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Gold coin with Bitcoin symbol.(Photo: Getty Images)
A Nixa entrepreneur who pleaded guilty in May to conducting an illegal money transmitting business by exchanging Bitcoin for cash without a license recently told his story to Time magazine.
Jason R. Klein exchanged Bitcoins with undercover federal agents who gave him thousands of dollars in cash on five separate occasions in 2015 and 2016, the News-Leader previously reported.
It’s not illegal to possess Bitcoins — an online currency existing entirely on the internet — but a license is needed to exchange them.
Background: Nixa entrepreneur pleads guilty to unlicensed Bitcoin scheme
Each time Klein made the exchange, the federal agents were charged a fee, for a total of $2,122 in fees.
In exchange for the guilty plea, Klein received five years of probation, a $10,000 fine and 120 hours of community service. He also has to repay the $2,122 he earned.
In the Time piece published Thursday, Klein speaks earnestly about his naivete and eagerness to get involved with the cryptocurrency. The 38-year-old describes himself as a “tinkerer who got involved in tech in high school, back in the dial-up internet days,” so it seemed natural to him to start following and tinkering with Bitcoin.
“When I first got into this, I’d have to explain what it was because no one would have any idea,” Klein told Time. “Now it seems like I could walk up to almost anyone in this room and they’d know.”
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He started by purchasing $100 worth of Bitcoin. Klein found few easy options for buying the tokens, so he mailed a money order to an exchange based in Atlanta. By mid-2013, the seven tokens he had purchased had skyrocketed in value, worth about $1,000. He bought more.
But Klein felt the process of buying Bitcoin was inefficient. He began looking for other ways to buy and sell, and discovered the website localBitcoins.com. This site allowed him to meet with nearby people to conduct a trade. He soon posted an ad on the website, offering to sell the cryptocurrency for cash plus a 10 percent fee.
In this Feb. 7, 2018, photo, a neon sign hanging in the window of Healthy Harvest Indoor Gardening in Hillsboro, Ore., shows that the business accepts Bitcoin as payment. Purchases with Bitcoin and other digital currencies remain rare relative to cash and credit cards. (Photo: Gillian Flaccus, AP)
That’s how the trouble started. A couple of years later, Klein met a “weird guy.” He turned out to be an undercover agent — the first but not the last. Klein told Time the agents pushed him to do larger trades, selling up to $10,000 worth of Bitcoin. He conducted five trades with the undercover agents and sold them up to $7,640 worth of Bitcoin.
In one of these meetings, these contacts suggested they were going to use the Bitcoin to purchase “Girl Scout cookies,” a reference to drugs Klein did not understand at the time. Then after a subsequent trade, the pair told Klein they were going to use the tokens to buy cocaine.
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Klein told the magazine he should have known better but that he didn’t believe the two were drug dealers.
Klein is a business owner. He founded two technology companies: Logic Forte, a consulting and computer programming business for the restaurant industry, and Datality Networks, an internet housing and network consulting company.
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