Beware of LocalBitcoins.com

[fordlincoln]

So I wanted to share with you all the problems with trading Bitcoin on LocalBitcoins.com

There are risks with any online trading, and when Bitcoins are involved - the inherent anonymity and irreversible transactions make it really easy for Bitcoin scammers to make an easy buck.

Localbitcoins.com does offer a Dispute process, and has certain security measures that try to make it safe for both buyers and sellers.

1. I.P. Address check - can be faked using a Proxy
2. Phone Number Verification - can be faked using a SMS servce
3. Real Name Required - can be faked using fraudulent ID
4. Trust Score - Scammers give each other trust scores and testimonials
5. Dispute is not possible after the Trade is completed


The #1 Problem with their site is the Escrow service - localbitcoins.com requires sellers of BTC to put their coins in Escrow - this is a huge F#&K%!G MISTAKE.

Users are not able to make a trade unless Bitcoins are held in Escrow, these coins are locked until the Trade completes - whereby the Seller can push a button to 'Release the Bitcoins' or the timer for completing the trade runs out (sometimes this is 2 hours or 12 hours depending on the user). If the trade is cancelled by the Buyer before either of these options, that is the 3rd and final way that Bitcoins can be unlocked from Escrow.

The intention of their Escrow system is for Sellers to prove they have the Bitcoins and they can release the coins once they receive the buyer's funds.

Here's the problem, localbitcoins.com is a vehicle for transacting Bitcoin but offers no protection or safety from scammers
- You are required to place Bitcoins in their Escrow System - but they don't allow you to cancel the trade
- Their Escrow System is not meant to protect the Seller of Bitcoins
- If you receive payment for Bitcoins, localbitcoins.com is not responsible for making sure it's legit
- Bitcoins released from their Escrow are not protected and good luck trying to dispute a scammer

These are my conclusions about the service after using it a couple times and going through the process of getting scammed on the site only to receive Zero Support in retrieving my stolen coins. Although they offered to block the User, it does little to prevent the scammer from creating a new account from a new IP Address.

My two cents: use cash for Bitcoins.

Avoid online payment systems altogether - it's the equivalent of printing out your BTC-e voucher and folding it into a paper plane on the hope that it ends up where its supposed to.

Say no to scammers.

[1715302484]

1715302484

[BitBits]

On top of all this, in view of most recent arrests in Florida, any seller on localbitcoins (especially high volume one) can potentially be arrested for a mere fact of trading. States define such activity as money transmitting, which in turn requires proper state license. The arrest mentioned above were made by undercover law enforcement agents posing as Bitcoin buyers. So, the next time you arrange for a meeting to sell bitcoins, you could be meeting with the police officer.

[pekv2]

On top of all this, in view of most recent arrests in Florida, any seller on localbitcoins (especially high volume one) can potentially be arrested for a mere fact of trading. States define such activity as money transmitting, which in turn requires proper state license. The arrest mentioned above were made by undercover law enforcement agents posing as Bitcoin buyers. So, the next time you arrange for a meeting to sell bitcoins, you could be meeting with the police officer.

I just removed my account. Thanks for the headsup. Not only is it illegal, they are a fruad and scam. I cannot prove it, but it is my opinion of them.

[BurtW]

OP:  You said you got ripped off.  What payment method did you accept?  Was it cold hard cash or some reversible form of fiat?  If you accepted reversible funny money for your BTC who's fault is that?

BitBits:  You go on to repeat the stupid "got arrested for selling Bitcoins" lie.  The cops do not give one crap about people selling or buying BTC (the IRS is another matter).

What happened there is that the undercover cop repeatedly told the BTC sellers that they were going to use the BTC for illegal purposes.  That is what they got arrested for - not selling BTC.

I use localbitcoins all the time.  It is, by far, the best and safest way to buy and sell BTC.  I have also met dozens and dozens of totally cool people with a shared interest/passion for Bitcoins.

pekv2:  I expect you are just trolling since you know better than these two noobs.

[dmpotter]

On top of all this, in view of most recent arrests in Florida, any seller on localbitcoins (especially high volume one) can potentially be arrested for a mere fact of trading. States define such activity as money transmitting, which in turn requires proper state license. The arrest mentioned above were made by undercover law enforcement agents posing as Bitcoin buyers. So, the next time you arrange for a meeting to sell bitcoins, you could be meeting with the police officer.

Well I guess that can be challenged now, since the IRS considers bitcoin to be property. Unless that has changed, I can't get in trouble for selling my TV at starbucks.

[BurtW]

We are in great shape here.  The various factions in the goobermint could spend years fighting amongst themselves just trying to figure out what Bitcoin is.  We can use them against each other until they come up with a unified definition.

[pekv2]

pekv2:  I expect you are just trolling since you know better than these two noobs.

No I am not trolling. Just want to avoid illegal activity thats all.

[Cryptogirl82]

So I wanted to share with you all the problems with trading Bitcoin on LocalBitcoins.com

There are risks with any online trading, and when Bitcoins are involved - the inherent anonymity and irreversible transactions make it really easy for Bitcoin scammers to make an easy buck.

Localbitcoins.com does offer a Dispute process, and has certain security measures that try to make it safe for both buyers and sellers.

1. I.P. Address check - can be faked using a Proxy
2. Phone Number Verification - can be faked using a SMS servce
3. Real Name Required - can be faked using fraudulent ID
4. Trust Score - Scammers give each other trust scores and testimonials
5. Dispute is not possible after the Trade is completed


The #1 Problem with their site is the Escrow service - localbitcoins.com requires sellers of BTC to put their coins in Escrow - this is a huge F#&K%!G MISTAKE.

Users are not able to make a trade unless Bitcoins are held in Escrow, these coins are locked until the Trade completes - whereby the Seller can push a button to 'Release the Bitcoins' or the timer for completing the trade runs out (sometimes this is 2 hours or 12 hours depending on the user). If the trade is cancelled by the Buyer before either of these options, that is the 3rd and final way that Bitcoins can be unlocked from Escrow.

The intention of their Escrow system is for Sellers to prove they have the Bitcoins and they can release the coins once they receive the buyer's funds.

Here's the problem, localbitcoins.com is a vehicle for transacting Bitcoin but offers no protection or safety from scammers
- You are required to place Bitcoins in their Escrow System - but they don't allow you to cancel the trade
- Their Escrow System is not meant to protect the Seller of Bitcoins
- If you receive payment for Bitcoins, localbitcoins.com is not responsible for making sure it's legit
- Bitcoins released from their Escrow are not protected and good luck trying to dispute a scammer

These are my conclusions about the service after using it a couple times and going through the process of getting scammed on the site only to receive Zero Support in retrieving my stolen coins. Although they offered to block the User, it does little to prevent the scammer from creating a new account from a new IP Address.

My two cents: use cash for Bitcoins.

Avoid online payment systems altogether - it's the equivalent of printing out your BTC-e voucher and folding it into a paper plane on the hope that it ends up where its supposed to.

Say no to scammers.

I never really trusted this site anyway!

[CoinMKT.com]

Treat localbitcoins like Craigslist.... always do face to face interactions otherwise.... go elsewhere for online pickups. 

[Harley997]

The #1 Problem with their site is the Escrow service - localbitcoins.com requires sellers of BTC to put their coins in Escrow - this is a huge F#&K%!G MISTAKE.

This concept is the best way to buy/sell bitcoins.

If you were to not use escrow there would be a lot of the opposite scams. The BTC seller could simply walk away once payment is received.

[u9y42]

[...]

BitBits:  You go on to repeat the stupid "got arrested for selling Bitcoins" lie.  The cops do not give one crap about people selling or buying BTC (the IRS is another matter).

What happened there is that the undercover cop repeatedly told the BTC sellers that they were going to use the BTC for illegal purposes.  That is what they got arrested for - not selling BTC.

[...]

Hmm, I hadn't heard of this story yet; still, it strikes me as being weird that he got arrested for ignoring something that could very well be a lie, or someone's idea of a joke. I mean, if it was a situation in which there was a clear and obvious illegal operation going on, and he willingly helped (by selling the btc in this case), then I could understand his arrest; but that wasn't the case, right? Did this hold in court (or is it expected to, if the case still hasn't been to court)?

[haploid23]

1. I.P. Address check - can be faked using a Proxy
2. Phone Number Verification - can be faked using a SMS servce
3. Real Name Required - can be faked using fraudulent ID
4. Trust Score - Scammers give each other trust scores and testimonials
5. Dispute is not possible after the Trade is completed

Most of what you posted is true, although you can't really fake trade scores. In order to have the score increase, the trade must be confirmed and the bitcoins released from escrow. There are fees every time a coin goes through escrow.

[Harley997]

1. I.P. Address check - can be faked using a Proxy
2. Phone Number Verification - can be faked using a SMS servce
3. Real Name Required - can be faked using fraudulent ID
4. Trust Score - Scammers give each other trust scores and testimonials
5. Dispute is not possible after the Trade is completed

Most of what you posted is true, although you can't really fake trade scores. In order to have the score increase, the trade must be confirmed and the bitcoins released from escrow. There are fees every time a coin goes through escrow.

The trade fee is only 2% (a percentage of a transaction) so scammers could simply trade very small amounts between each-other

[steelbuzz]

wtf!??!!? Are you absolutely SURE there are undercover police trying to nab people simply for buying BTC?

I seriously SERIOUSLY doubt it..... 

[ganabb]

This may be great if you are in the USA where most of the site user base lives, and you want to meet up in the big city you live in. But in many other countries, you are more or less screwed.

[BitCoinDream]

On top of all this, in view of most recent arrests in Florida, any seller on localbitcoins (especially high volume one) can potentially be arrested for a mere fact of trading. States define such activity as money transmitting, which in turn requires proper state license. The arrest mentioned above were made by undercover law enforcement agents posing as Bitcoin buyers. So, the next time you arrange for a meeting to sell bitcoins, you could be meeting with the police officer.

Please provide some authoritative news links supporting the arrest incident.

[100bitcoin]

www.100bit.co.in is launching soon. You may count on us in terms of scammer protection.

[BurtW]

wtf!??!!? Are you absolutely SURE there are undercover police trying to nab people simply for buying BTC?

I seriously SERIOUSLY doubt it..... 

On top of all this, in view of most recent arrests in Florida, any seller on localbitcoins (especially high volume one) can potentially be arrested for a mere fact of trading. States define such activity as money transmitting, which in turn requires proper state license. The arrest mentioned above were made by undercover law enforcement agents posing as Bitcoin buyers. So, the next time you arrange for a meeting to sell bitcoins, you could be meeting with the police officer.

Please provide some authoritative news links supporting the arrest incident.

AGAIN:  What happened there is that the undercover cop repeatedly told the BTC sellers that they were going to use the BTC for illegal purposes.  That is what they got arrested for - not selling BTC.  This story was all of this forum and all over the news when it happened.  You might try Google.  It happened in Florida.  Try "Florida arrest Bitcoin" or something like that.

I use localbitcoins all the time.  It is, by far, the best and safest way to buy and sell BTC when done correctly (cash, in person, face to face, public location with free WiFi).  I have also met dozens and dozens of totally cool people with a shared interest/passion for Bitcoins.

[BurtW]

www.100bit.co.in is launching soon. You may count on us in terms of scammer protection.

What will make you different from localbitcoins?  Why would we want to use your site rather than localbitcoins, which has never lost or taken any of my BTC in all the years I have been using it?  How do we know we can trust you with our BTC (assuming you operate as an escrow agent like localbitcoins does)?

[BitCoinDream]

AGAIN:  What happened there is that the undercover cop repeatedly told the BTC sellers that they were going to use the BTC for illegal purposes.  That is what they got arrested for - not selling BTC.  This story was all of this forum and all over the news when it happened.  You might try Google.  It happened in Florida.  Try "Florida arrest Bitcoin" or something like that.

I use localbitcoins all the time.  It is, by far, the best and safest way to buy and sell BTC when done correctly (cash, in person, face to face, public location with free WiFi).  I have also met dozens and dozens of totally cool people with a shared interest/passion for Bitcoins.

Thank you. Your search keyword has helped me to find out related news stories.

www.100bit.co.in is launching soon. You may count on us in terms of scammer protection.

What will make you different from localbitcoins?  Why would we want to use your site rather than localbitcoins, which has never lost or taken any of my BTC in all the years I have been using it?  How do we know we can trust you with our BTC (assuming you operate as an escrow agent like localbitcoins does)?

This is a Q I dont expect from a Hero member. You are correct that 100bit.co.in needs to build up trust so that we can trust them for escrow and I believe that can only happen with time while users test them with small fractions. But why will we use them while LocalBitcoins is there is NOT a valid question in my opinion. Why we started to use Bitstamp while BTC-e was there ? Why do we use Citibank while bank of America is there ? Competition is always good & healthy. We should not vote for monopoly in a free market.