Why is he only one being prosecuted?
There are still a lot of people selling on localbitcoin.
I think his case is being used to set an example and make us behave. Everyone trading cash and Bitcoins without the proper license on localbitcoins is most certainly in violation of the law. I wish DnT was in this thread. He studied up on it and could explain the ins and outs.
I think it is more about buying and selling drugs over the internet. They charged Ross with the harshest statutes that were designed for drug lords. They changed that guy in FL with money laundering when he sold bitcoin on LBC at outrageous prices (huge mark up) to a undercover cop that told him he was going to use the bitcoin to buy drugs and do other illegal things.
You may be right. It might not have anything to do with Bitcoin. It may just be a warning to anyone trying to bypass drug laws using the deep web.
More evidence to support this theory is the fact that Mark (gox) was violating AML rules for years but was never charged with any crimes. Granted homeland security did seize their bank account, but this was likely to try to become more strict for AML (to make it easier to figure out who Ross was).
Also, how many traders on LBC or craigslist do you think there are that even attempts to follow AML rules? My guess is less then 20% on LBC and less then 5% on craigslist. Same with people trading fiat for bitcoin on this forum. People are outright breaking the law out in the open (that is bitcoin related) but the government is not doing anything about it. Granted these are all very small "fish" and there are no real victims.
Charlie was doing pretty much exactly this (granted he was making more money from it) but the only other real difference is that he was profiting from and helping SR.