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Your friend would be the money transmitter in this case and at that scale no one would care, but if he did it with 1000 “friends” then, well yeah. People have gotten arrested and charged for operating on localbitcoins without proper licensing.

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That isn't quite true. Money business laws only apply to people doing it as business, so your friend is in the clear de-jure as well as de-facto. One of the things a prosecutor would have to prove as part of the case is that this was in fact a business. Typically this would be done by showing that he had been listing both buy and sell on localbitcoins.com and/or by setting up a test purchase that showed he was dealing with anyone who showed up.

There is a difference from selling a few cars to strangers, and setting up a car-selling business which would then be subject to a bajillion rules and regulations.

The same for selling bitcoins. You can do it a few times but if you make it a business you become a MSB.

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