[2018-11-2]US Man Faces up to 5 Years in Prison for ‘Unlicensed’ Bitcoin Sales.

[anamie]

US Man Faces up to 5 Years in Prison for ‘Unlicensed’ Bitcoin Sales via LocalBitcoins

A U.S. citizen has pled guilty before a federal court to operating an “unlicensed money transmitting business” via LocalBitcoins.com, according to a Department of Justice (DoJ) press release published Oct. 29.
The man, Jacob Burrell Campos, has reportedly admitted to “selling hundreds of thousands of dollars” in Bitcoin (BTC) “to over 1,000 customers” in the U.S. between Jan. 2015-April 2016, thus deemed to effectively be operating what the DoJ characterizes as an unregistered “Bitcoin exchange.”

Availing himself of the popular peer-to-peer platform LocalBitcoins.com, Burrell reportedly failed to register his business activities with the U.S. Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury, and to apply due diligence (such as anti-money-laundering (AML) measures) on the sources of his clients’ funds.

According to the release, after advertising on LocalBitcoins, Burrell negotiated his Bitcoin sales at a commission of 5 percent above the prevailing rate, “often” using encrypted email or SMS apps to communicate with clients. He is reported to have accepted payment either cash in hand, through ATMs, or through MoneyGram.

Burrell further admitted that his account on an unnamed “U.S.-based, regulated” crypto exchange had been closed after coming under scrutiny for “suspicious” transactions. He then turned to a Hong Kong-based platform, through which he is said to have purchased $3.29 million worth in Bitcoin between March 2015-April 2017 in “hundreds” of individual transactions.

The press release lastly outlines that Burrell has admitted that he exchanged his U.S. fiat currency, which he stored in Mexico, with a San Diego-based precious metals dealer, Joseph Castillo. The latter has reportedly pleaded guilty to making a false declaration on his federal tax returns, for which he awaits sentencing Dec. 13.

Burrell and unnamed “others” are said to have daily imported over $1 million between late 2016 and early this year, in amounts just below the $10, 000 threshold at which the money would have to be declared.

Burrell will be sentenced Feb. 11 2019, facing a maximum sentence of five years behind bars. He has agreed to forfeit over $800,000 to the U.S. in his plea agreement.

The press release cites U.S. attorney Adam Braverman as saying that:

“Unlicensed money transmitting businesses, especially those operating at or near the border, pose a serious threat to the integrity of the US banking system, and provide an ‘open door’ for criminals to utilize such businesses to launder the proceeds of their illicit activities.”

As reported this June, an L.A.-based trader, who acted under the pseudonym “Bitcoin Maven,” was prosecuted for running an unregistered multi-million dollar Bitcoin-fiat money transmitting business, also via a LocalBitcoins.com listing.

Source: https://cointelegraph.com/news/us-man-faces-up-to-5-years-in-prison-for-unlicensed-bitcoin-sales-via-localbitcoins

[KryptoKai]

Seems like an overly harsh sentence, 5 years just for trading in bitcoins. When you look at all the crimes that are taking place and the pathetic sentences they get, it makes you wonder if they simply have it in for bitcoin

[figmentofmyass]

Seems like an overly harsh sentence, 5 years just for trading in bitcoins. When you look at all the crimes that are taking place and the pathetic sentences they get, it makes you wonder if they simply have it in for bitcoin

that's the maximum sentence. i'm guessing he won't get sentenced to five years, and i'm guessing he won't end up serving his full sentence. but you never know, we'll see what happens.

it is a stiffer charge than shrem plead to, which was aiding and abetting an unlicensed money transmitting business. shrem served 1.25 years for that. burrell plead to operating.

Burrell further admitted that his account on an unnamed “U.S.-based, regulated” crypto exchange had been closed after coming under scrutiny for “suspicious” transactions. He then turned to a Hong Kong-based platform, through which he is said to have purchased $3.29 million worth in Bitcoin between March 2015-April 2017 in “hundreds” of individual transactions.

ah, good old bitfinex. always there for money launderers in need.

[Kakmakr]

It is obvious that this guy was not just your average Bitcoin trader. He went the extra mile to evade taxes and also to hide the money that he was shifting between countries. <Mexico> 

If you do this on a large scale like this, then the red flags will be raised and the authorities will come after you. I think they are not too worried about the average Bitcoin users that are using the P2P sites like Localbitcoin for the smaller transactions. <or I might be wrong and they going for the big fish first.> 


What say you?

[pixie85]

It is obvious that this guy was not just your average Bitcoin trader. He went the extra mile to evade taxes and also to hide the money that he was shifting between countries. <Mexico> 

If you do this on a large scale like this, then the red flags will be raised and the authorities will come after you. I think they are not too worried about the average Bitcoin users that are using the P2P sites like Localbitcoin for the smaller transactions. <or I might be wrong and they going for the big fish first.> 


What say you?

If it was only about taxes he'd get tax evasion charges. They're trying to put him in jail for selling Bitcoins in private which they are calling "money transmitting" even though Bitcoins aren't treated like money because according to the law there's no central government issuing them. It doesn't matter how much he was selling. If you sell a bitcoin to your friend for cash you can be arrested in this weird country.

[squatter]

If it was only about taxes he'd get tax evasion charges. They're trying to put him in jail for selling Bitcoins in private which they are calling "money transmitting" even though Bitcoins aren't treated like money because according to the law there's no central government issuing them.

Government-issued currency isn't all that's regulated. The legal definition of "monetary instruments" includes "negotiable instruments, in bearer form or otherwise in such form that title thereto passes upon delivery." Bitcoin functions like a bearer instrument, and no one has successfully contested that in court.

It doesn't matter how much he was selling. If you sell a bitcoin to your friend for cash you can be arrested in this weird country.

The entire basis of enforcing this law in this case is how much he was selling:

(5) Totaling more than $10,000;

(6)(i) On one calendar day; or

(ii) If for the purpose of evading the reporting requirements of §1010.340, on one or more days.

What undercover police often do is persuade the seller to structure multiple payments that aggregate to more than $10,000, but also avoid complying with AML reporting requirements. If the seller takes the bait, they've violated the Bank Secrecy Act.

[timerland]

It is obvious that this guy was not just your average Bitcoin trader. He went the extra mile to evade taxes and also to hide the money that he was shifting between countries. <Mexico>  

If you do this on a large scale like this, then the red flags will be raised and the authorities will come after you. I think they are not too worried about the average Bitcoin users that are using the P2P sites like Localbitcoin for the smaller transactions. <or I might be wrong and they going for the big fish first.>  


What say you?

There were obviously a multitude of factors that is influencing this.

I seriously doubt that it is illegal in most countries to sell low amounts of BTC on p2p trading platforms for personal use. Besides, it would just be too much hassle for the police to chase you up for such minuscule amounts, it's just not worth their time whatsoever.

Whenever you are dealing on such a large scale and potentially evading tax and not reporting to the regulators you have the risk of going through this, and we have seen precedents of this as well. Just use your common sense here. I wonder though if $800,000 that he forfeited was all the profits he had or if there was more.

[squatter]

Whenever you are dealing on such a large scale and potentially evading tax and not reporting to the regulators you have the risk of going through this, and we have seen precedents of this as well. Just use your common sense here. I wonder though if $800,000 that he forfeited was all the profits he had or if there was more.

I imagine that represents disgorgement of profits. I don't think most of these cases even involve tax authorities -- tax evasion is a much smaller issue. It's more about millions of dollars being transmitted without complying with AML laws. His taxable profits are tiny compared to the amount of money he transmitted.

If you sell bitcoins to someone in amounts beyond $10,000 but structure the payments to avoid CTR reporting, you're liable to get charged for this. It's amazing to me that people keep doing this so egregiously when there are obviously undercover federal agents infiltrating Localbitcoins.

[ZombieSlayerTank]

I'm surprised it took this long to figure out what he was doing.  There are professionals looking to stop this from happening all the time.

[magneto]

Has happened before and probably will happen in the future again.

$10,000 is a threshold that most of us will never come close to in terms of crypto trading, so I don't think that there is anything that average buyers or sellers will have to worry with that. Their volume is much much higher than what most people are trading at.

Not to mention their ties with overseas money laundering, tax evasion, etc. No surprise whatsoever that he's been caught doing this. Of course, do be careful with even moderate amounts of bitcoin sales if you're not asking for KYC, anyone is able to use that excuse to catch you and claim that it was "unlicensed".

[Bitarch Ancap]

I think his main mistake was using the same account for multiple trades.

Lesson from this case is you have to create new account every week or month, so even if caught they cannot prove that you have operated large-scale business.
Of course, use VPN and burner phone & SIM.

[figmentofmyass]

I think his main mistake was using the same account for multiple trades.

Lesson from this case is you have to create new account every week or month, so even if caught they cannot prove that you have operated large-scale business.
Of course, use VPN and burner phone & SIM.

yeah as it was, he made himself low-hanging fruit. they can only establish that unlicensed activity has taken place after > $10k in money is transferred. since he was dealing below that threshold, multiple deals were necessary, so ditching his account regularly may have prevented the agents from targeting him.

the problem is, it's hard to collect 5%+ premiums with good volume using new (no feedback) accounts.

[erikoy]

USA has made a strict implementation on cryptocurrency and for sure it should be respected. If one has violated the rules then he/she should be punished. Reminder that no one is above the law besides if he/she think that he does not know what he/she has violated but still he/she will be prosecuted as it says that ignorance to the law excuses no one.

[veleten]

it is not the first time, I read another guy (or the same? ) was being held for unlicensed  local bitcoin trading last year
it is very obvious that local bitcoins share data with the agencies and this guy wasn't your average 1-2 btc dude
he must have been selling or buying ridiculous amounts of coins , either that or some of the coins were tainted and connected him to something something we do not know about
shows how important it is to try and make sure you are as anonymous and safe as possible
trading at local bitcoins copious amounts of coins and expect to get away with it forever in the US - not smart

[Bitarch Ancap]

USA has made a strict implementation on cryptocurrency and for sure it should be respected. If one has violated the rules then he/she should be punished. Reminder that no one is above the law besides if he/she think that he does not know what he/she has violated but still he/she will be prosecuted as it says that ignorance to the law excuses no one.

Another statist here? Your beloved go(d)v is a stationary bandit who have enslaved people through indoctrination of faith in the state (statism).
I would like to see when your "god" will slap you for some victimless crime or even thoughtcrime.