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Comment by ve55 | Hacker News Reader

The part about these convictions that bugs me is that some of the people getting in trouble were definitely not aware that they were breaking the law. It surprises a lot of people when they find out it's illegal to buy and sell bitcoin for cash to strangers in the US like this (that is, with no license or reporting or discrimination). I hope most of those convicted don't get jail time unless they truly knew that it may have been coming.

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According the filing (linked elsewhere in this thread) she knowingly took funds (from an undercover agent) that she believed to be from drug sales... e.g. she intentionally provided a money laundering service.

But was still charged with more generic offences that have nothing to do with drugs.

That’s what those generic offenses are designed for.

There’s nothing morally wrong with moving money around for people without validating their identity.

But if you make it illegal than almost everyone doing it will be doing it to launder money or evade taxes, so if you catch someone at that, it’s almost certain that they have either committed another crime or have assisted someone else at committing a crime.

The alternative to having financial crimes like that is that it becomes impossible to convict the upper levels of crime organizations of anything, and you just end up arresting low level people for crimes where you have immediate physical evidence.

Wouldn't they still be guilty of tax fraud? Making more actions/people criminal just to catch the people that should be criminal more easily doesn't sit well.

It wouldn't necessarily be tax fraud. Criminals are free to declare their income from illegal activities and pay taxes on it.

https://amp.cnn.com/money/2013/02/28/news/economy/illegal-in...

That's awesome, thanks. Since declaring it means you're no longer trying to avoid be caught for the underlying crime I don't think it adds to the point I'm skeptical of.

so if you don't know the source of the funds are you still breaking the law?

I have to think that such unawareness is at least partially willful. They are no doubt aware that the government regulates a lot of things and that financial services in particular have a lot of regulation. It didn’t occur to them that they might need to find out what applies to them?

What other commodities do I need to get a license to buy/sell?

Off the top of my head: food, cars, stocks, land, gasoline, scrap metal.

At a small enough scale and not in government-heavy states all of those are legal to do without any sort of license. When you start doing it regularly is when you need licenses.

Does selling $2 million a year or more qualify as regularly?

This reminds me of AirBnB hosts or Uber drivers violating various laws. The platform (LocalBitcoins in this case) should be educating people about these laws so they can understand the risks of what they're doing.

This is a very old article published recently. She was sentenced to one year in prison, in July.

Correct: more info in this write up:

https://www.latimes.com/business/la-fi-bitcoin-sentencing-20...

Really, you make $300,000 a year and report no taxes and you think you're not doing something illegal?

Would her paying taxes make this less illegal? If she was dealing with gold/diamonds instead of bitcoin would it be legal?

> If she was dealing with gold/diamonds instead of bitcoin would it be legal?

IANAL but surely laundering known drug money with gold/diamonds/beanie babies/bitcoin are all illegal.

> Would her paying taxes make this less illegal?

Pedantically, yes--there would be one fewer crimes committed. Practically, not reporting income hints at knowing its source isn't entirely legal.

It doesn’t matter how you launder money. It could have been Applebee’s gift cards.

It's not unlike those who capriciously decide to day-trade then run afoul of taxation rules and limitations of operation so they end up losing a lot more money than expected.

Some like the individual in the article will end up being examples to others.

Ah yes.. it’s full of people in the world earning 300k$ just working 3h/day from home as all the ads say.

Ignorance of the law is not a defense, and this person had the resources to engage an attorney (at $300k/year of income).

I don't think they made that much. At 6-9 million in transfers, that would be a 10-15% commission, which feels quite high.

But maybe that is typical when doing illegal transactions.

10-15% sounds reasonable. For example currently Bitcoin trades at $6325 on Coinbase, while cash offers on LocalBitcoins are at around $7000 per BTC.

It’s not a defense but traditionally this was balanced by laws requiring a mens rea component - or a guilty mind.

With the rise of strict liability crimes for everything this balance is no longer in place. The Overton window has moved dramatically from where it was when that phrase was coined.

Disclaimer: unless you're the police.

Systemic issues are behind the scope of this thread.

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