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A friend of mine trades Bitcoin and often asks me to pick up money for her, i.e., someone sends money to me (on my name) and I just pick it up and give it to my friend. The amounts are usually around $500.

Is this legal? Can I get into trouble doing this?

I have no idea who the senders are. Thank you.

  • 88
    What reason does your friend give for putting these payments in your name? – Ben Miller Apr 25 '18 at 18:07
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    I think she pickups so many of them very often that she just needs another person to do it for her. She does not give me any money for doing that but she is a barber and gives me free haircuts. – Gall Anonim Apr 25 '18 at 18:10
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    Taking your post at face value, it is total madness to do this. It's simply "structuring" and hence illegal. If you think you will ultimately be able to say you "didn't know" like in a courtroom drama on TV, you're in a dreamland. Obviously, never do it again. If in reality you're asking whether you can "get away" with this scheme, never in a million years. – Fattie Apr 26 '18 at 4:23
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    Are you reporting these on your taxes? The money was sent to you and was not a gift to you. It is reportable income. – David Schwartz Apr 26 '18 at 4:27
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    Here's an article about someone else who did this kind of thing: bbc.co.uk/news/business-43897614 – Robert Longson Apr 26 '18 at 6:13

12 Answers 12

192

I think it is likely that your “friend” is doing something illegal, and that she is putting these payments in your name to avoid getting caught. You may be being used as an unwitting money mule.

I recommend steering clear of this. Tell her that you will no longer pick up any of these payments for her, whether or not your name is on them.

Giving your friend the benefit of the doubt, it is simply not a good idea to mix money like this with friends, even if it is legal. But because you don’t know where these payments are coming from or what they are for, you certainly should not allow your name to be used like this.

  • 59
    "Money mules are complicit and risk criminal prosecution and long jail sentences. [...] Bitcoin ATMs were reported by Brian Krebs in 2016 to be rising in popularity for money muling." – 0xFEE1DEAD Apr 25 '18 at 19:17
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    Still would not keep doing it, but a reason could also be that a lot of Bitcoin-exchanges restrict withdrawals to a fixed dollar-amount per month. So it could be that she is using multiple accounts to withdraw more coin. – Daniel Apr 26 '18 at 7:52
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    @mbrig "Bitcoin-exchanges restrict withdrawals to a fixed dollar-amount per month" -- Sure you have thousands of dollars! Buy more! Good luck withdrawing sucker. – Yakk Apr 27 '18 at 21:42
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    @Yakk its generally a staged amount depending on how well verified you are. Again due to legal restrictions. A legitimate exchange will let you withdraw $100k+ at once, but not via e-transfer, only a bank transfer with signatures. Worth noting too that a legitimate exchange will also limit the amount you can deposit without doing similar verification, to cut down on fraud. – mbrig Apr 27 '18 at 21:53
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    @Yakk - My Fidelity account also has fixed limits on how much I can withdraw. This isn't a Bitcoin thing, it's a banking thing. – Rob P. Apr 28 '18 at 11:55
57

So just to be clear, she gets so many of these ~$500 transactions she can't even make the time to show up and collect them all? Yet, she still holds down a day job cutting hair? You are on here asking if this is strange because well, it seems very strange.

"Bitcoin" something something is a convenient way to explain away strange income sources. It's mentioned in the media as some mysterious source of wealth for the lucky few, who really understands it?

Does this friend cut the hair of the wealthy, influential or socially mobile at a swanky salon? Does she own her on business, as in the entire business and not just rent a stall? Or does she grind out haircuts in a strip mall?

The thing about unreported/illegal income is you can't just quit your day job. It raises too many questions. Legal income, you can tell people about it, be proud of your business, try to grow it. Use a bank account for it. Regular stuff.

Does your friend seem to mention this fountain of cash to others? Or is it on the down low and all you ever hear about it is when you're asked to do a pickup?

Follow your common sense here. And remember if the IRS ever comes calling, that is your name on there. And that is likely very taxable income for you, unless you have legit records of your friend taking ownership of that income. I'm going to guess that doesn't happen. Protect yourself first, good luck.

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    @DonQuiKong Whether or not you can make money trading Bitcoin isn't the issue here, nor is whether the friend is rich or not. The transactions could be totally legitimate Bitcoin trades, but then why involve the OP at all? – Nuclear Wang Apr 26 '18 at 13:34
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    @NuclearWang the answer seems to suggest a big enough margin that the friend wouldn't have to work anymore. Which isnt neccessarily true. – DonQuiKong Apr 26 '18 at 13:46
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    @DonQuiKong No, this answer suggests that getting enough income to quit your job just makes you a target for investigation, which means that people who have illegal sources of income will keep a day job to explain why they're not in poverty and make the illegal activity less obvious. It's not saying the "friend" is getting rich off whatever is going on; it's saying that the fact the "friend" holds a job isn't evidence that this whole scheme is legitimate or that the "friend" is trustworthy. Instead, base the (lack of) trust on other considerations, like whether it's all hush-hush or not. – jpmc26 Apr 26 '18 at 23:11
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    I'll also add that hair salon seems like a decent way to launder money. You can claim you're getting cash tips, of which there would be no record. – jpmc26 Apr 26 '18 at 23:17
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    @DonQuiKong ok so for .5% in order to generate $500, that would require $100k in capital to risk on that transaction, correct? And the friend succeeds at this so often she can't even make time to collect all the proceeds. So a haircutter understands Bitcoin exchanges well enough to succeed at consistently trading for profit, has at least $100k to risk, prefers to use high fee services like WU instead of a bank account, is willing to risk putting those profits in other people's names, risk having them lose or keep the money? Sorry, this doesn't pass the smell test. – red_squiggly_line Apr 27 '18 at 12:58
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is this legal?

No, in most places. You are likely participating in money laundering, fraud, tax evasion, or other sorts of crime. You are acting as a money mule. It is bad enough if you receive no monetary reward but if you take a cut of the proceeds of crime you are more likely to be deemed complicit in those crimes.

Can I get into trouble doing this?

Yes. You can be arrested, prosecuted in a criminal court and get a criminal record that will affect your future life.

When the police arrest you picking up the money, you are going to have to prove that all the money received then and in the past wasn't kept by you and that your friend isn't someone you made up or falsely accused. Your friend may deny any involvement. That money might be associated with the sorts of crime you, your family, employers and real friends would find abhorrent.

I do have no idea who the senders are.

Most likely the victims of fraud or possibly criminals themselves (fraudsters, heroin dealers, sex-traffickers, etc).


Update - I read an interesting article in The Economist today: The head of Europol estimates that about $5,000,000,000 of European proceeds of crime are laundered through cryptocurrencies every year, and climbing. Often in chains of multiple small transactions involving money mules. The bigger international criminal gangs are very much involved in this. Recently a UK citizen in the Netherlands was imprisoned for processing several $m in small transactions in this way for a criminal gang involved in the illegal drugs trade.

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    "... if you take a cut of the proceeds of crime..." If this is a pun on the OP receiving free hairstyling for his assistance, then well done. – Grade 'Eh' Bacon Apr 26 '18 at 15:52
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    I think you missed one possible repercussion. OP could get in tax trouble as well, if these amounts cumulatively run into real money. – T.E.D. Apr 26 '18 at 16:11
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    ....as an example, cnbc.com/2018/01/22/… – rrauenza Apr 26 '18 at 20:07
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    @EdmundReed: Are you suggesting that heroin dealers and sex traffickers are fictional? Because, if so, I can assure you that you're wrong. – Lightness Races in Orbit Apr 30 '18 at 11:37
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    @LightnessRacesinOrbit not at all, I am pointing out that insinuating OP's friend is involved with heroin dealing and sex trafficking is amusingly specific; likely the result of too much TV and imagination. – ESR Apr 30 '18 at 12:31
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You need to get yourself a lawyer now! Your name is on the money transfers. Your face is probably on surveillance cameras picking up the money. Worst of all, it sounds like you did a lot for her, which makes you seem more like a partner than someone doing a favour for a friend. It's possible the police are already investigating, or it could take months or even years for this to come back to haunt you.

A lawyer will advise you what the best course of action is, which could range from "don't worry about it" to going to the police to get ahead of this. You can probably also get an initial consultation with a lawyer for free.

EDIT: If your friend really is trading bitcoin, then it sounds like she is buying on a major exchange and then selling using one of the peer-to-peer bitcoin markets. While not everyone buying bitcoin is a criminal, private peer-to-peer purchases are favoured by criminals as they can exchange cash for bitcoin with little or no paper trail. The major exchanges all have know your customer (KYC) and anti-money laundering (AML) policies. There was recently someone convicted of this, although it seems they knew they were helping to launder money.

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    Yes. A lawyer. Now. – ChrisInEdmonton Apr 27 '18 at 21:29
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    Another reason -- what are you going to report on your taxes? This is money that you received. It was not a gift. It is reportable. – David Schwartz Apr 29 '18 at 15:50
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One of the (claimed) features of Bitcoin (and other crypto-currencies) is the anonymity (let's call these Cryptocoin). When two identities exchange Cryptocoin, the identities that appear in the universal ledger are public keys (which can be discarded once the funds are transferred from the account). Many people use Cryptocoin for legitimate transactions, however some use the (perceived) anonymity as a way to secretly perform transactions which include an illicit component.

One way the government tracks down and prosecutes criminals is by following the money trail. Well, some people have realized that identity can be derived from Cryptocoin by observing the parties at the edge of the transactions. The way that someone might avoid law enforcement would be to avoid having their IRL (in real life) identity associated with their Cryptocoin digital identity. And that is the role which you may be serving, as the unwitting proxy endpoint for receipt of cash.

Suppose that your friend is not engaged in illicit activity, but merely selling high-value items (crafts, collectibles, information). Or even just taking advantage of arbitrage opportunities in crypto-currencies or selling previously obtained (purchased, earned) Cryptocoin. However, the IRS considers any gain in value as income, and unreported income is tax fraud.

Suppose the FBI, DEA, or IRS contact you and start asking you questions. You may well tell them you were just collecting money for your friend. And what proof do you have when she disavows any involvement?

Does this friend also have you shipping parcels for her as well?

Stop, get educated, and Get a Lawyer.

3

There are different possible scenerio's, but almost all of them end up badly.

  1. She bought bitcoins back in the day, when they were cheap. She sells them now little by little and is using you to evade taxes (since the money is on your name.).
  2. Like most other posts. She uses you as a money mule and uses bitcoin as an excuse to not arouse any suspicion in you.
  3. She is too lazy to pick up the money and simply asks you to pick it up.

I don't know about you, but even that third scenerio you are still being used, and that is the best case scenerio.

In other words, you risk a lot and benefit little. So stop...

EDIT: Also, assuming she is using u as a money mule, you are screwed. People think bitcoins are anonymous, wrong. The blockchain is the most open and transparent payment system ever created. Unless she took some precautions, it can even be tracked by amateurs.

2

You haven't specified your coutry, so those laws might not apply, but there's something that is called invalid deposit. Your friend is sending you money, but there's no causa for that. For example in Poland such money transfers are taxed with civil operations tax - 2%. I'd expect similar regulations in other EU countries.

So the illegal part is likely you don't report those operations and don't pay taxes that apply.

In that case, it doesn't matter how near friends you are. Even if your grandma have lost her bank card and send money to you account to take them using your bank card, it still constitutes an invalid deposit.

1

There are only a few outcomes from this situation if you continue. 1) Authorities find out there is illegal activity going on due to your friend. Thus making your crime a FEDERAL crime. This would leave you in a very bad place. 2) Tax Evasion or Scamming is what your friend is doing by using you. This will also end you up in Prison.
3) The actions seems precise enough to elicit other types of activity that may not be deemed legal.

  • Welcome to Money.SE! Generally speaking, it's frowned upon here to add an answer that repeats what another answer has said without adding anything new. I've given you an upvote anyway as your first answer is correct and helpful despite repeating other answers, but other users may end up downvoting you in future for adding a duplicate answer – Fred Stark Apr 30 '18 at 2:05
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One other unpleasant possibility is that the "friend" is working a con, eventually the victim will ask how he/she can also invest into "bitcoin" or whatever to make so much money. Less likely than money laundering in this case, but a real possibility under slightly different circumstances.

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    Welcome to Money.SE. Have you any evidence that this ever occurs? Otherwise this isn't really an answer to the question. – Rupert Morrish Apr 29 '18 at 21:01
-2

A lot of people keep suggesting to go retain a lawyer immediately. There is something here that everyone seems to be overlooking though, this friend of his, if she is a criminal ABSOLUTELY KNOWS that he is going to tell the authorities about her when he gets caught, so the fact that she is still even around would indicate that the jig isn't even close to being up yet. The fact of the matter is that fraud and other crimes that would be the most likely underlying funding for this are crimes that are slow to be investigated heavily for quite a while. Usaully someone disputes charges, if they haven't done so before the bank writes it off, if they have the bank will deny it as to the financial institutions repeatedly being a "victim" means you really are the culprit. My personal opinion (In a past life I was involved in this kid of stuff) is that more then likely she does small scale fraud and funnels the proceeds to bitcoin because it is a very slick way to move money, especially now that you have services like the cash app with square which make it very easy to funnel money from bank account through debit or direct deposit info, you have the apps which simply let you take pictures of checks to cash them, no more needing MICR printers for fraudsters this is single handedly bringing back the check game, all these various online companies like paypal and netspend all trying desperately to be real banks and falling over each other trying to make themselves as accessible as possible. And at the end of it all you have social media to learn about people and get as many of the financial backing questions as you can and then you get three chances (three free credit reports) to get the tricky ones in a multiple choice timed environment that you couldn't glean from cyber stalking them and lurking their social media. But it pays off, for instance if you can get one of their credit reports and they have good credit you can immediately get a line of credit over a thousand dollars completely over the internet through paypal right now and funnel that through bogus merchant accounts... you guessed it right into bitcoin through an exchange if you keep good enough records to look legit, or if you don't bother because you are too busy cyber stalking and chatting with potential victims while cutting their hair you use local bitcoins or atms and such. In the criminal world computer crimes and a lot of other cottage industry or white collar crimes are more "women's" crimes while the men like to feel macho and go do dumbass gangster stuff with guns and such. It's really a very silly culture but a chick is exactly who you would expect to be a fraudster, they are great at social engineering, it's a manipulative and passive agressive crime. I'm not saying that men don't do it too, I'm just saying when a woman wants to make money illegally and they don't want to do sex work, this is usaully what they end up doing, there are a lost of stigmas and obstacles for a woman to overcome to be a stickup artist or even a drug dealer (individuals think they can con women easier and they seem much easier targets for robbery. Even if they are tough as ails and not easy targets they will deal with significantly more ATTEMPTS which are always at least minor setbacks in some way shape or form)

But that brings me to the other crime I would suspect she is involved in which is sex work. She could moonlight doing online shows or even escorting at night, sex work, especially live media streams has increasingly turned towards bitcoin based payment options. The ways that the money is coming would seem to indicate this is a possibility. Unlike fraud, these individuals are willingly paying for a service and will be much more eager and less suspicious to send bitcoin based payments themselves to whomever, even some dude who like free haircuts. If fraud is what she is doing she likely has complete control over the funds long before they become bitcoins.

Those are just my speculations from personal experience, in any case she is up to something dude, she would have been more transparent otherwise. She is probably shocked you haven't asked any questions about this. Like I said she is going to have some degree of an idea, even just down to intuition when it is about to collapse and she will be gone when that happens. I would not panick and go straight for hiring a lawyer, yes you are on surveillence footage but it is not kept for very long so unless the police are following you around and obtaining the footage on the fly. Stop doing this activity, if the police are already investigating and have enough evidence for a conviction you will know VERY quickly after your behavior changes (you stop doing the mule runs). If this happens TELL THEM ABSOLUTELY NOTHING, even stuff you think is showing your are innocent can still nail you for some kind of violation you don't think exists or shouldn't exist but does and they will use it against you. They aren't lying when they say that anything you say will be used against you. At this point there is no talking yourself out of it, suck it up keep your mouth shut, chances are they jumped the gun and you will be ORed on your initial appearence anyways because they were depending on you to say something to give them that little bit of evidence they needed for the charges to stick at initial appearance. But absolutely don't tell them anything and at this point think about the lawyer. Odds are the only one who doesn't know you are a patsy is you and unless the jaws are about to be closed on this, you will be allowed to walk away if you do it now.

So tl;dr is just stop it, right now, find a new barber and pay for haircuts. Don't go crazy and overreact and confront this girl, don't go shopping for a lawyer (if she is a serious criminal this will make her very very nervous, and it will likely cost you a LOT of money you don't need to spend since I personally don't think you are in it deep enough to need one yet) Just walk away from it all, and check your credit reports in a couple months because if she's a fraudster I guarantee she knows everything about you to take you for all your money and put you deeply in debt at this point. And the second you are no longer her mule you are of no use to her otherwise.

One thing I forgot to talk about is the micro payment structure. This is specifically done to expedite the transaction. Over certain thresholds the transaction has to be halted and reported to the federal government to see if they think this is money laundering or terrorist funding, them giving the nod that no you aren't collecting money for terrorism take a day or two, but single transactions under the threshold don't trigger this. Obviously it is cumbersome to try and send like 80 thousand dollars in 499 dollar increments but if you are sending an amount that barely crosses that threshold like 5 thousand, it is very much preferable to send it as micropayments, the bank will probably even suggest it as it doesn't get tied up for a couple days in bureaucracy. So the micro payments don't automatically set off a red flag, this is a common legal loophole to make a transaction in the low thousands happen much much faster, no one wants that transaction to sit there an extra two days, the feds don't really want to investigate some white person sending some other white person 6 thousand dollars, but it is the law if it is sent as a single payment and the bank will have to comply. That being said the individuals who usually learn this trick first and almost universally know it are individuals who have been in the criminal justice system. You learn very fast to make your money order court payments in micro payment increments and put money on a friend of family member's inmate account as such as well when they are locked up (a single payment over the threshold to an inmate will generally be more on the timescale of a week or two to clear).

But the flip side of this is that more then likely it wasn't really reported to the IRS, unless he accumulated a massive amount in a short period all through the same method of transfer. More then likely these were small enough and spread out enough that it wont get reported in a way that will be glaringly obvious to the FBI, a good way to check is to try and apply for government benefits and see if these income sources pop up there, yeah you will get denied but applying for government benefits is free and they source the same reporting generally that the IRS does, in fact they source exactly the same reporting that the state tax audits will refer to. My guess is you are filing singe with a modest income shown on w-2s and that's about the extent of your income tax filing for the most part, if I'm right your audit risk is hella low and you really shouldn't sweat the tax implications of these micropayments, there will be no evidence that you ever deposited even a red cent of this money into any kind of account you have or converted it into any reportable purchase like a car or medical bills or real estate, they have no way of proving you wrong when you act shocked and say you had no idea this happened and your identity must have been stolen, thank you so much for letting you know. This is an outrage if you ever find out who did this, blah blah blah.. You didn't keep any of that money, don't freaking pay the tax on it. If she is laundering properly she is paying tax on that same money anyways to get it into her legit accounts (wow 500 dollars of tips again! yeah she is supposed to pay tax on that)

-5

They don't sound like a very good friend. Keep the five hundred dollars a few times and tell your friend it didn't turn up. It's totally illegal and if you're going to get into trouble, you're already implicated so you might as well make some cash from it. I'm sure they'll soon stop asking you.

Unless of course, you're worried about having a horse's head in your bed.

  • 3
    If the money is the result of fraud, scam, drugs traffic, crime, etc. and you keep it, then you risk a lot if eventually an investigation says that this is the result of some illegal activity. – Willem Van Onsem Apr 29 '18 at 13:34
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    Keeping the proceeds of crime is not really an improvement in the situation. – Lightness Races in Orbit Apr 30 '18 at 11:38
  • Are we trying to save the world here or extricate ourselves from an unwholesome activity? I answered the question: yes, it's illegal. If only from a tax evasion stand point. Tell the friend the cash didn't turn up, tell the authorities it did and you passed it along - all the transactions have been in your name anyway and I doubt your friend has given you any receipts. You stop having to do favours and you make a grand for all of your previous trouble. It strikes me as the most just solution to the problem. – sanepete May 8 '18 at 19:53
-12

Why dont you just ask? She may be doing something illegal but probably not, possibly just not wanting to have income show up from these transactions as actual income. I have picked up thousands and thousands of dollars in Western Unions and its kinda weird...never seems to end up being recorded anywhere with the Feds. It took til 100, 000 plus of money being picked up before anyone batted an eye. Kind of a grey area. A 500 dollar transaction does not trigger any sort of flag. Then they just asked for copies of license and stuff... dont worry about the occasional 500. I wouldn't...People worry too much. You should ask her for a few bucks here and there, I would do that...

  • 5
    Asking is a good idea, but IF the friend is involved in something illegal and OP ask for compensation in exchange for picking up money, then OP is much more likely to be implicated in money laundering. Noting this risks in your answer would be a good improvement – Fred Stark Apr 26 '18 at 0:19
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    If she is doing it to hide her income from the feds, that is tax fraud and is illegal. – Seth R Apr 26 '18 at 0:40
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    " possibly just not wanting to have income show up from these transactions as actual income" So, she's probably doing something illegal or she's probably evading taxes which is definitely illegal. That's the sum of your argument? – NPSF3000 Apr 26 '18 at 1:11
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    We know for a fact that someone is lying to Western Union and Moneygram about who the beneficiary of these payments are. And the fact that a 500 dollar transaction does not trigger any sort of flag is a reason to suspect that there's structuring going on, which is illegal. – David Schwartz Apr 26 '18 at 6:41
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    This started off so well, but was all downhill after the first five words. This is bad advice and will likely dig the OP a deeper hole. – trashpanda Apr 26 '18 at 8:49

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