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Devin Chow
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August 09, 2014, 06:24:35 PM
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TheNewAnon135246
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August 09, 2014, 06:30:29 PM
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Wow that's something to think about. Sounds like you did the right thing turning him down.
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August 09, 2014, 06:32:48 PM
 #3

The real risk on LocalBitCoins is something you're not even considering. I am talking to those that sell on LocalBitCoin for face-to-face transactions in cash.

Am I talking about receiving counterfeit bills? No..

Am I talking about being robbed? No..

There is a much bigger, and frankly more concerning, threat. That threat is Law Enforcement sting operations.

I've been selling on LocalBitCoin for a while. Most of the people I meet are speculators, curious newbies and more recently, people paying encrypted data ransoms.

But today was different. But today has happened to me before. Allow me to explain.

Received a text from a potential buyer yesterday. In his text messages he's trying to give the appearance that he's being "discreet", but at the same time divulging information makes it look like he's engaged in something illegal.

<me> Are we still on for today for the Bitcoin?
<him> Yeah, I am waiting on a package from UPS and then I'll be there.
<me> Ok, text me when you're ready.
<him> Ok. After I get this package I have to drop it off near you and make some moves. Then I'll be there.
<me> 12:30pm ok with you?
<him> Once I pick this stuff up, I'll be there. Yeah, 12:30pm is good.

On the surface, this text interaction appears fairly innocuous, right? Not necessarily. I call this the "priming" stage of a law enforcement sting. These texts would be included in the discovery of any court action, and combined with other evidence, start to appear quite incriminating.

So, at 12:30pm I meet this guy. The interaction goes like this.

<me> Nice to meet you.
<him> Same to you.
<me> So you want xxxx of Bitcoin, right?
<him> Yeah..
<me> What wallet do you use?
<him> I have an address for you to send it to.
<me> You don't have a wallet on your phone?
<him> No, I have an address for you to send it to.
<me> Ok, that's fine...we can check Blockchain to confirm that I sent it after it's sent.

<I start logging into my Blockchain phone app...a brief moment of silence. He sets the money on the table, I count it and confirm the bills are legitimate and set it back down on the table.>

<him> So, you know..I can get like whatever.
<me> What do you mean?
<him> I do all sort of different kinds of work. I'm a handyman.
<me> Oh yeah? What kind of handyman work do you do?
<him> You know, if someone needs to get hurt, I can do that.
<me> That's not really something I need.
<him> Oh, ok. I can get like whatever you need though. Weed, ecstasy..whatever.
<me> I'm not involved with that sort of thing. I honestly want nothing to do with it.
<him> You know, if you ever need.

<pause, brief silence>

<me> I gotta be honest with you. Since now I have a reason to believe that you will be using these coins for something illegal, I cannot sell to you. I don't get involved with the stuff that you're talking about.
<him> You serious? I was just saying..
<me> It would be illegal for me to sell you coins if I have any indication that you're going to be using them to purchase anything illegal. Money laundering statutes are vague and law enforcement is out trying to create cases because Bitcoin is a hot topic at the moment.

<he gets this look on his face like, "Oh, fuck. I thought I had a sucker.">

<me> In any event, it was good to meet you.
<him> Ok. You too.

<we part ways>


The recent criminal case in Florida with the "unlawful money transmitter" and money laundering charges is alarming. Read the statement of fact from those cases. YOU WILL BE HELD ACCOUNTABLE FOR WHAT YOU SAY. Cumulatively, if the statements made/text messages/emails/testimony from informant/LE appears to be money laundering, you WILL be indicted/charged. They are creating crime in order to prosecute it. Despicable? Yes...but that's the country we live in now. (Well, if you live in the US)

In my state, there is no legislation regarding Bitcoin sales...yet. According to FinCEN guidance, I do not need a money transmitter license because I am trading on my own account. I am completely compliant with the law as it now exists. People need to bear in mind that the line between legal and illegal in the world of Bitcoin is very thin. Merely making statements about anything illegal while conducting a Bitcoin transaction could potentially result in criminal action. Combine this with the overzealous nature of American law enforcement and you have a very serious concern.

Aside from the legal ramifications, I don't want to sell to people that are going to use it to buy drugs. I want to sell Bitcoin locally because I like meeting like-minded people that share the same interest/curiosity as me. I like having 20-30 minute conversations with newbies answering questions about Bitcoin. The more I spread information about Bitcoin, the more it flourishes and the higher the resulting price. This is my motivation behind selling Bitcoin locally. (Despite the ever-cynical thinking of law enforcement, we're not all looking to "fund terror!")

I just wanted to reiterate what other people should already know: IF YOU'RE SELLING ON LOCALBITCOINS AND SOMEBODY MENTIONS ANYTHING UNLAWFUL (or even gives you any suggestion that they intend to) DO NOT SELL THEM BITCOIN. You will get yourself in very serious trouble.

Law enforcement used to be an honorable profession. Today, it's about statistics, quotas and politics. Right and wrong isn't even a factor. Entrapment laws are intentionally skirted and called something else. These people should be ashamed of themselves.





On any escrow based exchange like localbitcoins, it is better to trade online rather F2F. People will get to accustomed to this fact with time.

fanboy4
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August 09, 2014, 06:33:45 PM
 #4

Localbitcoin is risky place to make business.

Free SIGNs giving everyday. Be part, don't miss!. T8u1QBuXHrAWVKT4gJqL7m9qbT2VdBX28F
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August 09, 2014, 06:37:39 PM
 #5

i tried selling to localbitcoins twice, i hope nothing like that happens to me.
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August 09, 2014, 06:39:44 PM
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they must believe that a vast majority of bitcoin users are druggies and peddlers.. that or they just want to make bitcoin look bad. what's funny is that they'd be buying the bitcoin with CASH.
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August 09, 2014, 06:40:04 PM
 #7

I trade on LBC and can confirm similar suspicions.  

Couple weeks ago I initiated a purchase with a local seller.  Typically Bitcoin people I've met are open and excited about the currency but this seller didn't seem particularly friendly and politely just answered yes or no.  What struck me as odd was as I was leaving, I caught the glance of another man seated at another table and his eyes widened as if he saw Lenin's ghost then quickly averted eye contact. I've seen that look before when I've been followed by poorly trained undercover security at department stores.  

This week, I received a package of clothing that I was expecting.  It had a clean 2 inch slit as if my mail were being inspected.  

That's all to report for now, but I'm going to send some test mail to myself.  Maybe send some flour or something...  Shocked
Repteezy
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August 09, 2014, 06:43:27 PM
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I was honestly considering using BTC before, but after I read this I've made my mind up. Thank you for the heads up.
gelross2014
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August 09, 2014, 06:49:08 PM
 #9

looks like BTC is the new currency of those delinquents
maurya78
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August 09, 2014, 06:49:15 PM
 #10

This is excellent advice, thanks for posting
Exercise common sense, err on the side f caution, shoot straight so you don't get into needless trouble

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August 09, 2014, 06:50:26 PM
 #11

Is that spreading to the world?

Or only in USA stuffs like that are common, for now?


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August 09, 2014, 06:50:36 PM
 #12

Great post.. i am thinking about selling bitcoin locally on local bitcoins. I figured I would be okay if i just accepted cash and didn't use an exchange to do the transaction. But I do know for a FACT that the DEA and Homeland security have a whole division that is looking into localbitcoin. So, do what the op did, if you have any clue that the  buyer/seller is doing something illegal, tell him exactly what the op did. I believe the guy the op ran into was indeed a cop and was hoping to get a drug connection, ect. not really a bitcoin bust, but the govt thinks that if you are using bitcoin the transaction HAS to be illegal..
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August 09, 2014, 06:51:29 PM
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I think if you're gonna sell on Localbitcoins, cash deposit is better, just dont go first
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August 09, 2014, 06:52:40 PM
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I was honestly considering using BTC before, but after I read this I've made my mind up. Thank you for the heads up.

Sting operations are nothing new or exclusive to bitcoin.
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August 09, 2014, 07:12:18 PM
 #15



On any escrow based exchange like localbitcoins, it is better to trade online rather F2F. People will get to accustomed to this fact with time.

I respectfully disagree.

For you and I, online exchanges are a great idea. That's because we know what the scammer signs are.

To the complete newbie, in person is the ONLY smart way. I can't count how many Bitcoin newcomers have told me, "I tried to buy on this or that site and never received my Bitcoin."

In person + cash = 90% guaranteed to receive your coin.

In person + cash + dealing with me = 100% guaranteed to receive your coin.



I understand what u r saying, but it is because the current system on localbitcoins does not provide enough security to the traders, especially sellers. This is not the problem of escrow based system. This is because of the flaw in localbitcoin's system design. Because, when it was written, Jeremias did not account for much to deal with a scammer. He tried to make it hindrance free. Sadly their are no much alternatives as of yet. Hopefully we will see proper escrow based exchanges in coming days...

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August 09, 2014, 10:01:44 PM
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I think this only applies if you are charging a large markup (this is how they find you) and continue with the transaction after the undercover LE officer says he is going to use the BTC for illegal purposes. If you were to trade face to face by other means, you will likely be safe as it would take up too much of LE's resources to go after everyone that trades face to face like this.
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August 09, 2014, 11:01:25 PM
 #17

I used to sell on LBC just for fun and to help get new people started with BTC. Just like how I got started by using #bitcoin-otc and (rip) Bitinstant.

But the last time I tried an in-person transaction, the person seemed really weird...did not seem to have much interest in bitcoin. I had to cancel the transaction anyway because the LBC sms service was so backlogged it would not release my coins to the buyer after I sent the text.

I remember last year someone contacted me to buy and when I googled their username (due diligence) it turned out they were using the same name on the SR forums where they talked about their business. LOL.

Anyway it does not surprise me that LBC is crawling with LEO, be careful out there!

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August 10, 2014, 01:08:48 AM
 #18

Good eyes OP, nice catch. You did the right thing there by canceling the sale, and came to give the community the heads up.

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August 10, 2014, 01:14:20 AM
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Just why out of nowhere did he ask if you want to get illegal? The agent is not good. Or maybe they're not experienced for a buy bust operation. Anyhow everyone should be very careful.
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August 10, 2014, 01:15:53 AM
 #20

I don't think I would have the confidence to do the local trade it would be going through my mind that the person I'm dealing with could actually be willing to harm me to get to a high amount of Bitcoin I don't think I fancy having that in the back of my mind every time I did a deal with someone locally.

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