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Two men in Florida have been arrested and charged following transactions arranged on the LocalBitcoins.com service, which allows bitcoin enthusiasts to buy and sell bitcoin with locals in-person.
The men were charged with violating state anti-money laundering laws along with operating an unregistered money services business.
The Miami Beach Police Department and the United States Secret Service Miami Electronic Crimes Task Force reportedly contacted individuals on the service looking to sell high volumes of the digital currency in what was to be a sting operation.
One of those very individuals was 30-year-old Michell Abner Espinoza, going by the name ‘Michaelhack’. With a 99 percent positive feedback score, an undercover agent arranged a meeting with Espinoza, and transacted one bitcoin for about $1,000 in an apparent trust-building transaction — high above market value. A higher-stakes deal was then arranged on the order of $30,000, in which the agent told Espizona he wanted get bitcoin to purchase stolen credit card numbers off the web. When Espinoza met with the ‘buyer’ (the agent), he was arrested (Thursday).
In addition to the arrest, a search warrant on Espinoza’s residence was carried out to seize digital media from the premises.
Canadian-born Pascal Reid was also arrested Thursday and charges with violating anti-money laundering laws and operating an unregistered money services business. Reid was apprehended in a similar meeting with an undercover agent.
Reid’s mobile device was apparently holding on the order of 403 BTC (worth over $300,000 at market value), according to court documents.
The case sheds light on the legal gray areas that still exist in peer-to-peer crypto transactions and draws parallels to broader regulatory concerns in Florida, especially in industries like online gambling Florida real money where digital currency is also gaining popularity.
In a statement to CoinDesk, LocalBitcoins.com owner Jeremias Kangas explained that users are expected to follow local laws and regulation when buying or selling the digital currency in person.
“That’s our guideline. But it’s quite difficult for us to look after everyone,” he stated.
