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Man Faces Prison for Selling Bitcoin without a License

Discussion in 'Coffee Shack (Daily News/Economy)' started by Goldhedge, Jul 12, 2017.



  1. Goldhedge

    Goldhedge Modal Operator/Moderator Site Mgr Site Supporter

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    Man Faces Prison for Selling Bitcoin without a License

    July 11, 2017 Reason Money 1

    [​IMG]
    Wiki
    A grand jury charged Phoenix-area neurologist, Peter Steinmetz, with operating an unlicensed bitcoin exchange. The Treasury’s Financial Crimes Enforcement Network alleges that Steinmetz, along with co-defendant Thomas Costanzo, “enabled their customers to exchange cash for ‘virtual currencies’ charging a fee for their service” without a federal or state money-transmitting license. Therefore, he violated the Bank-Secrecy Act, which could cost him five years in prison. –GEG

    When the U.S Treasury Department declared in March 2013 that exchangers and administrators of virtual currencies like Bitcoin were “money service businesses” subject to regulation under the Bank Secrecy Act, Reason‘s Brian Doherty issued a prescient warning.

    “What the government cannot stop (and ought not try to stop) it can still interfere with, and ruin lives in the process,” he wrotethat May. “Those who think it necessary that Bitcoin be regulated, even if they want to be in on making the regulations as sane and harmless as possible, need to remember that every regulation has a punishment attached for violating it.”

    On Friday, a grand jury charged Phoenix-area neurologist Peter Steinmetz with operating an unlicensed bitcoin exchange.

    established a localbitcoins.com account to conduct in-person exchanges of cash for bitcoin a month after FinCEN made such exchanges without a money transmitters license a crime, according to the indictment.

    While Steinmetz and Costanzo’s business failed to attract federal attention for several years, Steinmetz had received $10,000 in Bitcoin funding from an anonymous donor to continue his workresearching memory for the Arizona-based Barrow Neurological Institute (BNI).

    “It’s almost appropriate actually, that a cutting-edge method of funding is used to fund cutting-edge research,” he told the Arizona Republic at the time of the donation.

    A month later security arrested Steinmetz for carrying a loaded AR-15 into the Phoenix Sky Harbor airport as a protest against the TSA. BNI cut ties with him soon after.

    Undercover federal agents in 2015 initiated a series of transactions with Costanzo, paying him roughly $160,000 in cash in exchange for bitcoin over two years. Agents arrested Costanzo on April 20 and got an indictment issued for Steinmetz two months later.

    The indictment does not make clear what role Steinmetz played in the bitcoin-for-cash business.

    Several men have already been convicted of similar offenses. In April, a New York man pleaded guilty to operating an unlicensed money transmitting business after an undercover federal agent paid him $37,000 for 37 Bitcoins. In May, Missouri tech entrepreneur Jason Klein pleaded guilty to the same crime after making several in-person cash-for-bitcoin transfers with an undercover federal agent.

    There has been some legal pushback to these prosecutions.

    In 2016, Florida State Circuit Judge Teresa Pooler dismissed state-level charges against Michell Espinoza for selling $1,500 worth of bitcoin to an undercover cop he met via localbitcoins.com, ruling that bitcoin did not count as a “payment instrument” under Florida law.

    Read full article here…
     
    nowon likes this.
  2. SilverCity

    SilverCity Gold Member Gold Chaser

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    This ain't happenin'...really?

    SC
     
  3. Buck

    Buck Fabian Society Gold Chaser

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    build it and THEY will come
     
  4. Joe King

    Joe King Gold Member Gold Chaser

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    Sounds to me like the real problem was goin' over their $10,000 cash limit w/o reporting it.

    Edited to add: if'n you're gonna play in this market with large sums, follow the rules that cover the movement of large sums of cash. We all know they take that shit seriously and will use any excuse they can to seize assets.
    ....and personally speaking, I wouldn't advise anyone to be putting large sums into cryptos. Certainly not in the amounts listed in the OP. Small amounts only, IMHO. If your $40 ever turns into $400k, it's well worth the price to just play it straight.
     
    Last edited: Jul 13, 2017
  5. Aurumag

    Aurumag Dimly lit. Highly reflective Midas Member Site Supporter

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    So much for anonymous, encrypted, distributed ledger accounting.

    The feds will always insinuate themselves in for their pound of flesh.
     
    andial, gringott and the_shootist like this.
  6. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    As soon as big money is happening, the chokehold gets tighter.
     
  7. Cigarlover

    Cigarlover Gold Member Gold Chaser

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    One month its legal, the next it isnt. To many laws. Especially surroundinjg money. In the old days there were no laws and you could do whatever you wanted. Then again it was all metal so real money.
     
    CrimsonGuardJay likes this.

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