I have a few stories to share from people who used LocalBitCoins to sell their Bitcoins.
In September and October, I sold 213 BTC (gradually) to some random guy on localbitcoins. Everything went fine, each time I got the money, I sent the bitcoins. 5 days after the last transaction, I get arrested by the police. “Where does this money come from?” I explain about bitcoins, and tell them all I know about the random guy, I volunteer my phone to analyse my emails and check my story. Once they were sure that the guy contacted me and not the other way around, I was finally free to go. Later they told me that the money was stolen and they thought I was doing money laundering.
Now after almost 3 months and a lot of back and forth with the police, they are now suggesting that I send back the money. I would gladly do that if they arrested the criminal and found out he can not repay. Right now if I send back the money, the innocent person who got his money stolen gets it back, but then I become the innocent person who got his money stolen, so that makes no sense to me.
Edit: I just saw a lawyer. According to him I already won the case. But it’s going to cost me some serious money in lawyer’s fees… More than my cumulated profits. I take that as the cost of a great life lesson and a wake-up call.
He also told me I can disclose the info that the police already knows. So here we go. I’m in Brisbane, Australia. The reason the police froze my account and not the criminal’s account is that they wanted to know where the money was going. The police are regularly checking my house to make sure the criminal is not seeking revenge (he has my full address and I have 2 kids).
This guy, likely a BTC miner, was arrested and questioned by police for selling BTC to a buyer over several transactions. They must have assumed that the buyer was using fraudulent funds and this shifted suspicion onto the seller as well. I do not know if this story is true, but I am tending to believe it is. Police are monitoring these transactions, so you better make sure you have a reasonable explanation as to where you obtained the Bitcoins you are trying to sell.
This next story was removed by the original poster (OP), but luckily somebody in the replies quoted the entire post and therefore I was able to grab it.
So, as a few of you guys know, I’m moving to another country soon enough. When I get over there I won’t have access to my bank account, so a few weeks ago I decided it might be a good idea to sell some of my BTC for cash. I had done this a couple of times before and had a positive experience, so had no whims about doing it again.
So I received a request from someone who wanted to buy 500euro worth of BTC in a f2f transaction. I drove down to meeting spot, met the guy, he gave me the 500euro and basically ran back to his car and drove off. I obviously found this strange, but it was an escrow tx, so I released escrow from my phone and went back to my car.
On my drive back, I noticed that there was a Ford Mondeo behind me (the kind of car that is usually used by undercover police in my city). It seemed to be following me, I didn’t have all my paperwork on my car in order, so I decided to take a detour down some local back-roads and shake it.
So anyways, I lost the car, drove home and thought nothing of this strange encounter.
Over the next few days, I noticed strange needle marks and tiny tears in all of my mail, I also noticed a really strange parked car outside my house one day, when I walked over to it to ask them what they were doing there, they drove off at speed. I probably should’ve been suspicious then, but I had done nothing wrong and shrugged it off.
A couple of days later, I wake up to the sound of my door being smashed in. I run down to find 5 police officers in my house. They showed me a search warrant under the misuse of drugs act. The national drugs unit were parked outside with sniffer dogs ready, they left after a few minutes though and didn’t come inside with the dogs. The police told me the person I met on localbitcoins was an undercover police officer, and they had copied the registration number off of my car and got my address from it.
They stripped the whole house down, turned everything upside down looking for drugs. They found 1 joint of weed and they also seized a clock which they thought was a digital scale (it wasn’t) and informed me that they were going to prosecute me for intent to supply, even though I wasn’t selling, and I showed them a prescription from a doctor in another country (that isn’t valid here) and told them the superintendant of the local police station had informally told me that they wouldn’t prosecute me for possession if it was medical use even though I was technically breaking the law. They also found padded envelopes and accused me of selling drugs through the post (a complete lie with no evidence).
They then told me that if I didn’t give them all the messages & phone numbers of everyone I had met to sell BTC that they were going to seize all my bitcoin miners, computers etc and have them “analyzed”. I was about to move country in the next few days and didn’t want the hassle of having to deal with this, so I told them that I had deleted all the messages (which I did) but that I would be able to get them back if they left my computers there, and that I would co-operate fully (I’m obviously not going to co-operate). They then left and I changed my flight date and basically fled the country the next day, luckily I was planning on moving in a week anyways.
So, a warning to you guys, be careful doing f2f transactions or buying/selling BTC in general, even though we’re not breaking the law it doesn’t mean you won’t get unwanted attention from the police.
This story above, I do not know if it is true either, but it is something to think about. According to the OP, law enforcement wanted all his messages and phone numbers, obviously to try and find other people involved in money laundering and the drug trade. He was scared enough to have deleted the original post, but as I mentioned, some other people quoted it and I was able to grab it.
To summarize, the police are likely watching these Bitcoin transactions to some degree and you need to establish a buyer or seller that you can trust. Once you find a good one, stick with them, even if their rates go up. Try to search for people with established feedback, ask for ID if you want, and make sure you have nothing incriminating on you, or at your home around the time of these transactions. You never know when you could be trying to offload your BTC to a cop!