How to trade on LocalBitcoins without going to jail

thejaytiesto

legendary

Activity: 1358

Merit: 1014

Quote from: wunkbone on January 25, 2015, 06:30:25 PM

I do like the piece about the recording the conversation and telling them that anything about illegal activity would be reported. It is my understanding that MSBs need to report similar activity anyway and law enforcement is likely going not go crazy over you not having a MSB license if you are actually reporting discussion/bragging about illegal activity.

I don't however like the charity piece. Unless you actually plan on donating then you are opening a whole new can of worms. In theory law enforcement could charge you with something related to misrepresenting what you are doing with the funds and/or stealing from the charity and/or some other crime

If i go to a place where i've acorded to meet with a guy to exchange some bitcoins and the guy starts telling a disclaimer I would get pretty paranoid about it. It just doesnt feel right... too much tension.
In the past i have done succcesful trades and meet the guy and we had a coffee, now it seems the exchanges IRL will look like a drug deal exchange or something, where you are nervous as hell.

QuestionAuthority

legendary

Activity: 2156

Merit: 1393

You lead and I'll watch you walk away.

Quote from: wunkbone on January 25, 2015, 06:30:25 PM

I do like the piece about the recording the conversation and telling them that anything about illegal activity would be reported. It is my understanding that MSBs need to report similar activity anyway and law enforcement is likely going not go crazy over you not having a MSB license if you are actually reporting discussion/bragging about illegal activity.

I don't however like the charity piece. Unless you actually plan on donating then you are opening a whole new can of worms. In theory law enforcement could charge you with something related to misrepresenting what you are doing with the funds and/or stealing from the charity and/or some other crime

Ok, charity is no good. What is the transfer of dollars for then? What other reason would a stranger have for giving you money?

wunkbone

sr. member

Activity: 420

Merit: 250

I do like the piece about the recording the conversation and telling them that anything about illegal activity would be reported. It is my understanding that MSBs need to report similar activity anyway and law enforcement is likely going not go crazy over you not having a MSB license if you are actually reporting discussion/bragging about illegal activity.

I don't however like the charity piece. Unless you actually plan on donating then you are opening a whole new can of worms. In theory law enforcement could charge you with something related to misrepresenting what you are doing with the funds and/or stealing from the charity and/or some other crime

QuestionAuthority

legendary

Activity: 2156

Merit: 1393

You lead and I'll watch you walk away.

Quote from: inBitweTrust on January 25, 2015, 02:21:59 PM

Quote from: MakingMoneyHoney on January 25, 2015, 02:17:38 PM

I can see how the US law might be that way, but aren't they being hypocritical if they consider it "exchanging funds" and criminal if it's considered a commodity for income taxes?

Should it be just like buying beanie babies over craigslist if it's a commodity.

Double standards and hypocrisy is legal when states do it. In fact it is their whole business model.

Murder, theft, gambling, kidnapping all are institutionalized aspects which define what a state(as opposed to government) is and the state hates competition.

Amen to that brother.

Marijuana is illegal under federal law even though several states have legalized it. America has a screwed up system of laws that don't work for anyone except enforcement agencies.

AtheistAKASaneBrain

hero member

Activity: 770

Merit: 509

Only if you are in the USA you should be paranoid. Afaik outside the USA no one is caring enough to put honeypots in LocalBitcoins.
But just in case im staying off LocalBitcoins for a while and see how it goes.

inBitweTrust

hero member

Activity: 658

Merit: 501

Quote from: MakingMoneyHoney on January 25, 2015, 02:17:38 PM

I can see how the US law might be that way, but aren't they being hypocritical if they consider it "exchanging funds" and criminal if it's considered a commodity for income taxes?

Should it be just like buying beanie babies over craigslist if it's a commodity.

Double standards and hypocrisy is legal when states do it. In fact it is their whole business model.

Murder, theft, gambling, kidnapping all are institutionalized aspects which define what a state(as opposed to government) is and the state hates competition.

MakingMoneyHoney

hero member

Activity: 504

Merit: 500

Quote from: QuestionAuthority on January 25, 2015, 02:10:31 PM

Quote from: TippingPoint on January 25, 2015, 02:03:06 PM

There is the option to do incremental local transactions, but phone a remote assistant to initiate the Bitcoin transfers. But that still requires the transfer of currency face to face.

That's the real issue isn't it, face to face transactions. If you meet with anyone and initiate a money transfer for bitcoins by any means without a license you're breaking the law.

I can see how the US law might be that way, but aren't they being hypocritical if they consider it "exchanging funds" and criminal if it's considered a commodity for income taxes?

Shouldn't it be just like buying beanie babies over craigslist if it's a commodity.

QuestionAuthority

legendary

Activity: 2156

Merit: 1393

You lead and I'll watch you walk away.

Quote from: TippingPoint on January 25, 2015, 02:03:06 PM

There is the option to do incremental local transactions, but phone a remote assistant to initiate the Bitcoin transfers. But that still requires the transfer of currency face to face.

That's the real issue isn't it, face to face transactions. If you meet with anyone and initiate a money transfer for bitcoins by any means without a license you're breaking the law.

TippingPoint

legendary

Activity: 905

Merit: 1000

There is the option to do incremental local transactions, but phone a remote assistant to initiate the Bitcoin transfers. But that still requires the transfer of currency face to face.

Dread Pirate Roberts

sr. member

Activity: 1512

Merit: 326

maybe i just will be trade on local exchange and save my coin at my wallet
and wait good time to sell and rebuy .

QuestionAuthority

legendary

Activity: 2156

Merit: 1393

You lead and I'll watch you walk away.

Quote from: inBitweTrust on January 25, 2015, 01:28:36 PM

Quote from: QuestionAuthority on January 25, 2015, 01:22:12 PM

But you convinced me it can't be done without risking arrest! Are you willing to make multiple trades and risk being convicted of running a money services business?

I certainly understand why others don't wish to but you have to understand that I don't trade or sell to make money but to introduce others to bitcoin and as a matter of principle.

There is some ambiguity in what is considered a MSB as the law interprets in the US.

Perhaps the best solution is to organize meetups where I trade BTC with multiple people once a month for 0 profit pricing things at spot price where there is absolutely no confusion that I am running a business.

"Whether or not on a regular basis or as an organized business concern in one or more of the following capacities.....currency exchanger"

There's not a whole bunch of gray area in that. Unless you are giving btc away at your meetup and no dollars are involved you need a license. That's why I was trying to find an HSBC (loophole) in the law.

inBitweTrust

hero member

Activity: 658

Merit: 501

Quote from: QuestionAuthority on January 25, 2015, 01:22:12 PM

But you convinced me it can't be done without risking arrest! Are you willing to make multiple trades and risk being convicted of running a money services business?

I certainly understand why others don't wish to but you have to understand that I don't trade or sell to make money but to introduce others to bitcoin and as a matter of principle.

There is some ambiguity in what is considered a MSB as the law interprets in the US.

Perhaps the best solution is to organize meetups where I trade BTC with multiple people once a month for 0 profit pricing things at spot price where there is absolutely no confusion that I am running a business.

QuestionAuthority

legendary

Activity: 2156

Merit: 1393

You lead and I'll watch you walk away.

Quote from: inBitweTrust on January 25, 2015, 01:18:21 PM

Quote from: QuestionAuthority on January 25, 2015, 01:06:55 PM

Thanks for helping me brainstorm. I suppose you're right. LBC is dead for me now. Multiple smaller transactions with complete strangers, like $500, wouldn't even work because it would still make you a money services business. This thread can serve as a lesson to any future BurtW's here. Trading with strangers in the USA is a losing proposition. Don't do it.

I'm not going to allow them to intimidate me or back away from my principles and will continue to sell locally regardless.

But you convinced me it can't be done without risking arrest! Are you willing to make multiple trades and risk being convicted of running a money services business?

Quote

Money Services Business - The term "money services business" includes any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the following capacities:

(1) Currency dealer or exchanger.
(2) Check casher.
(3) Issuer of traveler's checks, money orders or stored value.
(4) Seller or redeemer of traveler's checks, money orders or stored value.
(5) Money transmitter.
(6) U.S. Postal Service.

inBitweTrust

hero member

Activity: 658

Merit: 501

Quote from: QuestionAuthority on January 25, 2015, 01:06:55 PM

Thanks for helping me brainstorm. I suppose you're right. LBC is dead for me now. Multiple smaller transactions with complete strangers, like $500, wouldn't even work because it would still make you a money services business. This thread can serve as a lesson to any future BurtW's here. Trading with strangers in the USA is a losing proposition. Don't do it.

I'm not going to allow them to intimidate me or back away from my principles and will continue to sell locally regardless.

QuestionAuthority

legendary

Activity: 2156

Merit: 1393

You lead and I'll watch you walk away.

Quote from: inBitweTrust on January 25, 2015, 12:51:52 PM

Quote from: QuestionAuthority on January 25, 2015, 12:41:25 PM

I hadn't thought about that. You would actually need receipts showing you donated the money to a charity. Or form your own charity.

It is impossible to be completely legal in the US today regardless as most people commit multiple felonies a day without even being aware. As soon as you are aware of this than the only thing you can do is protect yourself and mitigate those risks reasonably. Some people will choose to avoid Bitcoin altogether for this reason but if you compromise your values than that is removing the need to protect anything at all because you have already given up what is most important.

Starting your own non-profit can act as a complicated hassle and not necessarily prevent an indictment if the numbers don't add up. The safest bet is to just mitigate the risks and not deal with sell to people who claim illegal use , and keep transactions under 10k for strangers.

Thanks for helping me brainstorm. I suppose you're right. LBC is dead for me now. Multiple smaller transactions with complete strangers, like $500, wouldn't even work because it would still make you a money services business. This thread can serve as a lesson to any future BurtW's here. Trading with strangers in the USA is a losing proposition. Don't do it.

inBitweTrust

hero member

Activity: 658

Merit: 501

Quote from: QuestionAuthority on January 25, 2015, 12:41:25 PM

I hadn't thought about that. You would actually need receipts showing you donated the money to a charity. Or form your own charity.

It is impossible to be completely legal in the US today regardless as most people commit multiple felonies a day without even being aware. As soon as you are aware of this than the only thing you can do is protect yourself and mitigate those risks reasonably. Some people will choose to avoid Bitcoin altogether for this reason but if you compromise your values than that is removing the need to protect anything at all because you have already given up what is most important.

Starting your own non-profit can act as a complicated hassle and not necessarily prevent an indictment if the numbers don't add up. The safest bet is to just mitigate the risks and not deal with sell to people who claim illegal use , and keep transactions under 10k for strangers.

Quote from: ab8989 on January 25, 2015, 12:46:37 PM

If you think this kind of shady dealings makes bitcoins more popular towards mainstream ordinary people, think again.

We don't need another fiat, w/u, or paypal.... we already have plenty of those options. If Bitcoins core principles scare the mainstream away than so be it, I would rather have slow and steady adoption and keep the principles which make bitcoin valuable and useful to me than treating it like some get rich early investor stock.

ab8989

full member

Activity: 209

Merit: 101

FUTURE OF CRYPTO IS HERE!

That charity might sue you for stealing their money if you do not forward the money to the charity but instead keep it to yourself. They also might think you are tarnishing their name in this process and sue you to stop mentioning their name in this way.

I do not live in USA but in my country asking for donations to charity and keeping the money to myself is highly criminal.

I did not fully understand the point of apples how they played part of the game. However that kind of thinking might somehow open you to a situation where the other person could somehow trick you out of the money but now you have a contract to exchange bitcoins to apples and he could demand you do just that for real and then get that bitcoins to apples deal enforced by court.

If you think this kind of shady dealings makes bitcoins more popular towards mainstream ordinary people, think again.

QuestionAuthority

legendary

Activity: 2156

Merit: 1393

You lead and I'll watch you walk away.

Quote from: inBitweTrust on January 25, 2015, 12:38:05 PM

Quote from: A.F.K on January 25, 2015, 12:33:16 PM

Maybe just a donation is enough.

There are rules and requirements to accepting donations for a non-profit. Federal Reserve Notes are their tokens, and you must play by their rules when using them. The best bet is to eventually not accept or use their paper notes altogether. https://en.wikipedia.org/wiki/Agorism

Legally you are permitted to do this except with debt in which you are forced to by the state at gunpoint to accept their "funny money". If you don't allow people to accumulate debts with you, you still have a right to refuse accepting Fiat at this point in time.

I hadn't thought about that. You would actually need receipts showing you donated the money to a charity. Or form your own charity.

inBitweTrust

hero member

Activity: 658

Merit: 501

Quote from: A.F.K on January 25, 2015, 12:33:16 PM

Maybe just a donation is enough.

There are rules and requirements to accepting donations for a non-profit. Federal Reserve Notes are their tokens, and you must play by their rules when using them. The best bet is to eventually not accept or use their paper notes altogether. https://en.wikipedia.org/wiki/Agorism

Legally you are permitted to do this except with debt in which you are forced to by the state at gunpoint to accept their "funny money". If you don't allow people to accumulate debts with you, you still have a right to refuse accepting Fiat at this point in time.

A.F.K

newbie

Activity: 52

Merit: 0

Maybe just a donation is enough.

Topic: How to trade on LocalBitcoins without going to jail (Read 2885 times)