Man May Be Convicted for Charging 10% Fee in P2P Trading in the United States

On May 2, Missouri businessman Jason R. Klein pleaded guilty in federal court on charges of running an illegal money-transfer business converting bitcoin into cash without a license using the popular peer-to-peer market LocalBitcoins. For his actions, Klein can be sentenced up to five years in federal prison. Rather than take the case to a grand jury, Klein decided to waive that right and pleaded guilty before US District Judge David P. Rush to "conduct an unlicensed and unregistered money transmission business." Klein was the former owner of the technology companies Logic Forte and Datality Networks and was president of the Association of Information Technology Professionals (AITP), which focuses on technology education for business professionals.

According to a Justice Department statement, a disguised federal agent responded to an online advertisement published on LocalBitcoins by Klein. Klein informed the secret agent that his exchange rate included a 10% transaction fee for a $ 1,000 cash P2P deal. After this transaction, there were two more face-to-face transactions and several online transactions between Klein and disguised federal agents, which generated a total profit of $ 2,122 in fees for Klein. "Under federal statutes, Klein is liable to a sentence of up to five years in federal prison without parole. In pleading guilty, Klein admitted to exchanging bitcoin for cash without being a licensed money transmitter in the state of Missouri as required by state and federal law. This conviction scares the traders who trade bitcoin in peer-to-peer, by LocalBitcoins. This could mean that anyone exchanging bitcoin for money and earning a commission for the transaction may be breaking the law and may be sentenced to prison, similarly to Klein's.
Given that there is effectively no federal legal framework involving the use of digital coins in the US, bitcoin users who are leveraging peer-to-peer exchanges to generate an income through the exchange of US dollars in bitcoins for a fee will have to tread heavily Depending on the state in which they live. Legislators are taking a different approach to bitcoin from state to state without issuing clear legislation in most cases. This, in turn, leaves the peer-to-peer market largely in the dark, not knowing if they're doing something wrong or not until the feds start knocking on their doors.