What was once just considered to be a passing fad, selling of Bitcoin for fiat money is increasingly being seen as a crime in the US with more and more people being arrested and sentenced for the activity.
We would like to point out that it is not illegal to buy and sell Bitcoin, but doing so without a proper license is what is getting people arrested in the US. Reports have emerged that law enforcement agencies in the US are arresting people for selling Bitcoin via online sites such as localbitcoins.com.
In one incidence four people have been arrested for exchanging the cryptocurrency for fiat and they were charged with the crime of operating a money transmission business without a license.
Jason Klein of Nixa, Missouri, waived his right to a grand jury trial in May earlier this year and plead guilty to the charge of “conducting an illegal money transmission business.” Klein was arrested on multiple occasions and every time he was involved in a cash for Bitcoin transaction with amounts ranging from $1,000 to $15,000.
In the same month, Sal Mansy of Michigan also plead guilty to the charge of “operating an unlicensed money service business.” Between 2013 and 2015, it is estimated that Mansy bought and sold close to $2.5 million worth of bitcoin, the proceeds of which he funneled through a legitimate business that he owned.
There are many more such cases that have been reported in the last few months, but we won’t get into all of them. The important thing here is that while wording of the exact charge varies to some degree in each of the cases, the operative word that is being used is ‘business’. This effectively means that the marker of criminality seems to be whether or not an individual is selling Bitcoin as a business.
This doesn’t mean that every such cash for bitcoin or bitcoin for cash transaction has to be performed by a business entity. Consider the case of two individuals dealing on a one-time basis. This doesn’t constitute a business transaction and lawyers explain that frequency of the transaction matter and also whether an individual is doing such transactions with anyone interested or just one person all the time.
Although convictions for selling Bitcoin illegally appear to be on the rise, the law is far from clear cut. Judges in several states disagree with the assessment that selling Bitcoin is illegal.