P2P trading and taxes?

Hi, I was wondering anyone is knowledgeable on this subject, considering I've received multiple answers regarding it. I have a few questions:

1.) Let's say I purchase 500$ worth of bitcoin (about 0.054 btc with the current btc price), and I wish to conduct a trade over the popular P2P marketplace Paxful. If my trade partner is offering 45% of that in return (around 717$ in the end after fees) to be sent to a money app such as cashapp/movo, then reinvest that full amount into more bitcoin, then would that be considered illegal? I haven't really done any bitcoin trading like this before, so I'm just curious.

2.) I'm aware that there are possibilities of received money being dirty/stolen, but is there really anything I could do about that?

3.) Lastly, I'm concerned about taxes if I were to begin trading. Can anyone go into detail about this?

This may be a handful of questions, but I would greatly appreciate it if anyone could answer to clear up some confusion. Thanks!

submitted by /u/oldBurnsey
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