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Bitcoin’s not money, judge rules as she tosses money-laundering charge
- homero 10y agoThis is great for taxes. Capital gains are much cheaper than income taxes. Plus my bitcoin is my property which is correct.
- bsbechtel 10y agoI think I saw previously that the IRS classifies Bitcoins the same way? If digital currency becomes ubiquitous, I have a feeling our government is going to regret setting these precedents.
- criddell 10y agoDo you know if the classification depends on whether or not Bitcoin is legal tender?
- andrewaylett 10y agoIt's not, but then neither is the Scottish £10 note in my pocket -- see my other comment in this thread: https://news.ycombinator.com/item?id=12165554 https://news.ycombinator.com/item?id=12165554
- jrockway 10y agoCan't the legislature just change these things? There's nothing in the Constitution about Bitcoin.
- bsbechtel 10y agoYes, but it becomes much harder to do once precedent is set. Interest groups spring up around the current status quo, and it takes a lot of momentum to convince the general population that a change is necessary. If EVERYONE is using Bitcoin and their effective tax rate is 15%, I don't think changing the tax rate to align with income tax rates will go over very well.
- homero 10y agoyou would pay income taxes and reset the basis
- deleted 10y ago[deleted]
- morgante 10y agoWhy do you think that? Just because they treat Bitcoin as a commodity does not mean you can somehow avoid paying taxes on it. Compensation does not have to come in the form of cash to count as income (just look at stock allocations).
- charlesdm 10y agoThat doesn't mean the IRS won't take you to court to change the interpretation. Proceed with caution..
- homero 10y agoyou would pay income taxes and reset the basis
- mdasen 10y agohttps://www.irs.gov/pub/irs-drop/n-14-21.pdf https://www.irs.gov/pub/irs-drop/n-14-21.pdf The IRS has said that it is currently treating Bitcoin as property for tax purposes. The document has some interesting bits to it. If you mine bitcoin, you're likely liable for self-employment taxes. When you use bitcoin to pay for things, you might create a gain or loss compared to your basis (even though you aren't exchanging for cash). Wages received in bitcoin still have taxes due on the US Dollar value of the bitcoin received (and payable in USD). I'm a little surprised that the IRS didn't treat it as a foreign currency with the Section 1256 60/40% split long-term/short-term gain tax treatment. Anyway, this case doesn't change anything from a tax standpoint. The IRS has already clarified all of that for your federal taxes.
- wyldfire 10y agoIf someone gives you bitcoin-which-is-not-money in exchange for doing work, the IRS would probably consider that income-as-bartering. Capital gains is what you might pay if you go to an exchange and purchase bitcoin-which-is-not-money, and exchange it back for fiat at a higher rate.
- homero 10y agoTrue you would pay income taxes and reset the basis
- andai 10y agoIn the Netherlands I've had to declare bitcoins on my taxes the last few years.
- option_greek 10y agoWow. This case reeks of desperation to just put some one behind bars. I mean he didn't even bite the exchange of bitcoins for Credit card trap.
- deleted 10y ago[deleted]
- ryandrake 10y agoMiami must be pretty low on crime if the police are spending their time encouraging random bitcoin sellers to do something illegal just so they can arrest someone.
- Tomte 10y agoFun fact about German criminal law: If you hide a murder victim's body, you have satisfied the elements of money laundering. Obviously, this literal interpretation of the statute's wording is eschewed in favor of a more restrictive interpretation, so this bizarre outcome does not follow, but this example is actually mentioned in the legal literature.
- dmichulke 10y agoI tried to search for it but googling for most of the power set of "anklage geldwäsche leiche verstecken jura theoretisch" didn't do the trick. Do you have a link?
- Tomte 10y agohttps://books.google.de/books?id=UJloCwAAQBAJ&pg=PA9&lpg=PA9&dq=geldw%C3%A4sche+tatbestand+mordopfer+auslegung&source=bl&ots=Wnp_py8YBz&sig=oHqYE2bHukMaUyAPhIgKuYI_CtM&hl=de&sa=X&ved=0ahUKEwjJsc7IjpHOAhUL1BoKHeBGD4sQ6AEIIzAA#v=onepage&q=geldw%C3%A4sche%20tatbestand%20mordopfer%20auslegung&f=false https://books.google.de/books?id=UJloCwAAQBAJ&pg=PA9&lpg=PA9... "Tatbestand", "Auslegung", ("Leiche"|"Mordopfer") are my best guesses for search terms. And I haven't looked, but I'd almost wager that Fischer wouldn't keep that tidbit out of his famous commentary.
- bhaak 10y agoTry '"geldwäsche" leiche verstecken'. First hit was this book: https://books.google.de/books?id=CqVLvTSOwpsC https://books.google.de/books?id=CqVLvTSOwpsC Looks like hiding anything of value that has been acquired by a criminal act counts towards money laundering if you follow the words of the law too literally.
- chronial 10y agoNo, not anything of value: https://dejure.org/gesetze/StGB/261.html https://dejure.org/gesetze/StGB/261.html The definition of "money" in that article is simply "any object" :).
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- sebastianconcpt 10y agoTechnically that isn't incorrect, BTCs are not money. They are currency.
- sebastianconcpt 10y agoInteresting. Now I'm curious about the downvote since money and currency are two different concepts.
- JumpCrisscross 10y agoIn economics, currency is money in common use, i.e. circulation. Bitcoin may qualify, economically, as money, but it isn't commonly seen, outside limited economic areas, as a bona fide currency. Moreover, anti-money laundering regulations define "money" and "current" equivalently; the distinction is irrelevant in this context. Salespeople in the precious-metals industry try to pitch "currency" as paper money and "money" as a store of value, e.g. the commodity they're hocking. This isn't an accepted financial or economic construct as much as a marketing one.
- omegaham 10y ago> Salespeople in the precious-metals industry try to pitch "currency" as paper money and "money" as a store of value, e.g. the commodity they're hocking. This isn't an accepted financial or economic construct as much as a marketing one. So this is the basis behind my Dale Gribble coworker insisting that "the dollar isn't money" because we're no longer on the gold standard. I'd always wondered about that.
- geggam 10y agoTo see the difference in action. Hang on to that 1000 dollars for 20 years. Buy 1000 dollars of gold and hold it over the same period of time. At the end of 20 years go see what you can purchase. You will see what stores value.
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- gm-conspiracy 10y agohttps://en.wikipedia.org/wiki/Money#Functions https://en.wikipedia.org/wiki/Money#Functions Medium of Exchange Unit of Account Store of Value Standard of Deferred Payment - eh? That can't be the deciding factor.
- mdasen 10y agoThe judge seems to have used a very narrow view of money. They argued that money must be universally accepted and have a steady value. I don't know the law in this case, but does this mean that money laundering is ok as long as it's done through something that isn't cash? For example, bearer bonds aren't universally accepted so I could launder my money using them? Gold certainly isn't universally accepted and its value fluctuates compared to the US Dollar so laundering with gold wouldn't be illegal? If there's a currency from a foreign country that's less accepted than Bitcoin, can I wash my money though that legally? The ruling in the case just doesn't pass a logic test. If something has to pass a two-pronged test of near-universal acceptance and stable value compared to the USD, then it's going to make money laundering trivially legal. Now, this case seems kinda bad from the gov't side. I mean, imagine someone wants to buy some bitcoin from you and then casually drops, "yea, I'm gonna do somethin' illegal with it" at the last minute. What are you supposed to do in that situation? I wouldn't say no simply because, well, do these people have a gun and are going to get shooty if I don't go through with it? In fact, the judge said, "This court is unwilling to punish a man for selling his property to another, when his actions fall under a statute that is so vaguely written that even legal professionals have difficulty finding a singular meaning." Which really says that the judge was struggling to find a way to let someone off that was captured by a law written so vague as to capture everyone. I mean, if the law criminalizes all financial transactions that might promote some illegal activity, that's a crappy law. I can see not wanting to punish some random person that got caught in this police action. That still doesn't (shouldn't) mean that Bitcoin can't be considered money laundering.
- stephanheijl 10y agoI think that when the articles refers to not being universally accepted, it means that Bitcoins do not constitute legal tender. Their value is not guaranteed by any government (which is also one of the reasons the coin is, at least at this point, inherently less stable than most fiat currencies in the world). The point that was being made, if I am correct, is that you can't convict someone of money laundering if it doesn't involve money, not that the transaction these people hypothetically would've had was OK. If the accused had been trading in, for example, sheep (which also do not constitute money in the United States) the ruling would probably have been the same.
- jeffreyrogers 10y agoRegardless of whether Bitcoin is classified as money or not, its use has lead to convictions for money laundering in other districts. For example, in the Silk Road case.
- gbin 10y agoThe reasons given by the judge saying that it is not money would apply the same way if the perpetrator was holding some foreign currency. It is not accepted by merchants here and its value changes all the time.
- bko 10y agoFrom reading the article, the case appears nothing more than an exchange of Bitcoin for cash. The buyer dropped a hint about using it for illegal purposes, but I don't see how that's any concern of the seller. I'm reminded of a comedian saying "Drugs are illegal but ATM machines are open 24 hours a day". I'm just surprised the effort that agents go through to prosecute seemingly marginal activities. Unless the authorities knew this guy was involved in something more nefarious, I imagine there would be more pressing cases for them to pursue.
- forgetsusername 10y ago>The buyer dropped a hint about using it for illegal purposes, but I don't see how that's any concern of the seller. Within limits. If you sell Bitcoin to someone who tells you they're going to fund a hit on someone or blow up a building, I think it is a concern, both morally and legally.
- supergreg 10y agoBut does the bitcoin have anything to do with it? What if you buy their car (sell them dollars)?
- bko 10y agoPerhaps, but Bitcoin is fungible so I don't see how you're being an accomplice just by knowing the person performs illicit activities with Bitcoin. Would a needle exchange program also qualify as providing support for an illegal activity?
- conjectures 10y agoThe bitcoin issue seems ancillary. You could just as easily have investigators tell their hairdresser they plan to undertake a fraud with their slick new look.
- tim333 10y agoI think that would be a different crime though. Something like accessory to a homicide rather than money laundering.
- ChemicalWarfare 10y agoIf all they had on Espinoza is the fact that he "agreed to think" about them paying him for btc with stolen cc numbers then there's no "laundering" of anything going on there unless they have some proof of him using funds acquired from "illicit activities" to purchase the btc in the first place.
- eximius 10y agoOoph. I feel for the judge, but when you admit you fundamentally cannot explain/understand a key piece of the case you preside over, it might be time to recuse yourself.
- irln 10y agoThis article to the Washington Post has a pay wall. Given the number of comments in this thread I wonder if the HN community has a large proportion of subscribers to WP or do folks simply circumvent it?
- evanreichard 10y agoClick "web" right under HN's link to the article and then access it via Google. No more pay wall.
- irln 10y agoI appreciate it but for me it requires an additional step. Your response, in addition to being thoughtful is one data point to answering my initial question :).
- csydas 10y agoAn addendum, some adblockers circumvent the paywall, or the paywall isn't applied equally, I'm not sure which. I have rules set on my home machine, but my work machine does not and I still am able to view Washington Post Articles.
- irln 10y agoFor the down votes, I didn't ask how to circumvent, I asked whether you circumvent. I guess the down votes are data points as well.
- hkjgkjy 10y agoBitcoin Privacy Howto ===================== How to take control over your digital financial freedom. `$sudo apt-get install tor` or `$brew install tor` Set it to launch on login. macOS: <?xml version="1.0" encoding="UTF-8"?> <!DOCTYPE plist PUBLIC "-//Apple//DTD PLIST 1.0//EN" "http://www.apple.com/DTDs/PropertyList-1.0.dtd"> <plist version="1.0"> <dict> <key>Label</key> <string>org.torproject.tor</string> <key>ProgramArguments</key> <array> <string>/usr/local/bin/tor</string> </array> <key>RunAtLoad</key> <true/> </dict> </plist> Save that script in ~/Library/LaunchAgents/org.torproject.tor.plist Debian or other Linuxes (or systems) I don't know - would love to read in child comments. Set your bitcoin client (I know Electrum and Bitcoin-QT at least can, probably others as well) to connect via a Socks-5 proxy to localhost:9050. In Electrum I set it to connect to a .onion server as well. Keep the wallets that you spend on things that can be tied to you (like whatever business replaces amazon shopping) separate from the wallets you spend from in privacy.
- hkjgkjy 10y agoIf anyone is reading this thread I'd be very curious to know why a guide on how to run Bitcoin over Tor is downvoted on a website with "Hacker" in it's name.
- bluetwo 10y ago[That Washington Post paywall is killing me]
- jude- 10y agoI've always thought of Bitcoin as a rate-limiting token. The only thing it actually buys is space on its blockchain, which you bid on and pay for via transaction fees. In fact, this will probably be the dominant use-case in a few years, as more and more non-financial applications use Bitcoin OP_RETURNs to host replicated state machine inputs [1]. [1 shameless plug] https://blog.blockstack.org/blockchains-for-distributed-systems-ffd68e6341b5 https://blog.blockstack.org/blockchains-for-distributed-syst...
- vessenes 10y agoA few points about this case, although note I'm not a lawyer, just interested in digital currency law. 1) This is an elected state court judge, anecdotally one of the worst states for high quality judges. So, this is not a considered opinion from a federal judge. It is unlikely to have long term impact. 2) It looks like the purpose of this sting was to get someone on state Money Transmittal laws, levered up with some sort of racketeering type charges. When it comes to opining on whether something is money for the purpose of Money Transmittal, it makes a lot of sense to be conservative about the definitions, and this is the angle I would expect a good defense attorney to take -- prove the state has the right to enforce this law in this circumstance.. All that said, this isn't the first attempt Florida law enforcement has made at turning a bitcoin exchange into a crime. Hopefully a ruling like this will put them on to more useful activities.
- zekevermillion 10y agoFL state judge ruling about ambiguous language of FL statute. This does not impact anyone operating in another state, or anyone accused of federal crimes in FL. I would not expect this rationale to be copied at the federal level, or in other state courts. It is an aberration.
- gozur88 10y agoDidn't the IRS decide bitcoin is an asset and not a currency? Seems like they shouldn't be able to have it both ways - if using an asset in this way isn't money laundering then it's a sound decision.