A friend of mine has been selling bitcoins on localbitcoins.com for a few years without problems. He was selling mostly in Thailand, accepting bank wire transfer in exchange for bitcoins. One day his bank account was frozen and shortly after he was visited by the police in connection to a wire transfer he received. Apparently a scammer bought bitcoin from him and paid using someone else's stolen bank account.

My friend explained what had happened and was temporarily let go after paying the standard Thai bribe. The investigation was ongoing and my friend would be summoned when the time comes.

A month later my friend tried to get his bank account unfrozen and was told to wait a few minutes by the clerk at the counter. Shortly after the police showed up, taking my friend into the station for another round of questioning. Apparently there was a 'trap' set up - if the account owner shows up. So another round of the same thing, more bribe and my friend was let go again.

During the period of next several months my friend was periodically called in for questioning. He provided written explanation, screenshots of localbitcoins related pages, login details. He contacted localbitcoins.com to see if he can get some kind of written confirmation from Localbitcoins where they would confirm that this transaction actually took place through their service. They declined his request and said that if police formally requests information from them, they would oblige, otherwise no.

2 years later, the district attorney refused to drop the case and is pursuing trial which is due in september and october 2017. The complete story as my friend was able to find out from the court documents is this:

Two foreigners 'hacked' into a thai lady's phone and got access to her bank account. They wired money to my friend who is on trial as the scammer's accomplice in crime. The police got a hold of the the two foreigners but it's unknown if they were let go (bribe) or if they are in a thai jail.

When wiring money from a thai bank account, there is 2 factor authentication via sms, so the scammers had to have access to the account owner's bank password and phone. The same localbitcoins username who scammed my friend, also scammed 2 or 3 other people in the same period.

My friend made the mistake of allowing any new user to bid for his offer on localbitcoins. The amount was around 1300 USD worth at the time