3 ms·

Miami money-laundering case may define whether Bitcoin is really money

32 points by jackgavigan 10y ago

grondilu 10y ago
Fun fact : there was a "The Good Wife" episode years ago in which this is issue was basically discussed in court. There the judge ruled bitcoin as a currency after about thirty seconds. https://www.youtube.com/watch?v=KCJpJgyxKEg https://www.youtube.com/watch?v=KCJpJgyxKEg
- aninhumer 10y ago
  The Good Wife is one of the few shows I've seen that does tech right. That episode in particular was an excellent example of balancing technical accuracy and artistic licence (e.g. the creator's alias is "Mr. Bitcoin" instead of Satoshi Nakamoto). A lot of shows that do their research seem to feel a need to show it off by having nerds spouting word salad, which while completely accurate, is not something anyone would actually say.
- goodcanadian 10y ago
  I'll admit to not reading the article, but I would not be surprised if a real judge ruled that way almost as fast. It seems to me that it doesn't matter what it is (pieces of paper, bits of metal, whatever); the important point is what it is used for. I suspect that cigarettes or bottles of laundry detergent would also be considered currency in a money laundering case if that is the purpose that they served.
Animats 10y ago
This was settled back in 2013. Here's the judicial decision, from the Trendon Shavers case. Shavers was running a Ponzi scheme ("Make 1% a week") denominated in Bitcoin. The judge ruled that, no matter what thing of value your Ponzi scheme uses, it's still a Ponzi scheme and illegal. The SEC and the CFTC have agreed that Bitcoin will be treated as a commodity for regulatory purposes, so the CFTC regulates it. [1] https://ia800904.us.archive.org/35/items/gov.uscourts.txed.146063/gov.uscourts.txed.146063.23.0.pdf https://ia800904.us.archive.org/35/items/gov.uscourts.txed.1...
- cloudjacker 10y ago
  The sad thing is that there are real arguments the defendant could be making But stick to this 2012 crypto-anarcho argument that "its not US dollars so therefore you have no jurisdiction" silly
- notpirateat40 10y ago
  Point of order on the "1% a week": Initially launched as btclending.com it was 1%/day, invite/referral only and payouts were every 3 days. Effectively it was 7%/week, compound into something like 3300% APR. That being said as the website ui and backend transitioned from btclending.com to "First Pirate Savings & Trust" and ultimately btcst.com (Bitcoin Savings & Trust) more people started "getting in on the action" rules were changed, payouts went to once per week, blah blah... obviously a ponzi doesn't scale well. In the end minimum balances were required to stay in the "7%/week bracket" where balances <1000BTC were only earning 5.5%/week. If anyone that sets off your ponzi red flag detectors - well done. I can say that there were a handful of early GPU miners with truckloads of sub 5 dollar bitcoins and no where to invest them. GPU Miners who built mining rigs that literally ROI'd in days or weeks, not months. Did some people get burned? Obviously. Did others milk free interest? Most likely. Where I think Trendon and many others have ultimately failed - and this especially goes for Espinoza and his failed "bitcoin isn't money" argument - NOT PRACTICING KYC. There's a lot of smart people out there that know to walk from the transaction when the counterparty mentions tor/fraud/crime/buying stolen credit cards. Espinoza obviously didn't think facilitating the purchase of stolen credit cards was a problem (or didn't care) I'm not sure this specific article mentions it or not but the agents doing the undercover buy from localbitcoins told the seller Espinoza it was for fake credit cards. Huge Red flag for the bitcoin seller. In general though, I would agree with OP that bitcoin is some type of money already defined by precedent and Espinoza is getting reamed for no MSB license and not practicing KYC.
scott00 10y ago
This is an interesting article (about an interesting case) but the title is rubbish. There isn't really a single answer to the question "Is bitcoin money?" It depends on the context. Different laws dealing with money transmission, foreign currency exchange, and the like define things differently. For the case that is the subject of the article, the relevant question is "Is someone who exchanges bitcoins for US dollars a 'money services business' as defined by chapter 560 of the Florida statutes?" Read a few definitions from the statute and you'll likely be able to answer the question: http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0500-0599/0560/Sections/0560.103.html http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Displ... Based on my (non-lawyerly) reading, I would say bitcoin is not a currency, and thus a bitcoin dealer is not a foreign currency dealer, but it is almost certainly a "payment instrument" which means selling bitcoins makes you a seller of payment instruments, and a seller of payment instruments is a "money services business". Interestingly, you get different results depending on what laws you're looking at. For instance I reach the opposite conclusion when reading the Illinois statutes, and think you can probably sell bitcoins there legally. (http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=1201& http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=1201&) Though this guy sold them even though the undercover cops told him they were going to use it to buy stolen credit card numbers. That's just dumb, and I would guess prosecutors can find something to charge you with if you do that in almost any state. (And it's definitely a violation of US Federal anti-money laundering law if you don't file a SAR)
- jcslzr 10y ago
  no the answer is really simple. bitcoin is like the dollar a currency. Why? because it does not have intrinsic value. The only money there is. Its gold and silver. check mike malhoney videos in yt

32 points by jackgavigan 10y ago

Fun fact : there was a "The Good Wife" episode years ago in which this is issue was basically discussed in court. There the judge ruled bitcoin as a currency after about thirty seconds. https://www.youtube.com/watch?v=KCJpJgyxKEg https://www.youtube.com/watch?v=KCJpJgyxKEg

aninhumer 10y ago
The Good Wife is one of the few shows I've seen that does tech right. That episode in particular was an excellent example of balancing technical accuracy and artistic licence (e.g. the creator's alias is "Mr. Bitcoin" instead of Satoshi Nakamoto). A lot of shows that do their research seem to feel a need to show it off by having nerds spouting word salad, which while completely accurate, is not something anyone would actually say.
goodcanadian 10y ago
I'll admit to not reading the article, but I would not be surprised if a real judge ruled that way almost as fast. It seems to me that it doesn't matter what it is (pieces of paper, bits of metal, whatever); the important point is what it is used for. I suspect that cigarettes or bottles of laundry detergent would also be considered currency in a money laundering case if that is the purpose that they served.

Animats 10y ago

This was settled back in 2013. Here's the judicial decision, from the Trendon Shavers case. Shavers was running a Ponzi scheme ("Make 1% a week") denominated in Bitcoin. The judge ruled that, no matter what thing of value your Ponzi scheme uses, it's still a Ponzi scheme and illegal. The SEC and the CFTC have agreed that Bitcoin will be treated as a commodity for regulatory purposes, so the CFTC regulates it. [1] https://ia800904.us.archive.org/35/items/gov.uscourts.txed.146063/gov.uscourts.txed.146063.23.0.pdf https://ia800904.us.archive.org/35/items/gov.uscourts.txed.1...

cloudjacker 10y ago
The sad thing is that there are real arguments the defendant could be making But stick to this 2012 crypto-anarcho argument that "its not US dollars so therefore you have no jurisdiction" silly
notpirateat40 10y ago
Point of order on the "1% a week": Initially launched as btclending.com it was 1%/day, invite/referral only and payouts were every 3 days. Effectively it was 7%/week, compound into something like 3300% APR. That being said as the website ui and backend transitioned from btclending.com to "First Pirate Savings & Trust" and ultimately btcst.com (Bitcoin Savings & Trust) more people started "getting in on the action" rules were changed, payouts went to once per week, blah blah... obviously a ponzi doesn't scale well. In the end minimum balances were required to stay in the "7%/week bracket" where balances <1000BTC were only earning 5.5%/week. If anyone that sets off your ponzi red flag detectors - well done. I can say that there were a handful of early GPU miners with truckloads of sub 5 dollar bitcoins and no where to invest them. GPU Miners who built mining rigs that literally ROI'd in days or weeks, not months. Did some people get burned? Obviously. Did others milk free interest? Most likely. Where I think Trendon and many others have ultimately failed - and this especially goes for Espinoza and his failed "bitcoin isn't money" argument - NOT PRACTICING KYC. There's a lot of smart people out there that know to walk from the transaction when the counterparty mentions tor/fraud/crime/buying stolen credit cards. Espinoza obviously didn't think facilitating the purchase of stolen credit cards was a problem (or didn't care) I'm not sure this specific article mentions it or not but the agents doing the undercover buy from localbitcoins told the seller Espinoza it was for fake credit cards. Huge Red flag for the bitcoin seller. In general though, I would agree with OP that bitcoin is some type of money already defined by precedent and Espinoza is getting reamed for no MSB license and not practicing KYC.

scott00 10y ago

This is an interesting article (about an interesting case) but the title is rubbish. There isn't really a single answer to the question "Is bitcoin money?" It depends on the context. Different laws dealing with money transmission, foreign currency exchange, and the like define things differently. For the case that is the subject of the article, the relevant question is "Is someone who exchanges bitcoins for US dollars a 'money services business' as defined by chapter 560 of the Florida statutes?" Read a few definitions from the statute and you'll likely be able to answer the question: http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0500-0599/0560/Sections/0560.103.html http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Displ... Based on my (non-lawyerly) reading, I would say bitcoin is not a currency, and thus a bitcoin dealer is not a foreign currency dealer, but it is almost certainly a "payment instrument" which means selling bitcoins makes you a seller of payment instruments, and a seller of payment instruments is a "money services business". Interestingly, you get different results depending on what laws you're looking at. For instance I reach the opposite conclusion when reading the Illinois statutes, and think you can probably sell bitcoins there legally. (http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=1201& http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=1201&) Though this guy sold them even though the undercover cops told him they were going to use it to buy stolen credit card numbers. That's just dumb, and I would guess prosecutors can find something to charge you with if you do that in almost any state. (And it's definitely a violation of US Federal anti-money laundering law if you don't file a SAR)

jcslzr 10y ago
no the answer is really simple. bitcoin is like the dollar a currency. Why? because it does not have intrinsic value. The only money there is. Its gold and silver. check mike malhoney videos in yt