Cash out ETH winnings

[ricehi]

Hey folks,
I'm asking for a friend and would really appreciate any advice from those with experience in crypto privacy or off-ramping.

A friend of mine (19 years old, student) recently won a mid five-figure sum in ETH via a gambling site (Stake), though the account was in someone else's name. The ETH is now stored on a self-custodied MetaMask wallet, not tied to any identity or KYC.

He’s hoping to cash out a portion of it – either as cash or a quiet bank transfer, ideally with <1% fees – to fund small personal projects, set up a few savings plans, and help renovate his parents' home.

However, he's in a bit of a sensitive situation:
He currently receives government student aid (BAföG) in Germany, which has strict wealth/income limits. If he suddenly shows large deposits or assets, it could disqualify him or trigger repayment.

His main concerns:

If he uses a KYC exchange, even for small amounts, could authorities link his wallet to him?
Could banks or tax offices freeze his account or ask for explanations if more money starts showing up?
Would this be counted as "assets" and disqualify him from his student support?
His parents can't act as proxies, as they also have low income and don’t want to risk anything.
Possible solution:

We were thinking of P2P trading – selling ETH for cash (in person) or bank transfers to third parties, without using a centralized exchange.

But now he's asking:

What are the most reliable, anonymous, and KYC-free P2P platforms for ETH or BTC in Europe?
Should he convert ETH to BTC first? If yes, how to do it without linking it to himself or using KYC exchanges?
How does an in-person P2P trade actually work? Any dos & don’ts to stay safe and not get scammed?
Or… is there a better/cleaner way to go about this?
He’s not looking to avoid taxes, but just wants to stay under the radar and avoid issues with banks or government benefits.

Would love to hear your thoughts or tips – especially from people who've done similar things.

Thanks a ton in advance! 🙏

[Die_empty]

Cashing out of this win  directly or indirectly disqualifies your friend from the German student aid.  A whistleblower might still report him to the BAföG and he might still lose the loan.  I know he really needs the money for important things but cashing out is against the rule because you have acquired more money.  

The best decision is to postpone starting a business and renovating your father's house.  I don't know how many years his programme is, but after studies he can cash out. If the wallet is safe and under his control, let him keep the coin there. If the amount is big, he should buy a hardware wallet and hodl it.

[KyoFi]

His main concerns:

If he uses a KYC exchange, even for small amounts, could authorities link his wallet to him?
Could banks or tax offices freeze his account or ask for explanations if more money starts showing up?
Would this be counted as "assets" and disqualify him from his student support?
His parents can't act as proxies, as they also have low income and don’t want to risk anything.

Different countries, different regulations, I don't know how far that goes. But if your friend just wants to avoid being tracked on his behalf, shouldn't that be possible by using your identity to register an account on a legal CEX there, then liquidating directly through your bank account?

@cygan, @d5000 & @1miau coming from Germany, maybe they can give better directions, sorry for mentioning you guys.

[Wapfika]

Different countries, different regulations, I don't know how far that goes. But if your friend just wants to avoid being tracked on his behalf, shouldn't that be possible by using your identity to register an account on a legal CEX there, then liquidating directly through your bank account?

There still a problem on how can he use the money since he needs bank account to received and use it which the government can still track his money. @Die_empty suggestion is the best for playing safe since a sudden increase on his family finances will raise an alarm to the government since he has scholarship.

Maybe ask someone trusted but non-family related to received the funds and use  him as proxy for the business and gift the money for the house repair in exchange for some fees.

[Die_empty]

Different countries, different regulations, I don't know how far that goes. But if your friend just wants to avoid being tracked on his behalf, shouldn't that be possible by using your identity to register an account on a legal CEX there, then liquidating directly through your bank account?

Maybe ask someone trusted but non-family related to received the funds and use  him as proxy for the business and gift the money for the house repair in exchange for some fees.

I know some people are trustworthy but individuals can change. A family member might become greedy or jealous and with the money.  And you cannot report to law enforcement agencies because you committed an offence. Money can change people and I have seen people misbehave because of money. My best advice is to play safe, obey the rules of the aid, convert the money to Bitcoin and hodl. Those expenses can wait after all they are not health health related or other pressing issues. Keeping Bitcoin is another good investment. 

[Oshio-man]

Since you said your friend is around 19 years old show that he or she is not a child anymore, At this age in my country, they are entitle to open bank account to any bank of their choice to cash out the funds if cryptocurrency is legalized in that country, This is my advice to your friend if he or she will take it from me, let your friend download good crypto wallet to transfer the Ethereum to his or her wallet to hold  till he or she graduate from school before he or she can trade to turn to wealthy man or woman.

[suzanne5223]

If he uses a CEX platform, there's a huge chance for the authority to link the wallet to him now or in the future, and for this reason, his/her bank account could be frozen for tax, or if the source of the funds is illegitimate. However, everything depends on the crypto rules and regulations of the German government, with the inclusion of the government student aid (BAföG) in Germany.

Meanwhile, I believe the fund will be counted as an asset, and he may be disqualified from the student support program. Besides, using his parents as proxies could be another problem, due to their low income.
He could use privacy anonymous service to prevent anything linked to the fund source and the wallet used to hold the ETH. But, I believe the best solution here is seeking legal practitioner advice, and that's if he wants to avoid future complications.

[Rikafip]

If he uses a KYC exchange, even for small amounts, could authorities link his wallet to him?

Yes, as centralized exchanges gladly send the documents in order to have license to operating in each country.

Could banks or tax offices freeze his account or ask for explanations if more money starts showing up?

That depends on how his bank looks at crypto.

Should he convert ETH to BTC first? If yes, how to do it without linking it to himself or using KYC exchanges?

Generally its easier to sell BTc via p2p, and to do that exchange, probably the best is https://exch.net/ (which is also advertised here as well).

How does an in-person P2P trade actually work? Any dos & don’ts to stay safe and not get scammed?

That's the tricky part. Generally you want to meet in a public place and not in small small alley in the middle of the night and its good to be able to verify whether cash that you are getting is real and not counterfeit.

By the way, here in Croatia we can sell up to 1000 euro worth of crypto on the daily basis without KYC so if he is not too far away from us he can simply travel here, stay few days, sell his crypto kycless and go back to Germany with cash in hand.  

[Mrbluntzy]

The money is really huge and I doubt if your friend can exchange that money and utilize it on his plans without being noticed and it could cause him lose the aid he is getting from the government.

What I can suggest is that if your friend have a relative, either an uncle or aunt that he trust and the relative lives outside Germany or even living in Germany, the money can be passed to him via blockchain transaction and he will then exchange it and send it to your parents as a gift of financial support. What do you think?

[Dailyscript]

If he uses a KYC exchange, even for small amounts, could authorities link his wallet to him?

Every transaction can be searched online. For ETH transactions you can use ethplorer.io to track it. If they care to track it will take them to finding the exchange used to receive the money. Of course upon deep research they can link it.

Could banks or tax offices freeze his account or ask for explanations if more money starts showing up?

This will depend on how the Germany account policies works. There are different tier when opening an account, higher tiers will receive higher amount that the lower tiers. Account freezing will occur if he uses a lower tier to receive an amount that is higher than his limit.

Would this be counted as "assets" and disqualify him from his student support?

This i dont know.

[tabas]

He really has to find a way not to deposit that large money at once in his bank account. Just like what many will do, that is to deposit little by little or just enough after trading it to the platform where he can find there through P2P. If I'll do that, I'll keep the remaining of it in the form of BTC and will only withdraw just enough for me to have for my needs and for some leisure too. I think he's having trouble because he wants to get it all at once but tell him, he needs to take time and withdraw it slow and little by little with small amounts that won't remove him from that aid program.

[bias]

I think he's having trouble because he wants to get it all at once but tell him, he needs to take time and withdraw it slow and little by little with small amounts that won't remove him from that aid program.

The problem here is that he needs to justify where he got such amounts, small or significant, since it will come through an exchanger account. The bank or the gov can ask at any time anything related to it.

If he uses a KYC exchange, even for small amounts, could authorities link his wallet to him?
Could banks or tax offices freeze his account or ask for explanations if more money starts showing up?
Would this be counted as "assets" and disqualify him from his student support?

Yes to all of them.

Or… is there a better/cleaner way to go about this?
He’s not looking to avoid taxes, but just wants to stay under the radar and avoid issues with banks or government benefits.

Actually, yes, there is. Since he won a mid-five figure amount and he doesn't have a problem paying taxes etc, why not repay his loan and do whatever he wants with the rest? I'm guessing that his loan is far lower than the amount that he won. He will have to repay his loan either way, right?

[tabas]

I think he's having trouble because he wants to get it all at once but tell him, he needs to take time and withdraw it slow and little by little with small amounts that won't remove him from that aid program.

The problem here is that he needs to justify where he got such amounts, small or significant, since it will come through an exchanger account. The bank or the gov can ask at any time anything related to it.

That's kind of tough for him if that's what he'll get even with small amounts. I am not oriented with such policies there but if that's how strict they are, he needs to be careful or else he'd say goodbye to that program and benefits. How about going to the next country that's just beside Germany and he'd do the transaction there. Will there be concerns about him getting some cash there or withdrawing it from another bank outside?

[bias]

That's kind of tough for him if that's what he'll get even with small amounts. I am not oriented with such policies there but if that's how strict they are, he needs to be careful or else he'd say goodbye to that program and benefits. How about going to the next country that's just beside Germany and he'd do the transaction there. Will there be concerns about him getting some cash there or withdrawing it from another bank outside?

Think about this. A client's account constantly (weekly or monthly) receives money in small amounts (what consider small when you want to liquidate a mid five number?)  from an exchanger account (best case since any other incoming tx from different sources can be more "attractive" for the bank to start searching and asking for details faster). So, the easiest (and simplest) thing for the bank is to ask the source of those incoming funds. How will you justify them? You are in a student government program/ loan, and they know it. They will ask you for paperwork proofs, and until you deliver them, your account will be frozen. Not to mention that the bank will inform the tax authorities etc etc.
I'm not saying that it can't be done, but you need a strict plan, with specific amounts, dates that will look random (but won't be), etc. details.
As for going to another country, you will need to open a bank account there as well, right? Don't forget that we are talking about a 19-year-old person going from Germany to open an account in Switzerland or Austria, or any other country. The first question that everybody will ask him is why he went there to open a bank account and not in his country. Bad and strange from the start... The "best" way in these kinds of situations is cash on hand, and far better if you find someone in your country. But then comes the issue of knowing that person and how safe it can be to make a transaction of 50k+ with a random person...

[illanz]

simple just do  in-person P2P trade but with safe vendor