From the document, it doesn't look like this was from simple face to face transactions using localbitcoins... it looks like he was somehow involved with running an exchange.
Unfortunately I think the gov sees face to face transactions using localbitcoins as "running an exchange".
Even the LBC site gives you tips on how to
"run a bitcoin cash exchange for fun and profit".It is a shame that he faces time in prison for allegedly doing something so harmless.
A prosecutor would likely have a hard time convincing a jury
that a few transactions is running a business.
However, a large number of transactions is another story.
Unfortunately, if you are going to be doing a lot of
trading, you need to use a legitimate exchange
to keep your nose clean.
I consider this an assault on individual rights as
one should be free to transact voluntarily with
other individuals, but that's the current reality.
You are generally considered to be a MSB regardless if you are an actual "business" as long as you engage in the practice of "transmitting money" (which is a complex concept.
(IMO) be legally safe as long as you do not knowingly transmit money for people who are breaking the law (for example proceeding with a transaction after being told the funds were from some illegal activity)