Topic: man sentenced to 4 years for illegal bitcoin operation - page 2. (Read 13184 times)

Blew it all on drugs, gambling, and hookers?


My best guess was that he was meeting people from localbitcoins, but there aren't any details.  He could have had a black market hidden TOR site of some sort. He could have been trading here at bitcointalk in the Currency Exchange forum. He could have been on the OTC IRC channel, he could have been communicating with people on Reddit.

i wonder why a guy who processed $3mil in transactions couldn't afford to hire an attorney?

and WHAT THE HECK exchange was he running?

Layman's terms?

A man was arrested and charged with a crime.
Rather than hire his own attorney, he was assigned a public defender.

He plead guilty to operating a "money transmitting business which affected interstate commerce, and such business was operated without an appropriate money transmitting license as required by the State of Illinois".
He also plead guilty to operating a "money transmitting business which affected interstate commerce, and such business failed to comply with the money transmitting business registration requirements".

Because of these admissions of guilt, he has been sentenced to 4 years imprisonment followed by three years of supervised release.

Anything more than that is speculation or unverified news reports, since there is not additional information in the indictment.

According to unverified news reports:

"Investigators found Powell received more than $3 million in Bitcoins from individuals over an 18-month period ending in Feb. 2014. By law, he was required to register as a money service business with the state of Illinois or the United States."

I understand what you're getting at with this idea, but it's kinda still missing the point.

The buyer is still handing you "FIAT MONEY" cash, which is the stuff that these fascists are so concerned about controlling, hence their claims to be authorized to "regulate" your use of it.

What you'd need to do to accomplish what I *think* you're getting at here, would be something along the lines of an exchange of your printed QR code on paper for something like a 1 ounce gold coin, when the current dollar value of that gold coin was, say, $1225 and that QR code just happened to correspond to an address that was holding $1225 worth of bitcoin.

This, then, would be a simple barter exchange of one physical object (printed piece of QR code "artwork"...?) for another physical object (the gold coin). 

If you could abstract it even further from "money" by using something like a rare collectible baseball card or something like that, instead of a gold coin, so much the better.

Of course, this is ridiculous... and one would HOPE that we will never be reduced to playing such stupid GAMES to have to "get around" the increasingly draconian laws that it seems like "they" MIGHT begin to try to prop up around bitcoin, in a vain attempt to fence it in.

But if it comes to that? 

Before they'll ever be able to KILL bitcoin, I'd expect some stupid nonsense like this scenario might just become reality... but let's hope not.

Jesus fuck what? Can someone put what happened in layman terms?

Not according to Article 4, Section 2, Clause 2 of the U.S. Constitution:


Law enforcement individuals in the state that he goes to live in would be obligated to detain him and deliver him to Illinois (the state that has charged him with the crime).

So couldnt he go to another state to live and avoid the punishment?

They'd probably try and nail you by saying that you funding the address was the "money transmission" and that the qr code was a payment instrument.

Just a thought, what if I sell some stupidly large random number (private key) or corresponding QR picture.  Mere coincidence, perhaps, that a bitcoin is sitting on that private key in a "blockchain" -- whatever that is    The customer can place ~$350 on the table and I hand over the qr code.  What the customer does with that number has no concern to me.  In this case I believe sales tax would have to be charged for the QR code as a consumer good.  Probably only works for in-person trades.

I read recently that you should never pass a law unless you were prepared to see people die as a result.

The thinking was that the State is authorised to use lethal force to enforce its laws, and
eventually that will happen.

Whoever he is, hope the punishment stays as an example to the Bitcoin community.

I would say that more jurisdictions would require people to have some kind of money transmitter license to sell bitcoin for cash/fiat then would require some kind of license to buy bitcoin for cash/fiat

I'm not so sure about that... been wondering about this specifically myself for awhile now.

This guy's "offense" amounted to $3 million exchanged over 18 months?

Divide that up into just a reasonable per-day business volume:

3,000,000 / 18 = $167,000 per month
  167,000 / 4 = $42,000 per week
   42,000 / 5 = $8,400 per day, assuming 5 day working week (guy's not even doing any weekend trading, LOL)

If you figure a typical "quick trade" type deal for an average bitcoin buying customer on LocalBitcoins is maybe for $500, then this amounts in total to under 20 customers a day.

Granted, yes, that's a pretty brisk business, if he was working this kind of volume day after day, month after month, consistently for a year and a half, to accumulate $3 million in total.  It's clearly not a casual or part time business effort.

But on the other hand, it doesn't sound so impressive if his "crime" is described as "trading with 20 buyers a day for five hundred bucks each" now, does it.   

The Prostitutor in this case likely aggregated his "total business volume" UPWARDS into this more formidable sounding number... so that it sounds more like they've "taken a dangerous felony money launderer" off the streets, thus protecting innocent mothers and children in America for the glory and honor's sake of apple pie, rainbows, and unicorns that shit Skittles...

Let's hope this case is just a fluke, anomaly, one-off unfortunate plea-bargain this guy had to accept... and not the beginning of any kind of crack-down trend against simple & honest person to person bitcoin exchange.   

there will be a lot of martyrs before mass adoption

I suspect that each jurisdiction has its own rules regarding this and that such a blanket statement is likely to be mistaken in many jurisdictions.

purchasing bitcoins directly does not need a money exchange license. but if you are operating a system which holds FIAT for future use for customers or movement between people, then you need a license.

basically if your business model includes a users balance denominated in dollars. get a license!

for instance localbitcoins holds no fiat and all transactions are for direct bitcoin purchases. then users or webmasters of localbitcoins do not need a license.

and also anyone working as a fiat escrow needs a license.

Obviously it is the huge amount of money he was dealing with.  The odds that you will be prosecuted for
trading $200 worth of Bitcoin here without a lisence are very low.

i wonder if this guy was a high volume localbitcoins exchanger or if he operated a real online exchange website?

Because you would think we would have heard about the exchange suddenly disappearing, funds in peoples' wallets gone, etc.

Who is this dude and what exchange did he run??

Yep, he was also charged with possession of less than 50 kilos of marijuana with intent to distribute but that charge was dropped as part of the plea deal, so I'm assuming there is more to this case.

He pleaded guilty, so I'm just guessing that this was part of a plea deal.  If so, then the details of what actually happened might be difficult to come by.