Cryptocurrencies do have its good points, but some people make sure that the crypto industry has a few bruises. A trader on LocalBitcoins by the name of ‘Bitcoin Maven’ is imprisoned in Los Angeles (LA) for running an illegal money transmitting business.
LocalBitcoins is an over-the-counter trading of local fiat currency for Bitcoins by posting advertisements stating the exchange rate and payment methods for the trade. The reputation and feedback mechanism is well built ensuring trust is established between the buyer and seller. As of now it does not follow Know Your Customer verifications (KYC) which is mandatory for exchanges in America.
LocalBitcoins acts as an escrow service, connecting buyers and sellers directly. Since it is not an exchange by itself and not based out of the US, it has not followed KYC and other requirements needed for transfers. However, this has led to trouble for traders who’ve done a large volume of transactions without reporting to the necessary government agencies.
The LA trader had used LocalBitcoins in making a fortune through drug trafficking and other black market activities.
The total transactions were between $6 million to $9.5 million between 2014 and 2017, with a profit of a staggering $300,000 a year.
Thanks to the illegal activities, Bitcoin Maven has to spend 30 months in prison.
The official court documents state,
“Fueled a black-market financial system in the Central District of California that purposely and deliberately existed outside of the regulated bank industry.”
She was busted on March 30 with 40 Bitcoins, $292,264 in cash and 25 gold bars which the government has asked the court to forfeit due to it being bought with illegal money.
LocalBitcoins has been established as trustworthy, but many people are starting to exploit the over-the-counter method of trading.
Earlier this year, Morgan Rockcoons, CEO of Bitcoin Inc. was arrested by the U.S Immigration and Customers Enforcement (ICE) in Las Vegas. Rockcoons operated an unlicensed money transmitting business and promoted money laundering activities through the use of LocalBitcoins.
It’s high time; LocalBitcoins needs to safeguard illegal activities by traders operating through its platform.
Image Source: “Flickr”
I have been following the crypto markets since mid 2017, just in time to witness the incredible surge of the digital asset industry. Fascinated by the potential of blockchain technology I’ve started to dig deeper and that’s how I ended up meeting the Toshi Times team. I hold a Political Science degree, therefore the crypto regulation development is particularly interesting for me. I’m also heavily involved with music, running my own label, a YouTube channel and working with distribution. People call blockchain the ‘Fourth Industrial Revolution’ and I believe it will change our daily lives in the coming years and we will have the front row seats to witness it.