If you are thinking about selling bitcoin for cash inside the United States to people you don’t know, caution is advised. A reminder to stay alert for undercover government agents who might try to entrap you has been served by a recent California case.
Another Bitcoin Arrest in the US
An American citizen was arrested earlier this month for selling bitcoin by the Immigration and Customs Enforcement (ICE) agency, the federal government law enforcement body under the jurisdiction of the US Department of Homeland Security.
According to case records from the Southern District Court of California, Morgan Rockcoons (aka Morgan Rockwell) is accused of laundering monetary instruments and the operation of an unlicensed money transmitting business. The government also seeks the forfeiture of all his assets related to the matter, the records further show.
On Friday Feb 9, I was arrested in my home by Department Of Homeland Security over a #Bitcoin transaction from nov 2016 and am released under a personal recognizance bond. I am being charged with:
18 USC 1956 – Money Laundering Instrumenthttps://t.co/4w7NJIi4jw
Asset Forfeit pic.twitter.com/5kINtbxH17
— Morgan (@NODEfather) February 14, 2018
Abusing Hash Power?
With regards to the money laundering count, the defendant is accused of knowingly conducting a financial transaction with a law enforcement officer for the proceeds of a specified unlawful activity. He allegedly exchanged 9.998 bitcoin (then valued at about $9,208) with an undercover agent for $14,500 in fiat that he was told was the proceeds of manufacturing and distributing “hash oil” (an oil containing tetrahydrocannabinols). THC is the principal psychoactive constituent of cannabis and listed as a controlled substance under Schedule I by US federal law.
As for the count regarding the operation of an unlicensed money transmitting business, it is a more broad accusation which the US authorities can apparently pin on any individual who trades in larger amounts of bitcoin not on an approved exchange.
In a previous case where a Localbitcoins user from Michigan was charged, an agent claimed that any transaction of $3,000 or more must comply with know-your-customer (KYC) regulations.
What steps can off-exchange bitcoin traders take to stay safe from criminals and the police? Share your thoughts in the comments section below!