problem.  

Instead Law Enforcement threw in the fact that they were involved with illicit activity to show that these guys had no interest in obeying any existing law.

Pretty simple.

I'm not condoning or condemning the behavior.    I'm just stating facts.


 

The problem is.... you dont know the facts idiot.

First it already states by the police that buying/selling bitcoin can be felt into "money transmission type transactions " between $300-$20000 within 12 months period

Second, you dont know how the undercover agent express his "attempt to use bitcoin for criminal act". He could have made it sound like a joke. I would personal think its a joke if some stranger dude said "yo i'm buying stolen goods with this shit man". If thats not entrapment then i dont know what is

[1714174774]

1714174774

[Trance]

http://krebsonsecurity.com/2014/02/florida-targets-high-dollar-bitcoin-exchangers/


"According to court documents, the agent told Michelhack that he wanted to use the Bitcoins to purchase stolen credit cards online. After that trust-building transaction, Michelhack allegedly agreed to handle a much larger deal: Converting $30,000 in cash into Bitcoins."

there's the real story.

+1


Definitely sucks because now people MUST BE CAREFUL when selling Bitcoins if someone brings something up about illegal activities, you just need to say I dont want to know what you are doing with them or create a waiver to have customers sign!

When i worked for GNC, General Nutrition, we would have undercover GNC reps come in and ask what supplements I could sell them that would help them pass a drug test! It was horrible, they would try and entrap us so many times! Sometimes i felt bad because I really wanted to help the person that claimed they received "Second hand smoke" etc

Same concept but a bit different.

I make no sense.

[hilariousandco]

ouch... ive heard that bitcoins are gonna get banned here in australia too.... i guess its bad news for me who is just starting out !!

if they cant control it they dont want people having it!

Don't listen to rumours. Wait for facts. A lot of FUD is being spread around and you're helping it if you don't wait for confirmations.

[Trance]

Sounds like textbook entrapment...not that that matters to the USA Police State.

How could that be entrapment.  These guys were advertising on a public website to buy and sell bitcoins. Nothing illegal about that.  However if these guys would have said, wait, if you want to buy $30K i have to take your name and dob and ss# and address and telephone and I have to file a Currency Transaction Report with FinCEN, then there would have been no problem.  

Instead Law Enforcement threw in the fact that they were involved with illicit activity to show that these guys had no interest in obeying any existing law.

Pretty simple.

I'm not condoning or condemning the behavior.    I'm just stating facts.


 

The problem is.... you dont know the facts idiot.

First it already states by the police that buying/selling bitcoin can be felt into "money transmission type transactions " between $300-$20000 within 12 months period

Second, you dont know how the undercover agent express his "attempt to use bitcoin for criminal act". He could have made it sound like a joke. I would personal think its a joke if some stranger dude said "yo i'm buying stolen goods with this shit man". If thats not entrapment then i dont know what is

If they lawyer up they will get out of this one, we don't have enough details, perhaps the guy referred the agent to a black market website.

[DeathAndTaxes]

Sounds like textbook entrapment...not that that matters to the USA Police State.

It is not even close to entrapment.

http://en.wikipedia.org/wiki/Sherman_v._United_States

[First.Bitcoins]

The part of these cases that could have the most impact is not the sale coins to someone with malicious intent, but the fact that because of their volume of sales through localbitcoins.com they were both charged with failure to register as a "money transmitter" business. So does this mean that anyone who sells coins through localbitcoins.com (or a similar service) needs these state & federal licenses?

There was a recent ruling recently by the feds that seems to me to apply, but I am not an attorney.

--------------------------------------------------------------------------------------------------------
WASHINGTON, D.C. – The Financial Crimes Enforcement Network (FinCEN) today
published two administrative rulings, providing additional information on whether a person’s
conduct related to convertible virtual currency brings them within the Bank Secrecy Act’s (BSA)
definition of a money transmitter. The first ruling states that, to the extent a user creates or
“mines” a convertible virtual currency solely for a user’s own purposes, the user is not a money
transmitter under the BSA. The second states that a company purchasing and selling convertible
virtual currency as an investment exclusively for the company’s benefit is not a money
transmitter
---------------------------------------------------------------------------------------------------------

So I ask the question - if one buys and sells bitcoins in an attempt to make a profit (regardless of volume), using localbitcoins.com (or a similar service), then that activity is not considered to be a money transmitter, subject to the federal or state laws?

[DeathAndTaxes]

Second, you dont know how the undercover agent express his "attempt to use bitcoin for criminal act". He could have made it sound like a joke. I would personal think its a joke if some stranger dude said "yo i'm buying stolen goods with this shit man". If thats not entrapment then i dont know what is

Yeah that isn't entrapment.  If you honestly believed the person was joking then it is a possible defense.  However if you joke with me about illegal activity I am simply not going to do business with you.  Is it a joke? Maybe but it might not be and I don't have psychic powers so there really is no reason for me to do business with you.   If enough people on localbitcoin followed similar "policy" then people would stop joking (although honestly what % of buyers do you think joke about illegal activity with strangers, for all they know the seller is an undercover cop).  Then when someone "jokes" about illegal activity they either are a) a stupid criminal or b) an undercover cop.

In the long run it doesn't really matter if you believed someone was joking, it matters if nine people too dim witted to get out of jury duty thought the claim seemed like a joke.  If they find is to be credible and they wouldn't have gone through with the sale after that ... well you probably are going to prison.

[BCB]

The problem is.... you dont know the facts idiot.

We are having a civil conversation here.  Please avoid personal attacks. It's not very productive and basically discredits any legitimate argument you may be trying to make.

[yatsey87]

The part of these cases that could have the most impact is not the sale coins to someone with malicious intent, but the fact that because of their volume of sales through localbitcoins.com they were both charged with failure to register as a "money transmitter" business. So does this mean that anyone who sells coins through localbitcoins.com (or a similar service) needs these state & federal licenses?

There was a recent ruling recently by the feds that seems to me to apply, but I am not an attorney.

--------------------------------------------------------------------------------------------------------
WASHINGTON, D.C. – The Financial Crimes Enforcement Network (FinCEN) today
published two administrative rulings, providing additional information on whether a person’s
conduct related to convertible virtual currency brings them within the Bank Secrecy Act’s (BSA)
definition of a money transmitter. The first ruling states that, to the extent a user creates or
“mines” a convertible virtual currency solely for a user’s own purposes, the user is not a money
transmitter under the BSA. The second states that a company purchasing and selling convertible
virtual currency as an investment exclusively for the company’s benefit is not a money
transmitter
---------------------------------------------------------------------------------------------------------

So I ask the question - if one buys and sells bitcoins in an attempt to make a profit (regardless of volume), using localbitcoins.com (or a similar service), then that activity is not considered to be a money transmitter, subject to the federal or state laws?

It all depends on the volume.

[jongameson]

http://krebsonsecurity.com/2014/02/florida-targets-high-dollar-bitcoin-exchangers/


"According to court documents, the agent told Michelhack that he wanted to use the Bitcoins to purchase stolen credit cards online. After that trust-building transaction, Michelhack allegedly agreed to handle a much larger deal: Converting $30,000 in cash into Bitcoins."

there's the real story.

+1


Definitely sucks because now people MUST BE CAREFUL when selling Bitcoins if someone brings something up about illegal activities, you just need to say I dont want to know what you are doing with them or create a waiver to have customers sign!

When i worked for GNC, General Nutrition, we would have undercover GNC reps come in and ask what supplements I could sell them that would help them pass a drug test! It was horrible, they would try and entrap us so many times! Sometimes i felt bad because I really wanted to help the person that claimed they received "Second hand smoke" etc

Same concept but a bit different.

I make no sense.

u should have told them "anyone using cannabis or another drug has serious depressive issues, and should seek therapy instead of trying to work!"   

[BCB]

So I ask the question - if one buys and sells bitcoins in an attempt to make a profit (regardless of volume), using localbitcoins.com (or a similar service), then that activity is not considered to be a money transmitter, subject to the federal or state laws?

I am not a lawyer but it has to do with "facts and circumstances"

Also at what point does this activity become a "business"

then you are beholding to the Know Your Customer requirements, the Anti-Money Laundering requirements, the Suspicious Activity Requirements, and the Currency Transaction requirements.

Unfortunately there are no clear answers and it will take legislation or a precedent setting court case to bring more clarity.

For now consult a very smart lawyer who deals with Money Services Businesses.

[DeathAndTaxes]

Sounds like textbook entrapment...

How could that be entrapment.

'textbook entrapment' - been reading a lot of textbooks lately?  lol.  Most people have no idea what 'entrapment' means legally.  When the police 'trap' people, that is not entrapment - that is their job.  'Trapping' people is OK.  Unfortunately, most people think that when a cop traps you, it is not fair under the legal principle 'entrapment'.  In reality, these have almost nothing to do with each other.

If the police put you in a situation where you feel that you must break the law in order to protect your own physical safety, would that be 'entrapment'?

Possibly and most statutes have an exemption on non-violent crimes when it comes to the suspect feeling that not engaging would result in bodily injury or death of themselves or another person.  Of course these cops weren't dumb.  That is why gave the suspects plenty of time to report the first transaction, you know the one where they felt they were in immediate bodily danger.   Then setup a SECOND deal and gave the suspects time to report that.

Pretty obvious that was a way to kill that defense before it was made.

[leopard2]

Just because the undercover said " I want to use the BTCitcoins to purchase stolen credit cards" the seller of the BTCitcoin did not care and still sold the coins.

Makes them complicit in the illegal activity of "money laundering."

That is correct. But what if the cop would not have asked this? Just bought 1 BTC and $30K the next day? Does anyone here seriously think that would have been it?

Even if the guy would have said, $30K is above the $10K money laundering limit, that would not have helped, these cops were looking for an easy success instead of doing some real police work, catching some real scammers.

It is easy to reject a buyer who openly says he is doing something illegal; actually that would get you in trouble in almost every country. The $10K money laundering limit is also not the problem.  

The really nasty part about this case is that, obviously, everyone who sells anything for more than $300 in Florida for cash, commits a felony? Was that law copied from North Korea? Is that not against the constitution, to prohibit private citizens from selling their personal property (such as gold, silver, foreign currency that may be left over from a vacation, or BTC) for legal tender?

If Adolf had won the war, it couldn't be worse.

[seriouscoin]

The part of these cases that could have the most impact is not the sale coins to someone with malicious intent, but the fact that because of their volume of sales through localbitcoins.com they were both charged with failure to register as a "money transmitter" business. So does this mean that anyone who sells coins through localbitcoins.com (or a similar service) needs these state & federal licenses?

There was a recent ruling recently by the feds that seems to me to apply, but I am not an attorney.

--------------------------------------------------------------------------------------------------------
WASHINGTON, D.C. – The Financial Crimes Enforcement Network (FinCEN) today
published two administrative rulings, providing additional information on whether a person’s
conduct related to convertible virtual currency brings them within the Bank Secrecy Act’s (BSA)
definition of a money transmitter. The first ruling states that, to the extent a user creates or
“mines” a convertible virtual currency solely for a user’s own purposes, the user is not a money
transmitter under the BSA. The second states that a company purchasing and selling convertible
virtual currency as an investment exclusively for the company’s benefit is not a money
transmitter
---------------------------------------------------------------------------------------------------------

So I ask the question - if one buys and sells bitcoins in an attempt to make a profit (regardless of volume), using localbitcoins.com (or a similar service), then that activity is not considered to be a money transmitter, subject to the federal or state laws?

Fincen is only at Federal level. However we just notice the state law of Florida that you require a license for as such high volume would fall into Money service business.

[oOoOo]

Just because the undercover said " I want to use the BTCitcoins to purchase stolen credit cards" the seller of the BTCitcoin did not care and still sold the coins.

Makes them complicit in the illegal activity of "money laundering."

That is correct. But what if the cop would not have asked this? Just bought 1 BTC and $30K the next day? Does anyone here seriously think that would have been it?

Even if the guy would have said, $30K is above the $10K money laundering limit, that would not have helped, these cops were looking for an easy success instead of doing some real police work, catching some real scammers.

It is easy to reject a buyer who openly says he is doing something illegal; actually that would get you in trouble in almost every country. The $10K money laundering limit is also not the problem.  

The really nasty part about this case is that, obviously, everyone who sells anything for more than $300 in Florida for cash, commits a felony? Was that law copied from North Korea? Is that not against the constitution, to prohibit private citizens from selling their personal property (such as gold, silver, foreign currency that may be left over from a vacation, or BTC) for legal tender?

If Adolf had won the war, it couldn't be worse.

At this point in history it is basically impossible for the average person to keep up with all these random "money-laundering" laws, especially if they can be changed arbitrarily at any legislators whim. These so called "laws" are specifically designed to crush small business and individual entrepreneurs who can not afford an expensive law-team.

Also notice, how this was an entirely fabricated "crime". If it wasn't for the "law enforcement" officers, no "crime" would have ever happened. The officers apparently told those guys that they were intending to buy stolen credit cards, which was a lie - they weren't.
So who overstepped the moral boundaries here?

What I find particularly scary though is how here, in this very forum, people seem to fail to understand the crass immorality of these events, and are actually trying to justify the despicable behavior of the "law enforcement". You know, there also used to be people who tried to justify the nazis... just sayin....

.

[BlueNote]

Just because the undercover said " I want to use the BTCitcoins to purchase stolen credit cards" the seller of the BTCitcoin did not care and still sold the coins.

Makes them complicit in the illegal activity of "money laundering."

That is correct. But what if the cop would not have asked this? Just bought 1 BTC and $30K the next day? Does anyone here seriously think that would have been it?

Even if the guy would have said, $30K is above the $10K money laundering limit, that would not have helped, these cops were looking for an easy success instead of doing some real police work, catching some real scammers.

It is easy to reject a buyer who openly says he is doing something illegal; actually that would get you in trouble in almost every country. The $10K money laundering limit is also not the problem.  

The really nasty part about this case is that, obviously, everyone who sells anything for more than $300 in Florida for cash, commits a felony? Was that law copied from North Korea? Is that not against the constitution, to prohibit private citizens from selling their personal property (such as gold, silver, foreign currency that may be left over from a vacation, or BTC) for legal tender?

If Adolf had won the war, it couldn't be worse.

At this point in history it is basically impossible for the average person to keep up with all these random "money-laundering" laws, especially if they can be changed arbitrarily at any legislators whim. These so called "laws" are specifically designed to crush small business and individual entrepreneurs who can not afford an expensive law-team.

Also notice, how this was an entirely fabricated "crime". If it wasn't for the "law enforcement" officers, no "crime" would have ever happened. The officers apparently told those guys that they were intending to buy stolen credit cards, which was a lie - they weren't.
So who overstepped the moral boundaries here?

What I find particularly scary though is how here, in this very forum, people seem to fail to understand the crass immorality of these events, and are actually trying to justify the despicable behavior of the "law enforcement". You know, there also used to be people who tried to justify the nazis... just sayin....

.

Absolutely. So-called "money laundering" is not a real crime. There is no victim. It's just an attempt by the state to punish SOMEONE for the alleged crimes of the "guilty" who "violated" some other state edict which also probably does not have a real victim. It creates out of thin air a so-called conspiracy between provably innocent people and faceless nameless supposed criminals somewhere down the line of murky trade connections where an actual crime against person or property may or may not have occurred.

This is a perfect example of lawn enforcement creating a "crime" where none exists just to bully and intimidate people and create some sort of ridiculous justification for their existence. This is obviously not a real crime because there is no one to bring charges who can legitimately claim an injury or loss from this transaction. It's just a voluntary exchange of value. Period.

It's telling how they introduce the prospect of credit card fraud to make all of this seem like the seller willingly engaged in a conspiracy to defraud an actual person. The "money laundering" charge hangs on absolutely nothing but an edict from the state which takes away our right to freely engage in trade, so they always have to come up with some supposed real crime to insinuate into the mix even though no such crime has actually occurred. This makes the innocent seller, whose only interest is in selling bitcoins for dollars, an "accomplice" to non-existent crime against a non-existent person! The state makes it sound as if the orificer's lie establishes a real victim and a real crime. They also seem to insinuate that we are all personally responsible for the possible actions of people we trade with where there is absolutely no other connection to us, our actions, or our intentions. This is just guilt by association. It's a trick used every day in smearing and attacking people verbally. They use it in state propaganda, and now it has become entrenched in state law. The state has almost completely taken over every aspect of trade. If everything you do with your property and money is not fully controlled right now, then it is tracked and traced and noted and filed to the extent currently possible, and ready to be called up at any time to be used against you for any reason at any time. This is the real crime here - the state creating a situation where the innocent are made out of be guilty, where it's a "crime" to engage in voluntary exchange without the state's permission and without fully submitting to their demand to control your life.

It's one thing to comment on how to avoid becoming a victim of the state's absurd aggressions and their vague entrapping edicts and "regulations," but don't for one minute think you can justify the state's actions in any of these cases, or say that "these people had it coming". This and other cases such as the Bitinstant guy, the seizing of Mt. Gox's accounts in the US, and many others, are all completely bogus and have no merit whatsoever. They are clearly cases of state persecution. Anyone who doesn't make this clear in their comments is only contributing to the power of the police state.

They want us all thinking we're all guilty and that we deserve punishment. We all need to fight against this incessant and insanely creepy propaganda in our comments. Don't give these people any more power than they already have. We need to tear down their arguments and justifications for all the violence they commit, not mindlessly support it by blaming the people who get caught in their web.

[leopard2]

Money laundering IS a crime, a serious one, it is about turning black money into white, knowingly so.

Like in the Shrem case there was no ML here - only turning one form of white money into another one. The Florida case was a sale between two private counterparties, something that has been done for millenia, since money was invented. In ancient Rome you could swap an Aureus for a bunch of silver sesterce without being arrested.  

Now, the officer stated he would use that other form of white money to commit a crime, so the sale should have been cancelled. That part is clear.

However (and that is the key) Florida law is absolutely fascist since it automatically turns private citizens into ILLEGAL MONEY TRANSMITTERS.

Victimless crimes is not enough to keep all the govt. henchmen busy so now the trend is crimeless crimes.  

[tvbcof]

If the police put you in a situation where you feel that you must break the law in order to protect your own physical safety, would that be 'entrapment'?

Possibly and most statutes have an exemption on non-violent crimes when it comes to the suspect feeling that not engaging would result in bodily injury or death of themselves or another person.  Of course these cops weren't dumb.  That is why gave the suspects plenty of time to report the first transaction, you know the one where they felt they were in immediate bodily danger.   Then setup a SECOND deal and gave the suspects time to report that.

Pretty obvious that was a way to kill that defense before it was made.

If that is the way things went down, they ya, the seller is probably toast.  It won't be long before idiots like them are dropped from the Bitcoin gene pool, and it'll be 'good riddance' as far as I am concerned.  What comes after that phase will be interesting to watch unfold.

[waxwing]

Money laundering IS a crime, a serious one, it is about turning black money into white, knowingly so.

You have just contradicted BlueNote without making any attempt to argue the point. Turning black money into white - what you are describing is not money, as there is no fungibility if some money is black and some white. This is exactly what got the Bitcoin community up in arms about coinvalidation.

If money is paid for committing a crime, then the crime can be prosecuted. The money can be confiscated as a punishment if that's deemed appropriate. None of that is what money laundering statutes are about - they are laws specifically intended to punish intent - to punish someone who performs an otherwise entirely legal trade involving money, whose intent is to obfuscate the source of the money. It's financial thought crime. The state has no business assessing the intent behind every act of trade or exchange.

[johnyj]

Sounds like a made-up story. What kind of criminal would be that stupid to tell you the purpose of the bitcoin purchase? And who would be that stupid to believe such a claim and still sell coin to them?