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.
