Arizona Localbitcoins Trader Detained by U.S. Homeland Security

A well-known bitcoin blogger and Localbitcoins trader was taken into custody by Federal law enforcement agencies in Arizona last week. Thomas Costanzo, otherwise known as “Morpheus” is allegedly being investigated for digital currency money laundering charges.

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Arizona Bitcoin Trader Arrested by Federal Agents  

According to local reports and warrants obtained by the libertarian news outlet Freedom’s Phoenix Costanzo was detained by the U.S. Department of Homeland Security when officers raided his home on April 20. Costanzo is a well-known figure within Bitcoin and agorism-focused circles for his “Bitcoin and Cash” blog and libertarian writings.

A report published by the Phoenix New Times details that law enforcement agents are investigating Costanzo’s monetary dealings with bitcoin and other altcoins. Costanzo sold mining equipment, bitcoin ATMs, and sold cryptocurrency for an occupation over the past few years.

According to the regional publication, Costanzo is a popular Arizona trader who used Localbitcoins, and agents were authorized to confiscate financial records and any illegal contraband in his home.

Arizona Localbitcoins Trader Detained by U.S. Homeland Security
Thomas Costanzo’s blog “Bitcoins and Cash.”

Unlicensed Money Transmission

Law enforcement officials obtained a warrant from U.S. Magistrate Judge David Duncan to search Costanzo’s residence in Maricopa County. According to reports, Costanzo has only been charged with possession of 60 cartridges of ammunition, but warrants and investigators suggest federal authorities are also looking into his “unlicensed money transmitting business.” Costanzo appeared at his detention hearing on April 27 and was subsequently denied bail.

Arizona Localbitcoins Trader Detained by U.S. Homeland Security
Costanzo’s property receipt seized by Federal agents contains the words “bitcoins.” Photo via Freedom’s Phoenix

According to sources, the court believes Costanzo is a “flight risk” and will be held in custody until his trial begins. Federal prosecutors told U.S. Magistrate Judge Michelle Burns that Costanzo has a history of skipping out on warrants and other criminal court cases.

Why Is a Federal Taskforce Raiding a Man’s Home Over a Small Box of Ammunition?

The case has also been controversial across social media platforms as some critics have said the case has nothing to do with cryptocurrency. So far Costanzo is only charged with the ammunition possession. However other sources such as the Phoenix New Times suggest the investigation is likely a direct result of a cryptocurrency anti-money laundering crackdown by U.S. federal agencies.

People with these opinions believe it’s a bit extreme for Homeland Security to be arresting Costanzo for a mere sixty cartridges of Winchester ammunition.


How do you feel about a Localbitcoins trader being detained by the police? Let us know in the comments below.

Images via Shutterstock, Freedom’s Phoenix, and the Phoenix New Times.  

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    Why is the ammo considered illegal?

    • Pete M

      He had a previous Pot conviction, that prevents him from owning a gun or ammo

      • Zyo

        all that is deal at the federal level? wow the US is so “liberal”!

  • BitcoinTeo

    u see legal today illegal tomorrow – these gubment goons write the legalese aka CHINESE SUDANESE etc… fk them we have no obligation to learn their fking languages nor abide by it – COMMON law theft just occurred – he needs to learn to be a man and make CLAIM for his property… watch the feds slink away like little boys they are…

  • go away

    everybody just finished filing taxes. Is the timing just a coincidence?

  • Zlatko Sucic

    I see him as another future Liberland citizen!

  • why bother

    I lived in Arizona many years but am now living in California again. There are things in Arizona that are far more libertarian than California allows, and vice versa. I don’t know the guy but the way Arizona LE works is that if you are living too well off of something that is “legal” but borders on illiegal, the LE will want to eliminate you. Arizona LE won’t go after the ones who are below the radar and don’t broadcast their success. They just don’t want people to flourish. It is another example of why you never flaunt your success. our society depends on risky innovators but most people will quickly bring them down due to envy.

    • Dog

      yup better to fly under the radar… trying to frame people for trading electronic “tokens” (basically pieces of computer code lol) in for actual “money” as running an “unlicensed money transmitting business.” is just a bunch of f–king bullshit, but unfortunately this is the sad reality of what we need to deal with in the land of the free… a bunch of neo-nazi’s in uniforms…

      • Segue

        I thought that the Feds didn’t consider cryptocurrencies to be money. If that is the case, then how could he be involved in an unlicensed money-transmitting business? Do they mean the U.S.dollars portion of that?