Miami arresting people for use of Bitcoin

[JohnCar]

No, they arrested people for money laundering and finCEN violations.

No, they arrested people for buying and selling bitcoins, and are calling it money laundering. 

No they arrested people who sold bitcoin without a money service business license. YOU CAN NOT SELL BITCOIN FOR FIAT, if you do you become a money transmitter and can be breaking anti money laundering laws.

So bitcoin is a currency now? Bit confused here ..............

[Armis]

No, they arrested people for money laundering and finCEN violations.

No, they arrested people for buying and selling bitcoins, and are calling it money laundering. 

No they arrested people who sold bitcoin without a money service business license. YOU CAN NOT SELL BITCOIN FOR FIAT, if you do you become a money transmitter and can be breaking anti money laundering laws.

Kindly reference the laws that you are talking about, because I don't see how selling bitcoin for fiat is any different than selling gold for fiat, defunct currency for fiat, selling stamps for fiat, or selling, or selling like or unlike fiat for fiat.

Supposedly they are laundering the money (fiat) not the bitcoin so the presumption is that they take illegal "CASH" to purchase bitcoins then use the bitcoins to make legal purchases. 

The part about not having a license is a technicality that gets taken care of with an application, however money laundering is a crime even with a Money Service Business license, that license doesn't give you the right to launder money. 

I'm very suspicious of the motive for the investigation, it seems to be a grand waste of resources to have fed officers (FBI and Secret Service) presumably contacting random localbitcoin sellers in an effort to hit them with money laundering charges.   My guess is there was something else that was the true reason for the sting.  I'll go out on a limb and say the guys probably ripped off too many btc buyers as such had to be shut down one way or another.

[QuestionAuthority]

It makes sense that Miami, the illegal drug capital of the world, would voraciously chase money laundering criminals. If the piggies set up a sting they were being watched for a long time. Who knows how much drug money localbitcoins has laundered in the last couple of years. The downside isn't that the idiots were caught but that yet another negative media report exists showing John Q Public that Bitcoins are only for criminals. Lovely!

[Shimini]

If Id sell/buy BTC from a guy and he tells me about the crimes he is going to commit with these, I'd definitely question, why he would tell a stranger about the crimes he going to commit with these BTC and Id never do business with him. How can someone be that dumb and even more tell him - person to person - that he "will think about" buying stolen credit cards? Amazing ...

[erik777]

If Id sell/buy BTC from a guy and he tells me about the crimes he is going to commit with these, I'd definitely question, why he would tell a stranger about the crimes he going to commit with these BTC and Id never do business with him. How can someone be that dumb and even more tell him - person to person - that he "will think about" buying stolen credit cards? Amazing ...

a> how do you know they didn't question.  does the law require them to verbalize their concern? 

b> since the 30k transaction never happened, there's no proof they were willing to complete it after hearing the Russian story.

c> if you suddenly realized you were either talking to the russian mob or talking to undercover cops without knowing for certain which, would you respond by self-righteously trying to give them a lecture on how you are better than them for not dealing with stolen credit cards, or would you brush them off with a meaningless response to their question like "I will think about it" so as not to risk insulting them or leading them to believe you're a threat? 

The law does not require you to self-righteously confront potentially dangerous criminals.  And, saying you will think about something that someone just asked you is not the same as proposing an idea.  The former is being polite and avoiding confrontation.  The latter would be an example of demonstrating "intent". 
 

[cbeast]

It makes sense that Miami, the illegal drug capital of the world, would voraciously chase money laundering criminals. If the piggies set up a sting they were being watched for a long time. Who knows how much drug money localbitcoins has laundered in the last couple of years. The downside isn't that the idiots were caught but that yet another negative media report exists showing John Q Public that Bitcoins are only for criminals. Lovely!

Some sting operation. They go after guys that advertise publicly for their service. Wow! If all criminals did that, the Florida cops could just meet all of them at the donut shop.

[Armis]

It makes sense that Miami, the illegal drug capital of the world, would voraciously chase money laundering criminals. If the piggies set up a sting they were being watched for a long time. Who knows how much drug money localbitcoins has laundered in the last couple of years. The downside isn't that the idiots were caught but that yet another negative media report exists showing John Q Public that Bitcoins are only for criminals. Lovely!

Some sting operation. They go after guys that advertise publicly for their service. Wow! If all criminals did that, the Florida cops could just meet all of them at the donut shop.

in uniform

[TheFootMan]

It makes sense that Miami, the illegal drug capital of the world, would voraciously chase money laundering criminals. If the piggies set up a sting they were being watched for a long time. Who knows how much drug money localbitcoins has laundered in the last couple of years. The downside isn't that the idiots were caught but that yet another negative media report exists showing John Q Public that Bitcoins are only for criminals. Lovely!

Why bee worried? Bitcoin will win or fail on its own merits.

HSBC and others have been laundering money for God knows how long, and it doesn't seem like that have affected the banking system of fiat money too much?

If we do a check, I'm sure all drug trade in Miami is mostly done with USD dollars. In cash.

Perhaps we should ban the US Dollar? Or at least cash! Only criminals use cash!

If govts. really really wanted to combat drugs, they would put all their efforts into fixing the root causes, establishing why the narcotics trade flourishes, and see what alternatives they can offer people, and how they can keep people off the drugs, not because the people are threatened to do so, but because they have alternatives and lead meaningful lives.

[Trance]

No, they arrested people for money laundering and finCEN violations.

No, they arrested people for buying and selling bitcoins, and are calling it money laundering. 

When buying and selling Bitcoins if the buyer says Im using these bitcoins for ILLEGAL purchases and you sell that buyer those coins, you are breaking a law.

[chufchuf]

Is justice in the US a joke? I mean, is it seriously being discussed that the police can suggest a crime and if the ''criminal'' doesn't give what he perceives to be a mobster a lecture on ethics and walks out carefree as to whether he'll be followed, then the ''criminal'' can be put in prison?

Btw in other countries this police entrapment isn't legal.

The MSB license thing, they're probably fishing to get MSB interpreted as pubicly advertising the sale of, rather than selling on an exchange, which is a ridiculous and fine line, and would probably be taken down like a number of other clarifications have since the March FinCen requirements (which the NSA asked the FinCen to give them since they too didn't know whether to charge MtGox's Dwolla..).

[TheButterZone]

Is justice in the US a joke? I mean, is it seriously being discussed that the police can suggest a crime and if the ''criminal'' doesn't give what he perceives to be a mobster a lecture on ethics and walks out carefree as to whether he'll be followed, then the ''criminal'' can be put in prison?

Btw in other countries this police entrapment isn't legal.

Yep.

In Amerika, a man who you reasonably believe to be armed suggests committing a crime. You then are expected to

A) Comply, and be persecuted, despite your reasonable fear of death or serious bodily injury
B) Verbally oppose the criminal and suffer death or serious bodily injury, effectively commit suicide
C) Carry a gun in violation of "gun control", and attempt to citizen's arrest the criminal, risking death or serious bodily injury. In the case of undercover/plainclothes cops, they will shoot you, then you will be written off as a "suicide by cop", even though the wire recording will reveal a hailstorm of gunfire, and then an order for you to drop the gun as you are falling or fallen to the ground, a block of human Swiss cheese

A variant of C) actually happened http://www.ijreview.com/2014/02/115178-police-shoot-kill-80-year-old-man-bed/ and is likely not the only time it has ever happened.

[DoctorOz]

It has nothing to do with BTC, it's just an ordinary credit card crime that involved BTC.

[russokai]

It has nothing to do with BTC, it's just an ordinary credit card crime that involved BTC.

Wow some people are so easily confused and that's what the authorities count on.  Simple minded people believe eveyrthing they are told.

[DeathAndTaxes]

A variant of C) actually happened http://www.ijreview.com/2014/02/115178-police-shoot-kill-80-year-old-man-bed/ and is likely not the only time it has ever happened.

It depends on the state.  

A Central Texas man who shot and killed a sheriff's deputy entering his home will not be charged with capital murder, attorneys said Thursday.

A local grand jury declined Wednesday to indict Henry Goedrich Magee for the Dec. 19 death of Burleson County Sgt. Adam Sowders, who was part of a group of investigators executing a search warrant for Magee's rural home.

Sowders and other officers entered the home about 90 miles northwest of Houston without knocking just before 6 a.m. Authorities were looking for guns and marijuana.

Magee's attorney, Dick DeGuerin, said his client thought he was being burglarized, reached for a gun and opened fire.

http://www.charlotteobserver.com/2014/02/06/4668574/grand-jury-wont-indict-man-who.html#.UwMSBfldUom

Juries often reflect the viewpoints of the population at large and my guess in Texas they are getting sick and tired of using no knock warranties to bust non violent offenders just so sheriff boys get to play soldier using military weapons, gear, and tactics.  The jury was sending a message to judges and prosecutors.  If you order a no knock warrant and get someone killed the blood is on your hands. 

[Armis]

It has nothing to do with BTC, it's just an ordinary credit card crime that involved BTC.

Wow some people are so easily confused and that's what the authorities count on.  Simple minded people believe eveyrthing they are told.

+1

[TheFootMan]

No, they arrested people for money laundering and finCEN violations.

No, they arrested people for buying and selling bitcoins, and are calling it money laundering. 

When buying and selling Bitcoins if the buyer says Im using these bitcoins for ILLEGAL purchases and you sell that buyer those coins, you are breaking a law.

While what you says make sense, does the law really cover that?

If you go to a hardware store and you purchase a crowbar and you tell the clerk at the counter that you're going to use it to break into your ex's house, is the clerk part of a crime? Is the store part of a crime? Is the distributor part of a crime? Is the producer part of a crime? Is the source of the raw material that was used to produce the crowbar part of the crime?

Is the clerk part of a crime if the person tells it before he pays it? What if he tells it after he has paid and is on his way out of the store?

What if you send an e-mail to your bank, telling them you're going to withdraw cash and pay a plumber with it, is the bank then partners in crime?

What is the responsibility of a seller? When is the law broken?

Obviously, if selling bitcoins and the other party outright tell that he's going to commit a crime, he's either very stupid, or it's a law enforcement sting operation. Then the only wise thing should be to back off, but I guess a lot of dudes are greedy and don't care, esp. so if the comission is big.

I think however it is wrong that law enforcement is allowed to do entrapment. If law enforcement claims they will buy stolen cc's with bitcoins, and they never do this - then no crime ever took place. How can anybody be convicted of a crime that never took place? And how can somebody be convicted as partnes in crime to a crime that never took place?

I'm not sure if the americans really see how fucked up this system is?

I would like to see a bank being accused of being partners in crime the next time someone buys narcotics with usd dollars. After all, they have security cams at the ATM's right - and when a gangster drives up and cashes out an extraordinary large amount, then the bank must know that it's going to be used for illegal purposes, right, right?

The whole system is more and more turning into a farce. Exactly where should we draw a line as to whether you're complicit in crime or not? After all, there's a lot of everyday items that can be used to commit crime, and while not every buyer gives you a verbal clue, you sometimes can get clues from their body language and facial expression.

So if somebody that looks completely enraged goes into a gun store and asks for a rifle, should he get it? At what point should he not get it? Where's the responsibility of the store owner?

I guess it boils down much to using your gut feeling, and reacting when you think it's warranted. Ideally however a transaction between bitcoin and cash should be 100% neutral, and there should be no responsibility for the parties to know what the other party exactly is doing.

If one of them is doing some kind of crime that's against the law, then law enforcement should investigate that. Bitcoins are only one part of the puzzle, crime has always existed, and bitcoin is neutral. Today most crime is conducted with fiat money, we don't see much of a push for banning that, do we?

[User705]

No, they arrested people for money laundering and finCEN violations.

No, they arrested people for buying and selling bitcoins, and are calling it money laundering. 

When buying and selling Bitcoins if the buyer says Im using these bitcoins for ILLEGAL purchases and you sell that buyer those coins, you are breaking a law.

Do an experiment.  Stop by your bank and withdraw some cash.  Tell the teller you will get some gas for your car with that money and then will speed on the freeway.  What should the bank do?  Not give you your money?

[kik1977]

I guess some of you has misunderstood why the story of the stolen cards is mentioned. He's prosecuted not because he said "I'll think about it" re the proposed illicit activity.. that part is written in the document only to prove that he KNEW what the undercover agent was dealing with and which was the purpose of the bitcoins he wanted to buy.

My interpretation is that the specific ML "nuance" used in this case (you know there are more than one, some of them don't even require the funds to be the proceeds of a crime) is the following

U.S. Code › Title 18 › Part I › Chapter 95 › § 1956
18 U.S. Code § 1956 - Laundering of monetary instruments

(3) Whoever, with the intent—
(A) to promote the carrying on of specified unlawful activity;
(B) to conceal or disguise the nature, location, source, ownership, or control of property believed to be the proceeds of specified unlawful activity; or
(C) to avoid a transaction reporting requirement under State or Federal law,
conducts or attempts to conduct a financial transaction involving property represented to be the proceeds of specified unlawful activity, or property used to conduct or facilitate specified unlawful activity, shall be fined under this title or imprisoned for not more than 20 years, or both. For purposes of this paragraph and paragraph (2), the term “represented” means any representation made by a law enforcement officer or by another person at the direction of, or with the approval of, a Federal official authorized to investigate or prosecute violations of this section.

[TheFootMan]

No, they arrested people for money laundering and finCEN violations.

No, they arrested people for buying and selling bitcoins, and are calling it money laundering. 

When buying and selling Bitcoins if the buyer says Im using these bitcoins for ILLEGAL purchases and you sell that buyer those coins, you are breaking a law.

Do an experiment.  Stop by your bank and withdraw some cash.  Tell the teller you will get some gas for your car with that money and then will speed on the freeway.  What should the bank do?  Not give you your money?

I think this is a very good idea for law enforcement. They should just go to lots of banks and test this out, then arrest those employees one by one, since they're aiding in criminal activity. In fact, they should be arrested under the terrorist act, as speeding clearly i domestic terrorism and a matter of national security.

[TheFootMan]

I guess some of you has misunderstood why the story of the stolen cards is mentioned. He's prosecuted not because he said "I'll think about it" re the proposed illicit activity.. that part is written in the document only to prove that he KNEW what the undercover agent was dealing with and which was the purpose of the bitcoins he wanted to buy.

My interpretation is that the specific ML "nuance" used in this case (you know there are more than one, some of them don't even require the funds to be the proceeds of a crime) is the following

U.S. Code › Title 18 › Part I › Chapter 95 › § 1956
18 U.S. Code § 1956 - Laundering of monetary instruments

(3) Whoever, with the intent—
(A) to promote the carrying on of specified unlawful activity;
(B) to conceal or disguise the nature, location, source, ownership, or control of property believed to be the proceeds of specified unlawful activity; or
(C) to avoid a transaction reporting requirement under State or Federal law,
conducts or attempts to conduct a financial transaction involving property represented to be the proceeds of specified unlawful activity, or property used to conduct or facilitate specified unlawful activity, shall be fined under this title or imprisoned for not more than 20 years, or both. For purposes of this paragraph and paragraph (2), the term “represented” means any representation made by a law enforcement officer or by another person at the direction of, or with the approval of, a Federal official authorized to investigate or prosecute violations of this section.

All of this is just plain crazy, I sincerely hope they get out of this with a fine, and not have to spend years in prison. The prison sentences in America is out of every proportion.