Just do it, but don't sell it. Fact is, the music laws have not kept up with the times. There are so many gray areas already. Downloading music is one of them. If a source is illegal, it's not your problem. It's the source's problem.
But making money out of downloaded is definitely crossing the line. Even if you paid for such music, selling it is still illegal. You have to pay royalties to the publisher and get an array of licenses and permits to do it legally.
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