U.S. laws governing bitcoin trading are vague and sometimes lead to complicated law enforcement actions, according to an article in Fast Company magazine. Anti-money laundering laws require exchanges to verify customers’ identities, but what constitutes an exchange can sometimes be unclear.
A Louisiana chiropractor who used his credit card merchant accounts to sell hundreds of thousands of dollars’ worth of bitcoin pled guilty last month to operating an unlicensed money servicing business.
The chiropractor advertised “bitcoin services” on LocalBitcoins.com, a marketplace where bitcoin users buy and sell the currency, according to the indictment. The chiropractor and his son allegedly accepted more than $3.5 million in money orders, prepaid cards and cash in exchange for bitcoin that they bought on bitcoin exchanges.
Prosecutors agreed to drop a money laundering charge connected to an alleged $14,000 cash-for-bitcoin trade drug informant, along with wire fraud charges connected to the credit card transactions.
The case underscores vagaries involved in regulating virtual currency trading. Virtual currency transactions are