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Bitcoin-related crimes have increased in recent years. Find out the main ways using Bitcoin could land you in trouble.
While Bitcoin has experienced remarkable growth over the past few years, it also faces increasing criticisms from governments, regulatory agencies, and investors worldwide. Among the most common arguments is that Bitcoin is an anonymous currency, facilitating criminal activities including money laundering, fraud, and tax evasion.
Such claims usually impact widespread fear and panic in the markets, discouraging companies and individuals from investing in Bitcoin. For example, the US government describes crypto exchanges like bitlq as money businesses.
Today, Bitcoin is legal in several states and regions around the globe, except for a handful of countries like China that have banned crypto. However, it is not illegal to own Bitcoin, even in countries that prohibit crypto.
Although using Bitcoin is not inherently unlawful, committing crimes with Bitcoin could land you in jail. Here are some of the ways crypto usage can land you in prison.
Operating an Unlicensed Crypto Exchange
Crypto exchanges are marketplaces where anyone can buy, sell and hold crypto. They are legal in all countries that allow cryptocurrencies. However, crypto exchanges are businesses subject to government regulations and laws. They must have licenses from the relevant authorities to operate in a given jurisdiction.
That means operating a crypto exchange without a valid license can attract dire consequences, including jail. Therefore, you should first talk to a crypto expert when starting a crypto exchange business to understand the legal implications.
Doing so will enable you to meet the compliance requirements, preventing legal tussles that could see you end up in jail. However, individuals and businesses who merely use Bitcoin to transact do not require a license.
Other Bitcoin-related Criminal Liabilities
Apart from running an unlicensed crypto exchange, other Bitcoin uses could attract criminal liabilities. The most common cases revolve around using Bitcoin to commit illegal activities. Law enforcement authorities have arrested and convicted several individuals in the past for crimes connected to unlawful crypto transactions.
The Silk Road case is an excellent example of how people use Bitcoin and other cryptocurrencies to commit crimes. The dark-net marketplace hosted various illegal transactions with Bitcoin, including drug trafficking, money laundering, illegal pornography, and assassinations.
One entrepreneur who processed Bitcoin transactions pled guilty and is serving time in federal prison for facilitating the purchase of drugs on Silk Road. So, using Bitcoin to purchase illegal drugs can also land you in jail. The court sentenced the founder of the now-defunct marketplace to life imprisonment for aiding illicit transactions with Bitcoin.
Bitcoin and other cryptocurrencies have also been critical elements in criminal investigations involving securities fraud and money laundering. That is mainly due to Bitcoin’s perceived anonymity, making it difficult for law enforcement authorities to track the real identities of the individuals behind suspected illegal transactions.
We have also witnessed cases where individuals use cryptocurrencies to evade taxes; mainly by hiding their investments in Bitcoin. That could attract criminal charges as government regulators now require crypto investors to report and file taxes on those investments.
Apart from Bitcoin’s public ledger, there are other ways that the authorities can still pursue Bitcoin-related crimes.
Nevertheless, no direct link exists between Bitcoin and any of the above-discussed criminal activities. Besides, criminals can still use traditional currencies to commit the same crimes without detection.
Overall, using Bitcoin is not inherently illegal in most states, countries, and regions worldwide. However, money laundering, tax evasion, and fraud crimes with Bitcoin bear criminal liabilities that may land you in prison.