US state laws have been used against Bitcoin traders for the first time, with a sting operation in Florida cracking down on traders moving vast sums of money in the virtual currency.
Undercover officers and agents from the US Secret Service’s Miami Electronic Crimes Task Force, working closely with the Miami Beach Police Department and the Miami-Dade State Attorney’s office, contacted several individuals who were facilitating transactions in the thousands and tens of thousands of dollars via localbitcoins.com.
Localbitcoins.com is a sort of match-making exchange service that helps bring buyers and sellers of the virtual currency together so that transactions can be completed face-to-face.
One of those contacted in the sting was a localbitcoins.com user nicknamed “Michelhack.”
According to this user’s profile, Michelhack has at least 100 confirmed trades in the past six months, involving more than 150 Bitcoins (worth over £67,000). He has a 99 per cent positive feedback score on the marketplace.
The undercover agent met Michelhack and exchanged a single Bitcoin for $1,000, a price that investigators say "included an almost 17 per cent conversion fee."
Court documents reveal that the agent told Michelhack that he wanted to use the bitcoin to buy stolen credit cards over the Internet. After a successful initial meeting, Michelhack agreed to convert $30,000 (£18,285) into bitcoins for the undercover agent.
It didn’t take long for investigators to trace the Michelhack handle to 30-year-old Michell Abner Espinoza of Miami Beach.
Espinoza is currently charged with violating Florida’s law against unlicensed money transmitters – which prohibits “currency or payment instruments exceeding $300 but less than $20,000 in any 12-month period,” as well as Florida’s anti-money laundering statutes, which prohibit the trade or business in currency of more than $10,000.
The sting operation comes just a week after Charlie Shrem, founder and CEO of BitInstant, one of the largest Bitcoin exchanges on the Internet, was arrested in the US for selling Bitcoins to "Black Market" users.
Just last week, Apple came under fire from Bitcoin enthusiasts after quietly removing the Bitcoin app Blockchain from its Apps Store, without giving any reason or warning to users.
Image: Flickr (ynkefan1)