Likely a sting operation, in which he agreed to proceed with BTC transaction knowing the funds will be used for something illegal.
These MSB stings are weird.
It could be the case that no crime is ever committed by the accused beyond the disregard for the possibility of someone else doing something in a place where it is considered wrong...
I imagine a case where a sting is done by picking names off a LocalBitcoin list in some LEO's home turf. They pick a fellow that has done 5 or 10 trades and has some ratings, and they do a deal and LEO mentions they are buying acid with it.
The bitcoin seller assumes they are going to order some legal low-pH chemical online, the LEO arrests the seller for money laundering claiming that he told the seller he was buying drugs.
The accusations will be horrific, because the LEO gets to seize all sorts of property, some of which go straight to their expense account. Judge and Jury give deference to LEO because that is the standard practice. People reading the media releases will form judgements based on the accusations, far ahead of any trial. Defendant will get pressured to plead guilty to a slightly lessor charge. Jail and impoverishment by legalized theft follow. Having bought or sold a few bitcoin with strangers for very small money (way under any legal limits) I can see how it could happen to just about anyone.
"Let's be careful out there."
because low ph chemical online retailers only accept Bitcoin? get your head out of a delusion world. nobody would assume that.
the fact is when you sell somebody bitcoins, you need to make sure (or at least not know) they are going to be used for criminal activities.
this doesn't just apply to bitcoins. I am also pretty sure if you sell somebody a gun and they tell you they are going to murder somebody with it and you still sell it to them, you can go to jail.