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The 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

by mdasen 10y ago

The 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 ago
I 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.
- ChemicalWarfare 10y ago
  I don't think there's any money laundering going on in this case (at least based on the info from the article), that said though - Liberty Reserve founders were charged with money laundering even though their "liberty reserve dollars" were completely virtual and, unlike btc, not used outside of their own private ecosystem. https://en.wikipedia.org/wiki/Liberty_Reserve https://en.wikipedia.org/wiki/Liberty_Reserve
- andrewaylett 10y ago
  For the record, legal tender doesn't mean what you seem to think it means: legal tender is that which must be acceptable for payment of a debt. In Scotland, for example, only coins are legal tender. For a regular sale, the merchant is free to accept or reject whatever they choose. But the law on legal tender is designed to prevent bad lenders from keeping debtors on their books by not letting them discharge their debt. Take a tenant in a secured tenancy, for example. They try to pay their rent, but the landlord won't accept payment, because they want an excuse to evict them (non-payment of rent being one of the few acceptable reasons for evicting a secured tenant). But if (being in Scotland) the tenant dumps a bag of coins on the counter, they are obliged to accept that to settle the debt.
  - joosters 10y ago
    Legal tender has another quirk: in the UK, coins are only legal tender up to a certain amount. If you try to pay your rent of £500 using only pennies, your landlord can refuse to accept it. http://www.royalmint.com/aboutus/policies-and-guidelines/legal-tender-guidelines http://www.royalmint.com/aboutus/policies-and-guidelines/leg... For example, you can only use up to £10 worth of 50p pieces. Any more and the coin is no longer legal tender. The only coins that have no limits are £1 and £2. The much rarer £5+ coins are even more bizarre. According to the Royal Mint, they are legal tender but at the same time, shops and banks do not have to accept them!
    - andrewaylett 10y ago
      Scotland has different laws around legal tender, and no notes are legal tender here. And while you might expect shops and banks to accept any coins and notes in general circulation, they aren't obliged to at all (except the issuing bank for any notes you might have, which must exchange notes they have issued -- although since we moved off the gold standard, they'll just give you another note of the same denomination).
frank_jaeger 10y ago
The entire point of money laundering is to convert ill-gotten money into seemingly legitimate assets. It's not like they offered Espinoza dirty cash that he would buy for cents on the dollar with clean cash. He didn't channel their cash through legitimate business channels to obfuscate its history. He engaged in nothing resembling money laundering. This was a man who sold a commodity. Replace Bitcoin with literally anything else. If Espinoza sold them $30,000 of frozen orange juice concentrate, who cares if they're going to trade that for stolen Russian credit cards? In no way is he facilitating money laundering in either scenario.
- blackbagboys 10y ago
  Actually, the government invests quite a lot of time and resources in prosecuting people who facilitate money-laundering through the purchase and sale of commodities (look up "trade based money laundering").
- icebraining 10y ago
  Yeah, even if he sold, say, Euros, how would it be laundering? It's amazing this even got to court. And apparently, another guy during the same operation was charged and sentenced to five years probation for unlicensed money transmission: http://www.coindesk.com/judge-orders-localbitcoins-user-to-educate-police-on-digital-currency/ http://www.coindesk.com/judge-orders-localbitcoins-user-to-e...
  - frank_jaeger 10y ago
    I'm not sure exactly what you're implying. Are you suggesting Espinoza was laundering? Or currency exchange is money laundering? That his buddy had to cop to a plea deal with overzealous prosecutors is unfortunate, but in no way changes Espinoza's case.
  - tim333 10y ago
    Laundering is usually "the concealment of the origins of illegally obtained money." That could apply to swapping for euros or whatever. It's whether you are doing it to conceal the origins that is important.
zhte415 10y ago
The judge seems super sensible. Bitcoin is not money: it is not M0/M1. It can be traded for money or for other assets - barter. It may be treated as money, but it is not money. It may overtake money as a unit of exchange, at some point, IMHO probably never (central banks will come up with equivalent functioning if and only if block chains stop taking days/weeks/months to implement on clients), but it is not money, now.
- roymurdock 10y ago
  Money isn't binary. Any token that can be used to exchange goods and services can be considered "money". Some money is better (read: better store of value, widely accepted, used as legal tender to pay taxes) than others, depending on the specifics of the transaction it is used for. These tokens can be physical placeholders (dollar bills) or virtual placeholders (debits and credits in a bank account, bitcoin). M0/M1 is a grouping of extremely liquid forms of money. Bitcoin is also relatively liquid, so it wouldn't be too far-fetched to include it in M1 if it were more stable (read: if it had a government or large corporation backing it).
  - abcampbell 10y ago
    Here's our take...bitcoin is not money. https://medium.com/snow-ventures/bitcoin-is-not-money-part-1-2fe3108824df#.hnpg6w1fl https://medium.com/snow-ventures/bitcoin-is-not-money-part-1...
cloudjacker 10y ago
FLORIDA JUDGE made ruling in case of ambiguous FLORIDA LAW for FLORIDA MONEY LAUNDERING STATUTE Florida's money laundering statute has no relation to any other state's money laundering statutes or to the Federal statute, aside from the use of the word money laundering. Florida law enforcement tried to prosecute someone under an ambiguous statute, as even they were likely vexed by the name of the statute and a Hollywood interpretation of the supposed action. Florida law enforcement failed as the case under that Florida law really did rely on the definition of money as well as non-vagueness of the statute itself.

by mdasen 10y ago

stephanheijl 10y ago

I 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.

ChemicalWarfare 10y ago
I don't think there's any money laundering going on in this case (at least based on the info from the article), that said though - Liberty Reserve founders were charged with money laundering even though their "liberty reserve dollars" were completely virtual and, unlike btc, not used outside of their own private ecosystem. https://en.wikipedia.org/wiki/Liberty_Reserve https://en.wikipedia.org/wiki/Liberty_Reserve
andrewaylett 10y ago
For the record, legal tender doesn't mean what you seem to think it means: legal tender is that which must be acceptable for payment of a debt. In Scotland, for example, only coins are legal tender. For a regular sale, the merchant is free to accept or reject whatever they choose. But the law on legal tender is designed to prevent bad lenders from keeping debtors on their books by not letting them discharge their debt. Take a tenant in a secured tenancy, for example. They try to pay their rent, but the landlord won't accept payment, because they want an excuse to evict them (non-payment of rent being one of the few acceptable reasons for evicting a secured tenant). But if (being in Scotland) the tenant dumps a bag of coins on the counter, they are obliged to accept that to settle the debt.
- joosters 10y ago
  Legal tender has another quirk: in the UK, coins are only legal tender up to a certain amount. If you try to pay your rent of £500 using only pennies, your landlord can refuse to accept it. http://www.royalmint.com/aboutus/policies-and-guidelines/legal-tender-guidelines http://www.royalmint.com/aboutus/policies-and-guidelines/leg... For example, you can only use up to £10 worth of 50p pieces. Any more and the coin is no longer legal tender. The only coins that have no limits are £1 and £2. The much rarer £5+ coins are even more bizarre. According to the Royal Mint, they are legal tender but at the same time, shops and banks do not have to accept them!
  - andrewaylett 10y ago
    Scotland has different laws around legal tender, and no notes are legal tender here. And while you might expect shops and banks to accept any coins and notes in general circulation, they aren't obliged to at all (except the issuing bank for any notes you might have, which must exchange notes they have issued -- although since we moved off the gold standard, they'll just give you another note of the same denomination).

frank_jaeger 10y ago

The entire point of money laundering is to convert ill-gotten money into seemingly legitimate assets. It's not like they offered Espinoza dirty cash that he would buy for cents on the dollar with clean cash. He didn't channel their cash through legitimate business channels to obfuscate its history. He engaged in nothing resembling money laundering. This was a man who sold a commodity. Replace Bitcoin with literally anything else. If Espinoza sold them $30,000 of frozen orange juice concentrate, who cares if they're going to trade that for stolen Russian credit cards? In no way is he facilitating money laundering in either scenario.

blackbagboys 10y ago
Actually, the government invests quite a lot of time and resources in prosecuting people who facilitate money-laundering through the purchase and sale of commodities (look up "trade based money laundering").
icebraining 10y ago
Yeah, even if he sold, say, Euros, how would it be laundering? It's amazing this even got to court. And apparently, another guy during the same operation was charged and sentenced to five years probation for unlicensed money transmission: http://www.coindesk.com/judge-orders-localbitcoins-user-to-educate-police-on-digital-currency/ http://www.coindesk.com/judge-orders-localbitcoins-user-to-e...
- frank_jaeger 10y ago
  I'm not sure exactly what you're implying. Are you suggesting Espinoza was laundering? Or currency exchange is money laundering? That his buddy had to cop to a plea deal with overzealous prosecutors is unfortunate, but in no way changes Espinoza's case.
- tim333 10y ago
  Laundering is usually "the concealment of the origins of illegally obtained money." That could apply to swapping for euros or whatever. It's whether you are doing it to conceal the origins that is important.

zhte415 10y ago

The judge seems super sensible. Bitcoin is not money: it is not M0/M1. It can be traded for money or for other assets - barter. It may be treated as money, but it is not money. It may overtake money as a unit of exchange, at some point, IMHO probably never (central banks will come up with equivalent functioning if and only if block chains stop taking days/weeks/months to implement on clients), but it is not money, now.

roymurdock 10y ago
Money isn't binary. Any token that can be used to exchange goods and services can be considered "money". Some money is better (read: better store of value, widely accepted, used as legal tender to pay taxes) than others, depending on the specifics of the transaction it is used for. These tokens can be physical placeholders (dollar bills) or virtual placeholders (debits and credits in a bank account, bitcoin). M0/M1 is a grouping of extremely liquid forms of money. Bitcoin is also relatively liquid, so it wouldn't be too far-fetched to include it in M1 if it were more stable (read: if it had a government or large corporation backing it).
- abcampbell 10y ago
  Here's our take...bitcoin is not money. https://medium.com/snow-ventures/bitcoin-is-not-money-part-1-2fe3108824df#.hnpg6w1fl https://medium.com/snow-ventures/bitcoin-is-not-money-part-1...

cloudjacker 10y ago

FLORIDA JUDGE made ruling in case of ambiguous FLORIDA LAW for FLORIDA MONEY LAUNDERING STATUTE Florida's money laundering statute has no relation to any other state's money laundering statutes or to the Federal statute, aside from the use of the word money laundering. Florida law enforcement tried to prosecute someone under an ambiguous statute, as even they were likely vexed by the name of the statute and a Hollywood interpretation of the supposed action. Florida law enforcement failed as the case under that Florida law really did rely on the definition of money as well as non-vagueness of the statute itself.