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Selling a Large Amount of Bitcoins (self.Bitcoin)

Swag_Bro_420 が 投稿

I was planning on selling most of my bitcoins (about $50,000 worth) soon, but I'm worried about my bank thinking that the activity is suspicious, and possibly freezing my account if they think it's profits from selling drugs or something (it's not, it's gambling winnings).

Would a bank want proof of how I got the money? (That would be hard to provide. Most of it is from nitrogen.eu, a bitcoin sportsbook, and it's anonymous, so the account isn't connected to my name). If I told them it was gambling income, would I get in trouble for that? The US government doesn't enforce gambling laws against individual gamblers, but I'm not sure if that means a bank wouldn't care, since it is technically illegal.

Would it be better to withdraw the money a few thousand at a time, over a longer period of time? Or would that be worse, since it looks like I'm trying to hide something?

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[–]lechango 15ポイント16ポイント  (0子コメント)

Well, you can cash it all out and pay taxes, or sell it all for cash and "pay taxes" if you know what I mean.

[–]sgornick 6ポイント7ポイント  (6子コメント)

If you don't need the cash right away and simply want to sell now to "lock in the value" at the current exchange rate then you might consider using a service(s) such as Coinapult locks and/or BitReserve, etc, to essentially sell the coins today.

Then withdraw later in smaller amounts as you need the cash. With Coinapult locks you would "unlock" some which gives you that amount you specify converted back to bitcoins at the exchange rate at the time you unlock. You would then sell the coins at an exchange and withdraw.

[Edit: Though keep in mind these services are essentially banks holding your funds. That never seems to work that well in Cryptoland.]

[–]Swag_Bro_420[S] 3ポイント4ポイント  (2子コメント)

Thank you, I didn't know services like those existed. I don't need the money right now, I just wanted to avoid the volatility of bitcoin.

[–]blackmarble 1ポイント2ポイント  (0子コメント)

If you live in the US be aware of "structuring" laws. If you split transactions to levels below the amount that a bank would report to the government for the purposes of not being reported, that itself is a crime even if you came by the money legally.

They can fuck you on this so don't give them a chance to.

[–]elfof4sky 0ポイント1ポイント  (0子コメント)

Volatility swings both ways

[–]Geronimomo 1ポイント2ポイント  (0子コメント)

BitUSD, a Bitshares asset does the same thing but in a decentralized way. The only concern with that is the volume on the Bitshares exchange may not be high enough to absorb 50k.

[–]abtcuser 0ポイント1ポイント  (1子コメント)

Where did the Locks feature go? Modified on: Thu, 23 Jul, 2015 at 3:04 PM

As a result of integration with licensed financial institution, Crypto Capital, Coinapult’s feature product, Locks(TM), has been upgraded to fully functional buy and sell options, with the ability to deposit and withdraw fiat at any time via Crypto Capital.

All Coinapult fiat balances will now be held and insured under a separate Crypto Capital bank account.

Not at all clear what Crypto Capital Bank does with the deposits. No hint that it is a full-reserve institution.

[Edit: Though keep in mind these services are essentially banks holding your funds. That never seems to work that well in Cryptoland.]

That said, an institution that is trustworthy, secure, and really full-reserve is strictly-speaking superior to a bank (that subjects a large part of the deposits to counter-party risk by lending them out). But in practice, the risk that a US bank will default on your deposit is negligible compared to the multitude of risks with any of these crypto-shops, even if they are full-reserve, like bitreserve. For somebody without access to US banks, though, the case with a local bank is likely the opposite.

[–]sgornick 0ポイント1ポイント  (0子コメント)

Where did the Locks feature go?

But I don't need to create an account with that bank, right? I guess I need to revisit that. They gave out a $1 worth of gold in a lock -- it worked pretty slick.

[–]ericools 5ポイント6ポイント  (0子コメント)

I wouldn't sell all at once unless you have an immediate use for it, house down payment or something.. Once it's in dollars you have to trust someone with $50k.

[–]GaliX0 3ポイント4ポイント  (0子コメント)

Split it and withdraw it over several month over month local bitcoins as well..

[–]cqm 2ポイント3ポイント  (1子コメント)

Or you can just sell it all at once lol.

Your gambling winnings can be problematic though. Mix that shit!

[–]AussieCryptoCurrency 0ポイント1ポイント  (0子コメント)

Your gambling winnings can be problematic though. Mix that shit!

I'm thinking the gambling IS the mixing, or at least the end stage of the mixing.

FWIW mixing does nothing, and sets you up for untold risk

[–]SpaceTire 2ポイント3ポイント  (0子コメント)

Coinbase has a Bitcoin Wallet and a Dollar wallet. You can seemlessly transfer between both. And if you need to transfer to your bank, no problem. Send over exactly what you need.

[–]Cannon-C 2ポイント3ポイント  (0子コメント)

In US the wealth limit is $10,000 in which after this threshold you are considered a suspect and have to file alot of paperwork to prove you are not a criminal. Wouldn't getting an account from 6 different banks, then dividing up the $50,000 amongst your 6 bank accounts all under different banks work so you are never surpassing the 10,000 in either account and thus cannot be considered structuring? Another option is to use multiple LLC each with own bank account, since LLC can be operated without revealing your name. Or you can just bypass taxes altogether by not converting to USD but rather to silver and gold bullion, I know there are some companies that sell gold silver for bitcoin. Just beware of high premiums by getting as close to spot price as possible.

[–]hodlgentlemen 3ポイント4ポイント  (11子コメント)

Why not escape bank tyranny by not selling for fiat? Bitcoin was designed for this purpose you know.

[–]Swag_Bro_420[S] 5ポイント6ポイント  (7子コメント)

Well, my main concern is bitcoin's volatility. It could go up a lot, and I plan on keeping around $10k in bitcoins, but it also could go down a lot, and I don't want to risk losing that much money. It's also much more convenient to spend money with a debit card, vs having to find somewhere that accepts bitcoin. What are the advantages of keeping it in bitcoin, that would outweigh this? While I would like to avoid paying taxes, I don't think the risk of getting caught is worth the savings.

[–]telos17 2ポイント3ポイント  (0子コメント)

You could buy some stuff on Newegg, Tiger Direct, etc. I think you can also trade it for amazon gift cards with Purse.io

If I were you I would just buy/pay for things directly with your bitcoin instead of trying to sell directly. It would solve the problems you describe in your original post

[–]amarcord 1ポイント2ポイント  (0子コメント)

You can get a bitcoin debit card with Xapo.

[–]mikeydotcomdotau 0ポイント1ポイント  (2子コメント)

Deposit it to coinjar.com in 1k lots and spend itwith their debit card.

[–]Cannon-C 0ポイント1ポイント  (0子コメント)

Deposit it to coinjar.com in 1k lots and spend itwith their debit card.

Or perhaps he could pay himself using this debit card. Have multiple debit cards from coinjar.com to make it appear as if it is multiple people paying him for goods/services.

[–]b_coin 0ポイント1ポイント  (0子コメント)

Lol so the 50k in bitcoin should be used to buy consumer items instead of e.g. being used as a downpayment on a house?

[–]jimmajamma 0ポイント1ポイント  (0子コメント)

and I don't want to risk losing that much money.

I don't think the risk of getting caught is worth the savings.

Seems like you don't want to gamble with your money.

[–]fcktheussa 0ポイント1ポイント  (0子コメント)

Well, my main concern is bitcoin's volatility.

Look at services like vaultoro bitgold coinapult and bitreserve

[–]futilerebel 0ポイント1ポイント  (2子コメント)

Yeah, exactly, this dude is crazy for wanting to sell that much. I say if anything, trade it for something that isn't fiat currency, like a car or something.

[–]DrinkingHaterade 0ポイント1ポイント  (1子コメント)

You think a car is an investment? That's an immediate loss even on used ones. Also, almost no one will take bitcoins for a car. He could try traditional investments like bonds, stocks, or real estate. Once again, none will take bitcoin. Right now you can make money work for you. You can't make bitcoin work for you because it is an inherent risk.

[–]futilerebel 0ポイント1ポイント  (0子コメント)

You think a car is an investment? That's an immediate loss even on used ones.

It depends on the car. There are plenty of cars that lose very little of their value year over year. Antique cars hold up even better.

But you're missing my point, which was that OP can surely find something other than fiat currency to put his bitcoin into.

Also, almost no one will take bitcoins for a car.

I would :)

He could try traditional investments like bonds, stocks, or real estate. Once again, none will take bitcoin. Right now you can make money work for you. You can't make bitcoin work for you because it is an inherent risk.

I disagree that these are the only options for investing your coins. Especially now that cryptocurrency is a thing, there are plenty of other coins and bitcoin 2.0 projects to invest in. For instance, Ethereum ether is selling for 0.003 btc apiece, which is 6 times higher than the pre-sale price last year, and they're gathering steam, having just launched their platform. There's also bitcoin lending platforms like btcjam and bitlendingclub. Yes, it takes a little more effort to find good investments in the crypto space, but the potential upsides are way better than what you'd get in the fiat space, if you always make good decisions.

Ultimately, it really depends on what OP is intending to do with his fiat once he gets it. I'm just questioning his decision to throw away so many beautiful, anonymous, violence-free coins in exchange for fiat, which is guaranteed to lose him his privacy and simply lose value over time. Obviously if OP has an urgent need to acquire something that valuable and can't find anyone who takes bitcoin, he's making the right decision. But I disagree that you can't make bitcoin "work for you".

[–]-XB- 3ポイント4ポイント  (1子コメント)

A U.S. taxpayer would complete a W2-G to declare the winnings as income from gambling. I'm not sure where you heard that the IRS doesn't enforce tax laws related to an individual's gambling income, but that's not something I'd bet on.

The fact that the sale of bitcoin is also a taxable event in and of itself adds an additional layer of complexity. If your goal is to cash out your winnings to USD in a tax compliant way, ask an accountant.

Have 50k credited to your bank account isn't against the law. The bank will file a CTR (currency transaction report) with the IRS which your W2-G and capital gains declaration will explain come tax time.

It should be noted that intentionally avoiding a reporting requirement by breaking a large sum of money into smaller pieces is called structuring, and it is federal felony. Because of this, it is more likely to attract unwanted attention from your bank.

Consult a professional tax advisor.

[–]Swag_Bro_420[S] 1ポイント2ポイント  (0子コメント)

I meant the laws against online gambling itself, not tax laws. I know gambling income must still be reported on tax returns.

[–]VendorBacta 1ポイント2ポイント  (0子コメント)

https://en.wikipedia.org/wiki/Suspicious_activity_report

[–]bitterdull 1ポイント2ポイント  (3子コメント)

FWIW, once when trying to withdraw $5000 from Circle, I had to answer these questions before they would send the funds:

1) What is the source of these funds?
2) What is the purpose of these transfers?
3) What is your primary occupation?

Also, once I wired USD to itBit to buy BTC. When trying to withdraw 60 BTC I had to answer these questions before they would send the coins:

1) Please describe for us your source of funding for these XBT purchases. If employment is your source of funding, please provide us with your location of employment and your official title/job role.
2) What is the purpose of your trade activity at itBit. Are you an active trader or is this a hobby? Will you trade these XBT at other exchanges?
3) What 3rd party wallet service are you transferring your XBT funds to?

[–]Swag_Bro_420[S] 0ポイント1ポイント  (2子コメント)

Thanks for the information. Do you know if it's just Circle that does this? My wallet is at blockchain.info.

[–]bitterdull 2ポイント3ポイント  (0子コメント)

By they way, neither of them required proof. I just sent an e-mail answering the questions and they approved the withdrawals right away.

[–]bitterdull 1ポイント2ポイント  (0子コメント)

I think it's KYC/AML rules. So, it could happen with any company that's letting you withdraw USD. I'm guessing it won't happen the first time you withdraw (it wasn't the first time for me at either place).

[–]midmagic 6ポイント7ポイント  (5子コメント)

If you bank bothers you about it, switch banks. It's none of their business where the money came from. Report it on your taxes as earnings. DO NOT attempt to avoid any taxes. DO NOT attempt to use tricks or hide your income from the sale event.

DO NOT use vault, storage, or other forms of third-party bitcoin storage services. Do NOT trust any of them.

If you are interested in exiting, by all means do so. These people trying to get you to save your bitcoins aren't doing you any favours.

There is absolutely nothing wrong with doing larger transfers of cash. Attempting to structure your banking activity specifically to avoid suspicious activity reports is highly illegal. So all these people telling you to slow down and do it in chunks are morons. Do not listen to them, since you've already stated your intention is to sell the whole lot of it at once.

Finally, ignore all advice that comes from r/bitcoin. A significant fraction of the people in here are explicitly paid shills that vote each other up to build comment history and sway opinion. (See the Coinfire revelations.) The sorts of people who are willing to lie to people in that way have absolutely no problem, and would probably think it was funny (or that you deserved it) if you went to jail for structuring.

Talk to your bank first if you are concerned, and warn them you're about to do this. Ask them for advice. It is a service you are paying for, after all.

[–]Swag_Bro_420[S] 0ポイント1ポイント  (4子コメント)

Thanks for your advice. I think talking to the bank first would be best, I'll do that.

[–]flix2 -2ポイント-1ポイント  (3子コメント)

Your bank is not your friend. They don't work for you, they work for the Feds.

Better to ask a friend, a lawyer or somebody who works at another bank where you do not currently hold an account.

The first thing your banker will do, must do if you ask them about this is to make a big note on your profile "50k in Bitcoin" and perhaps that by itself will be enough to ensure a SAR is filed.

And by law they CANNOT warn you or tell you about it, else they risk running afoul of structuring regulations.

Bitcoin is a red flag. Gambling is a red flag. $50k is a red flag. Better avoid banks. You are almost guaranteed a SAR.

[–]flix2 -3ポイント-2ポイント  (2子コメント)

Just think about it! How much income do YOU personally generate for the bank in commissions, interest? 50? 100 bucks a year?

They would much rather lose you as a client than risk a problem with compliance that could cost them their jobs or a problem with regulators that could cost many 1000s in legal fees.

And no bank employee is going to risk 5 years in jail for giving you true advice on how to avoid a SAR. Even mentioning a SAR to a client can involve penalties for the bank employee from the bank's compliance department.

[–]midmagic -1ポイント0ポイント  (1子コメント)

He's not asking them how to avoid a SAR, you moron.

[–]flix2 -1ポイント0ポイント  (0子コメント)

Ad-hominem and insults is where I step out. Feel free to debate with yourself from now on.

[–]sanswork 3ポイント4ポイント  (1子コメント)

Your bank isn't going to freeze your account for having $50k wired into it.

Would a bank want proof of how I got the money?

No

If I told them it was gambling income, would I get in trouble for that?

Told who? The bank won't care or ask.

The US government doesn't enforce gambling laws against individual gamblers, but I'm not sure if that means a bank wouldn't care, since it is technically illegal.

No one will care. You'll have to pay taxes on it though so don't forget to include it in your next tax return.

[–]midmagic 2ポイント3ポイント  (0子コメント)

It's pretty terrible that this is the guy who's being downvoted into oblivion.

[–]sandball 0ポイント1ポイント  (1子コメント)

You could turn it all to gold at amagimetals. Couple pounds of gold would be cool to show off to people. Only half serious, but maybe.

To tie this thread in with the other about "why is the price dropping" I'm curious what is the main reason you are selling? I've thought about selling some due to the block limit fight, but then the devs could turn around and agree to some compromise like 2MB and put the problem off until 2017 and I wouldn't trust my ability to time the market to get back in, with respect to COIN or the halving or whatever else may come out. I want to be in long term so wouldn't want to buy back in at higher.

[–]Swag_Bro_420[S] 6ポイント7ポイント  (0子コメント)

what is the main reason you are selling?

Baseball season is ending soon, so I have no reason to keep the money in my sportsbook accounts any more. I wasn't really 'investing' in bitcoin, it was just necessary to use for the bets I wanted to make, so if I'm not betting, I have no reason to keep my money in bitcoin.

[–]djleo 0ポイント1ポイント  (2子コメント)

The bank will ask you questions and ask you 21 questions before they give you your money even though online gambling isn't technically illegal.

The Act actually prohibits the act of accepting money for internet gambling not the physical act of gambling online.

Source.

Spending from a debit card is probably easier, unless you plan on going travelling overseas - then it might make sense to keep some bitcoins.

[–]GundalfTheCamo 0ポイント1ポイント  (1子コメント)

Visa or Mastercard debit card is way easier any country. Almost all ATMs in europe and asia take them.

[–]djleo 0ポイント1ポイント  (0子コメント)

It's easier but you pay for the convenience and then there's outright scams like DCC

[–]bogrow 0ポイント1ポイント  (0子コメント)

Buy (part of) a tesla with it.

[–]coin_cube 0ポイント1ポイント  (0子コメント)

If you are looking for a way to mitigate downside risk and profit from bitcoin market volatility, take a look at my startup, coincube.io. You can easily set up a trading account with Bitstamp, Bitfinex, or Coinbase and then link your account to our trading algorithm with API keys. Our algo will keep you on the right side of the market and grow your wealth in a sober, automated fashion.

[–]AussieCryptoCurrency 0ポイント1ポイント  (0子コメント)

Would a bank want proof of how I got the money? (That would be hard to provide. Most of it is from nitrogen.eu, a bitcoin sportsbook, and it's anonymous, so the account isn't connected to my name). If I told them it was gambling income, would I get in trouble for that? The US government doesn't enforce gambling laws against individual gamblers, but I'm not sure if that means a bank wouldn't care, since it is technically illegal.

You're a regular gambler obviously, since $50k isn't a newbie win, so what's the problem?

Are you not declaring tax on your winnings? (fair enough, I guess).

Put it this way: if you go ahead with the attitude you've got now you'll get caught, I'm sorry to say.

To be honest, I don't buy the story at all; is the money from drugs that's been laundered through a Bitcoin casino? If so, and I'm not judging, and you need it ASAP, make one withdrawal and pay tax on it. Go to the bank in a suit, don't wear sunglasses, and don't chit chat; just wait patiently.

[–]Introshine 0ポイント1ポイント  (0子コメント)

Well that's a large stash sir. I'd be very careful with that. Maybe hire a tax lawyer for a day and make a plan. Maybe that will be worth the money.

[–]Cannon-C 0ポイント1ポイント  (1子コメント)

Why cash out when Bitcoin is superior to USD cash? USD cash can be stolen, confiscated, taxed, lost, destroyed etc... when bitcoin is not subject to these disadvantages. 50,000 cash is also heavier to carry than a few bits of data. This is one of the reasons of bitcoin is to get around the problems presented by the current financial regulatory sector, if you convert to cash from bitcoin you are leaving the financial system that is safe from financial regulations and going into a system that is victim to the very thing you are trying to avoid. Just get a Trezor, call it good.

If you want to convert to cash, you could advertise on localbitcoins for spot price with no markup and sell for cash so it remains unreported. Or just move out of the US to somewhere that has freedom and not worry about being raided by IRS.

[–]anti09 1ポイント2ポイント  (0子コメント)

USD can be used to buy stuff and it doesn't randomly lose 10% of its value in a day

[–]flix2 -3ポイント-2ポイント  (10子コメント)

Don't withdraw 50k from a bitcoin exchange to your bank.

Do not do any wires larger than 10k.

Use p2p exchanges, bitcoin atms and other bitcoin to cash options. Use more than one bank account.

Use at least 5 different methods and do it over a period of several months.

[–]midmagic 7ポイント8ポイント  (9子コメント)

IGNORE this person. This is called structuring, and it is highly illegal. This Reddit thread is explicit evidence that using smaller transactions on your part is an explicit attempt to avoid SARs.

https://en.wikipedia.org/wiki/Structuring

[–]flix2 0ポイント1ポイント  (8子コメント)

SARs are unconstitutional. They directly violate the 4th and 5th ammendments. They belong in fascist police states.

On the other hand, as long as you keep your interaction with the bank to a minimum, it is very unlikely that you will be targeted.

Enforcement is highly selective and motivated by asset forfeiture... If your balance is low, it is not worth it for them to go after you.

Just avoid banks as much as you can. The very fact that moving your own money as you like can result in doing something illegal, just because you made 5 wires instead of one... Shows you how arbitrary and dangerous banks have become.

Lock the value of your Bitcoins if you are worried about volatility. Better to avoid US banks altogether except for tiny balances (or loans).

[–]flix2 1ポイント2ポイント  (4子コメント)

BTW.. You don't need to trust a Bitcoin company to lock the value of your bitcoins. You can just buy one of the many USD-denominated altcoins that now exist, hold them yourself and sell for BTC when you want to cash out or spend.

[–]abtcuser 0ポイント1ポイント  (3子コメント)

Care to name a few? Also, could you please explain how can pegging of a crytocurrency to fiat currency be implemented?

[–]flix2 1ポイント2ポイント  (2子コメント)

Check out https://www.shapeshift.io/ or http://coinmarketcap.com/. You will see several. Eg: BitUSD.

The HOW is extremely easy. As long as the issuer is ready to buy and sell to keep the price stable at the peg, it will work. (Within some tolerance limits).

In fact you could do it yourself with colored coins in about 5 minutes if you wanted to. Just issue 10 "dollarcoins" and promise to redeem each for $1 worth of Bitcoin. As long as you have $10 in reserve to keep your promise, it's simple.

A certain degree of trust is required that the issuer will maintain the peg, but it is less trust than what is needed if you hand over your money to a bank (or bitcoin equivalent).

[–]midmagic 0ポイント1ポイント  (1子コメント)

You mean.. kind of like how Liberty Reserve did it?

https://en.wikipedia.org/wiki/Liberty_Reserve

Yeah. So good luck with that.

[–]flix2 0ポイント1ポイント  (0子コメント)

As I said, it requires trust. But less than allowing them to hold your funds. Plus liquidity and the ability to sell your dollar- or eurocoins immediately is better.

Obviously I only recommend this as an alternative to using a third party value-lock system. It is not my preferred option at the moment.

Much better to hold bitcoins and cash directly. Avoid US banks except for small balances when possible.

No bank worries or does increased due diligence on $1-5000 balances.

[–]midmagic -1ポイント0ポイント  (2子コメント)

I am convinced now, you do not operate with large sums of money in the way you're telling other people to operate, nor do you have a realistic idea of how banks actually treat people who move larger balances around.

But in that tiny chance where you do, you will eventually be caught, and you will go to jail, and absolutely nothing will change, nobody will martyr you, nobody will care, and it will have been for absolutely nothing: regardless of whether you think it's constitutional, the people with the power to put you in jail absolutely disagree with you.

[–]flix2 0ポイント1ポイント  (1子コメント)

Well, you are wrongly convinced about both points.

I am very familiar with how banks operate with high net worth clients and with the KYC, AML requirements that FATCA imposes.

You'll forgive me if I plead the fifth on what I do with my own money.

It seems pretty clear to me however that YOU have never made a large wire to an US bank from a Bitcoin exchange. Much less handled a cash-intensive business.

[–]midmagic 0ポイント1ポイント  (0子コメント)

You aren't, or else you wouldn't be counselling someone to structure their bitcoin sales.

[–]jonstern -2ポイント-1ポイント  (0子コメント)

Dude. You're only asking for trouble liquidating that stash. Store that shit offline and keep it safe. Only sell what you need to survive. Price ain't gonna go lower than mid 200's ever again. So just relax.

[–]redhawk989 -4ポイント-3ポイント  (0子コメント)

WEAK HAND