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Bitcoin question!! Is this LEGAL?

Discussion in 'BlackHat Lounge' started by hateandbreak, Mar 31, 2016.

  1. hateandbreak

    hateandbreak BANNED BANNED

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    OK bitcoin pros! There is this guy who has a method (it definitely works as he traded quite fast) that involves selling bitcoins at a markup (20-40%) and the person buys a gift card, or one of those vanilla prepaids and gives us the code/card number. The card is then charged and they get their bitcoins released instantly. He says these people want to avoid showing ID or waiting 4-5 days to get bitcoins, so they opt to use this service, and pay a higher price. There is a website he uses, but I won't disclose that. My question is: Is this legal? I've heard that re-selling bitcoins is called Money Transmitting, and can be bad if you had a license. But the guy mentioned it is now legal, and you don't need a license to do it. The people buying the bitcoin are legit, using actual prepaid cards they loaded in person etc. We charge the card using something like braintree, and then it's deposited into the bank account.

    Give it to me straight, should I be worried? It seems legit, just as you would arbitrage other products say with eBay and Amazon, and make some good money with that by marking up prices. I realize this is a different playing field, and a virtual currency, but it would be great to hear some solid answers from someone who has experience here. I will not go forward with this venture if it is illegal, or can cause some serious issues.

    Cheers
     
  2. chefgreg

    chefgreg Newbie

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    Not legal, and 100% most of those prepaid cards are going to be bought using stolen credit cards. Credit cards get charged back, prepaid card revoked (yes, they're reversible -- or at best, you're able to spend them and stolen funds trace to you), and then the thieves are home free with non-reversible, non-traceable Bitcoin.

    That, and yes you need to be regulated as a US Money Services Business in order to sell Bitcoin. Many people don't register and do it illegally (mainly small timers on Localbitcoins).

    All in all, you'll learn some hard lessons. Would avoid.
     
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  3. MonteCarlos

    MonteCarlos Regular Member

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    You could try it with stealth paypal accounts though, just tranfer the funds asap at another account, they can do $hit about it if you do it correctly.
     
  4. toml3030

    toml3030 Elite Member

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    There are no legit transactions where people are going to pay 40% premium so they can get their money 4 days faster. I'd assume that the prepaid cards weren't paid for legitimately.