10 ms·

Defense Motion: Bitcoin is not “money” within the meaning of 18 U.S..C. § 1960 [pdf]

79 points by quickthrower2 5y ago

the_sleaze9 5y ago
Interesting. Charging someone for a crime which _could_ have been committed....
- smachiz 5y ago
  Attempted Murder is a crime - so is attempted bribery and extortion. I'm not sure what your point is.
  - rantwasp 5y ago
    the point is that this shit is turning into Minority Report. It’s one thing to accuse someone of attempted murder when they actually tried killing someone, it’s another thing to accuse someone of attempted murder for suspecting them about thinking about killing someone.
    - vkou 5y ago
      Unfortunately for your argument, the defendant did not think about laundering drug money, they did actually launder what they believed was drug money. Thinking isn't a crime. Doing is.
    - quickthrower2 5y ago
      It’s a sting operation
- JumpCrisscross 5y ago
  > Charging someone for a crime which _could_ have been committed Weren't they operating a money transmitting business without being properly licensed before the FBI got involved?
jfengel 5y ago
The "bitcoin is not money" argument seems unlikely to work. There are people selling things for bitcoin. Not universally, but enough places that I don't see a court accepting the argument that it doesn't act like money. The "selling bitcoin is not transmitting money" seems more likely to me, at least as long as the sums are small. If they're selling more than $10k worth of bitcoin then it sounds like they're engaging in banking, if not money transmitting. But if they're selling a lot of bitcoins, they know perfectly well that it's a mechanism for moving money around. The fact that they don't know the destination doesn't make it not money laundering. If people are bringing large sums of money to some dipsticks rather than buying it on the open market, they're almost certainly trying to avoid visibility.
- skeeter2020 5y ago
  This defense seems doomed as money != a specific government-issued currency. IANAL but I suspect this is determined by an instrument serving enough of the underlying functions of currencies, which BC most certainly does. Also, effective money laundering OFTEN involves the facilitators NOT knowing the nodes in the graph; that's what makes it effective in the first place.
  - Turing_Machine 5y ago
    > This defense seems doomed as money != a specific government-issued currency. According to the statute in question (and also the Uniform Commercial Code), it is. The statute reads, in part, "Money,” in its common use, is some kind of financial instrument or medium of exchange that is assessed value, made uniform, regulated, and protected by sovereign power." Also: ... the Uniform Commercial Code defines money as “a medium of exchange *currently authorized or adopted by a domestic or foreign government...” I think they have a good argument. While Bitcoin is certainly "money-like", it does not appear to fit the U.S. government's current definition of "money".
    - SomewhatLikely 5y ago
      FWIW El Salvador now accepts Bitcoin as legal tender.
itomato 5y ago
Don't bother - hawala.com is taken
humanistbot 5y ago
They bought a lot of bitcoin early, then made a profit off regularly selling it to the public in exchange for US dollars. They didn't register with FinCEN, any state agency, or do any KYC. The thing about the sting operation is that the undercover agent blatantly told them that he was buying bitcoin using money he made from selling cocaine. So it isn't just a charge for operating an unlicensed money exchange service, but also laundering drug money.
- Simulacra 5y ago
  That just seems like entrapment... Bitcoin to me has always been an intangible asset. If someone is willing to exchange cash for it then that does not mean Bitcoin is suddenly cash. I wonder what the government's argument would be if bitcoin were tangible, say bottle caps.
  - arcticbull 5y ago
    I mean the whitepaper is titled a peer-to-peer electronic cash system. [edit] It feels like Scrodinger's asset class. It's a commodity when it's being attacked for being a security. It's a currency when it's attacked for being a commodity. At the end of the day I don't care, if it's good at being laundered then you can call it whatever you want, AML/KYC is going to have to apply. [edit] Further, entrapment is a specific legal construct wherein the government tricks you into committing a crime. If the government comes up and says "hello, do you want to do a crime?" and you say "damn right I do" that's not entrapment, that's just crime.
    - salawat 5y ago
      An affirmative defense in which a defendant alleges that police officers acquired the evidence necessary to commence a criminal prosecution of the defendant by inducing the defendant to engage in a criminal act which the defendant would not otherwise have committed. see, e.g. Jacobson v. United States, 503 U.S. 540(1992). https://www.law.cornell.edu/wex/entrapment https://www.law.cornell.edu/wex/entrapment I'm no lawyer, but I'm having trouble from a reading comprehension point of view seeing how this wasn't a to the textbook definition of entrapment.
ur-whale 5y ago
Your tax money at work: govt attacking citizens who didn't hurt a fly.
- danuker 5y ago
  Trading with someone openly admitting to sell dangerous drugs? Not hurting anyone is incidental. > The Government sent an undercover officer to visit The Geek Group and purchase bitcoin and, while doing so, mention that he sold cocaine.
  - ur-whale 5y ago
    > mention that he sold cocaine which was a bald-faced lie. entrapment is a thing.
    - carl_dr 5y ago
      Saying he got the money from selling cocaine is almost the opposite to entrapment. It certainly didn’t lead them to selling him Bitcoin when they would not have otherwise - he didn’t induce them to commit a crime. What he did was show they were happy to deal with a supposed criminal, even knowing the money had come from his crimes.
      - luma 5y ago
        That was a interesting issue as the defendant has always been extremely vocal about being anti-drug in person and through his social media channels. I'm frankly a little surprised that he went through with that particular transaction, while I hold a fairly low opinion of the guy he at least seemed to be consistent in his principles. I guess money was the goal and he was willing to compromise himself in its pursuit.
      - olalonde 5y ago
        I don't understand. Didn't the FBI agent induce him to commit money laundering by telling him he sold cocaine? Also, can't the defendant claim they thought it was a joke? Depending on the context, I most likely would have assumed it was a joke. It seems like the kind of answer someone would jokingly give if they didn't want to discuss their real job.
X6S1x6Okd1st 5y ago
Seems like an argument worth having. Somehow it doesn't seem like the court will decide that bitcoin isn't money, but hopefully will at least give clarity to whether bitcoin is money.
davidgerard 5y ago
This is dumb as hell. The FinCEN rules talk about this as "value that substitutes for currency", which this is absolutely doing. If you use phone cards as a money substitute, it's money transmission. If you use bottles of Tide detergent as a money substitute, it's money transmission.
nixpulvis 5y ago
There are literally bitcoin ATMs in convenience stores. It's trying really hard to act as a currency, so I'm not sold on this motion at all. Furthermore, > Stated simply, “[o]rdinary people in everyday life know this [i.e., that bitcoin is not money] intuitively; the average person who hears the term ‘money’ will think of government-issued ‘dollars’ or instruments, like checks, money orders, credit cards, or notes, directly connected to dollars.” This is making pretty unsubstantiated claims about "ordinary people", who are using apps like Venmo and "Cash" (Square Cash) more and more. Thinking of a cryptocurrency as a form of money seems perfectly understandable, even if false.
youeseh 5y ago
If we sell something in exchange for money, we are supposed to record the value in USD (if based in the US) at the time of sale, and pay taxes in USD on the sale / profits etc. So, Bitcoin is a fancy way of exchanging USD, similar to trading cars, or pogs. If the transaction involves some kind of an official title transfer, then we're going to pay taxes in USD...not a fraction of a pog.
- hanniabu 5y ago
  That's like saying the euro isn't money because when you exchange it you dominate it in USD for taxes. Clearly this line of thought is flawed.
  - youeseh 5y ago
    Can you accept payment in Euro in the US and then pay taxes in Euro? I don't believe this is the case. As far as the IRS is concerned, everything that isn't USD is just another non-currency asset. So far Bitcoin is a currency in El Salvador. That means, you can presumably do commerce and pay taxes in Bitcoin over there. But, I highly doubt anyone selling goods and services for Bitcoin wants to then pay their taxes in said Bitcoin because of the expectation that it will be worth much more in the future.
hackcasual 5y ago
Posting one side's legal arguments isn't useful as news, it's the definition of one sided, with no attempt at objectivity
- quickthrower2 5y ago
  The existence of the motion is the news
Black101 5y ago
it is not money in the US because they charge you taxes every time you sell bitcoins... they need to reverse that stupid ass law
kordlessagain 5y ago
Bitcoin is a fancy pants Ponzi scheme.
_robbywashere 5y ago
According to every tired hacker news thread: Bitcoin is not money or currency, it’s a Ponzi scheme
- imtringued 5y ago
  It's black market money. It's money for those who don't want to use the "real" (i.e. government issued) thing. It does make sense from that perspective but the idea that it is going to rule the world is absurd.
Animats 5y ago
Not going to work. This was settled back in 2013. See "Application of FinCEN's Regulations to Persons Administering, Exchanging, or Using Virtual Currencies"[1] A user who obtains convertible virtual currency and uses it to purchase real or virtual goods or services is not an MSB under FinCEN's regulations. Such activity, in and of itself, does not fit within the definition of "money transmission services" and therefore is not subject to FinCEN's registration, reporting, and recordkeeping regulations for MSBs. So, if you are selling things for Bitcoin, that doesn't make you a money transmitter. An administrator or exchanger that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN's regulations, unless a limitation to or exemption from the definition applies to the person. The definition of a money transmitter does not differentiate between real currencies and convertible virtual currencies. Accepting and transmitting anything of value that substitutes for currency makes a person a money transmitter under the regulations implementing the BSA. But if you swap Bitcoin for USD as a business, in either direction, you're a money transmitter. Separate from this, there's a threshold of US$1000/day, below which you don't have to register as a money transmitter. [1] https://www.fincen.gov/resources/statutes-regulations/guidance/application-fincens-regulations-persons-administering https://www.fincen.gov/resources/statutes-regulations/guidan...
anonytrary 5y ago
Unrelated, but Bitcoin cannot be banned without infringing on human rights. Bitcoin is a collectively enforced source of truth, like a bunch of people gathering together and engaging in this ledger protocol with pieces of paper and ink, being paid to do it. Banning people from using Bitcoin is like banning people from gathering religiously and engaging in some harmless religious protocol or something.
- vkou 5y ago
  > Bitcoin is a collectively enforced source of truth, like a bunch of people gathering together and engaging in this ledger protocol with pieces of paper and ink, being paid to do it. So is all money. 99% of fiat is stored in digital ledgers. Yet, as it turns out, it's not a human rights violation to place restrictions on how, and by whom those digital ledgers can be updated. Comparing I-OWE-U ledgers to religion is an absurd reduction that does a disservice to both. Freedom of religion isn't a thing because we care about letting people believe in truths, it's a thing because without it, millions of people start killing eachother.
  - anonytrary 5y ago
    > Congress shall make no law ... prohibiting ... the right of the people peaceably to assemble That's from the first amendment. How is Bitcoin any different than religion in this framing? Bitcoin is functionally equivalent to a peaceful gathering where people write characters on paper in order to agree on something. > Freedom of religion isn't a thing because we care about letting people believe in truths, it's a thing because without it, millions of people start killing eachother. This is very silly. What if people start killing each other because they are sick of being financially controlled puppets? Is that the reason we should allow things?
    - CRConrad 5y ago
      Yeah, OK, you're right. Thank you for officially confessing that Bitcoin — and, by extension, all the other crypto"currency" online Ponzi schemes too — are not, in fact, currencies at all, but cults.
otoburb 5y ago
>>The usage of the word “money” in other contexts supports this plain meaning. For example, the Uniform Commercial Code defines money as “a medium of exchange currently authorized or adopted by a domestic or foreign government. The term includes a monetary unit of account established by intergovernmental organization or by agreement between two or more countries.” U.C.C. § 1-201(b)(24). To be sure, the U.C.C. does not control the use of the term “money” in § 1960. But the U.C.C.’s widespread adoption and its purpose—to “simplify, clarify, and modernize the law governing commercial transactions, U.C.C. § 1-103(a)(1)—makes it a useful barometer of the ordinary usage for a broad, non-technical term like “money.” UCC §1-103 was brought up[1] when El Salvador announced they would adopt bitcoin as legal tender[2] on September 7, 2021. The defense should perhaps remove this argument from their motion as a result. [1] https://twitter.com/CaitlinLong_/status/1401334424160047107 https://twitter.com/CaitlinLong_/status/1401334424160047107 [2] https://www.reuters.com/world/americas/el-salvador-approves-first-law-bitcoin-legal-tender-2021-06-09/ https://www.reuters.com/world/americas/el-salvador-approves-...

79 points by quickthrower2 5y ago

the_sleaze9 5y ago

Interesting. Charging someone for a crime which _could_ have been committed....

smachiz 5y ago
Attempted Murder is a crime - so is attempted bribery and extortion. I'm not sure what your point is.
- rantwasp 5y ago
  the point is that this shit is turning into Minority Report. It’s one thing to accuse someone of attempted murder when they actually tried killing someone, it’s another thing to accuse someone of attempted murder for suspecting them about thinking about killing someone.
  - vkou 5y ago
    Unfortunately for your argument, the defendant did not think about laundering drug money, they did actually launder what they believed was drug money. Thinking isn't a crime. Doing is.
  - quickthrower2 5y ago
    It’s a sting operation
JumpCrisscross 5y ago
> Charging someone for a crime which _could_ have been committed Weren't they operating a money transmitting business without being properly licensed before the FBI got involved?

jfengel 5y ago

The "bitcoin is not money" argument seems unlikely to work. There are people selling things for bitcoin. Not universally, but enough places that I don't see a court accepting the argument that it doesn't act like money. The "selling bitcoin is not transmitting money" seems more likely to me, at least as long as the sums are small. If they're selling more than $10k worth of bitcoin then it sounds like they're engaging in banking, if not money transmitting. But if they're selling a lot of bitcoins, they know perfectly well that it's a mechanism for moving money around. The fact that they don't know the destination doesn't make it not money laundering. If people are bringing large sums of money to some dipsticks rather than buying it on the open market, they're almost certainly trying to avoid visibility.

skeeter2020 5y ago
This defense seems doomed as money != a specific government-issued currency. IANAL but I suspect this is determined by an instrument serving enough of the underlying functions of currencies, which BC most certainly does. Also, effective money laundering OFTEN involves the facilitators NOT knowing the nodes in the graph; that's what makes it effective in the first place.
- Turing_Machine 5y ago
  > This defense seems doomed as money != a specific government-issued currency. According to the statute in question (and also the Uniform Commercial Code), it is. The statute reads, in part, "Money,” in its common use, is some kind of financial instrument or medium of exchange that is assessed value, made uniform, regulated, and protected by sovereign power." Also: ... the Uniform Commercial Code defines money as “a medium of exchange *currently authorized or adopted by a domestic or foreign government...” I think they have a good argument. While Bitcoin is certainly "money-like", it does not appear to fit the U.S. government's current definition of "money".
  - SomewhatLikely 5y ago
    FWIW El Salvador now accepts Bitcoin as legal tender.

itomato 5y ago

Don't bother - hawala.com is taken

humanistbot 5y ago

They bought a lot of bitcoin early, then made a profit off regularly selling it to the public in exchange for US dollars. They didn't register with FinCEN, any state agency, or do any KYC. The thing about the sting operation is that the undercover agent blatantly told them that he was buying bitcoin using money he made from selling cocaine. So it isn't just a charge for operating an unlicensed money exchange service, but also laundering drug money.

Simulacra 5y ago
That just seems like entrapment... Bitcoin to me has always been an intangible asset. If someone is willing to exchange cash for it then that does not mean Bitcoin is suddenly cash. I wonder what the government's argument would be if bitcoin were tangible, say bottle caps.
- arcticbull 5y ago
  I mean the whitepaper is titled a peer-to-peer electronic cash system. [edit] It feels like Scrodinger's asset class. It's a commodity when it's being attacked for being a security. It's a currency when it's attacked for being a commodity. At the end of the day I don't care, if it's good at being laundered then you can call it whatever you want, AML/KYC is going to have to apply. [edit] Further, entrapment is a specific legal construct wherein the government tricks you into committing a crime. If the government comes up and says "hello, do you want to do a crime?" and you say "damn right I do" that's not entrapment, that's just crime.
  - salawat 5y ago
    An affirmative defense in which a defendant alleges that police officers acquired the evidence necessary to commence a criminal prosecution of the defendant by inducing the defendant to engage in a criminal act which the defendant would not otherwise have committed. see, e.g. Jacobson v. United States, 503 U.S. 540(1992). https://www.law.cornell.edu/wex/entrapment https://www.law.cornell.edu/wex/entrapment I'm no lawyer, but I'm having trouble from a reading comprehension point of view seeing how this wasn't a to the textbook definition of entrapment.

ur-whale 5y ago

Your tax money at work: govt attacking citizens who didn't hurt a fly.

danuker 5y ago
Trading with someone openly admitting to sell dangerous drugs? Not hurting anyone is incidental. > The Government sent an undercover officer to visit The Geek Group and purchase bitcoin and, while doing so, mention that he sold cocaine.
- ur-whale 5y ago
  > mention that he sold cocaine which was a bald-faced lie. entrapment is a thing.
  - carl_dr 5y ago
    Saying he got the money from selling cocaine is almost the opposite to entrapment. It certainly didn’t lead them to selling him Bitcoin when they would not have otherwise - he didn’t induce them to commit a crime. What he did was show they were happy to deal with a supposed criminal, even knowing the money had come from his crimes.
    - luma 5y ago
      That was a interesting issue as the defendant has always been extremely vocal about being anti-drug in person and through his social media channels. I'm frankly a little surprised that he went through with that particular transaction, while I hold a fairly low opinion of the guy he at least seemed to be consistent in his principles. I guess money was the goal and he was willing to compromise himself in its pursuit.
    - olalonde 5y ago
      I don't understand. Didn't the FBI agent induce him to commit money laundering by telling him he sold cocaine? Also, can't the defendant claim they thought it was a joke? Depending on the context, I most likely would have assumed it was a joke. It seems like the kind of answer someone would jokingly give if they didn't want to discuss their real job.

X6S1x6Okd1st 5y ago

Seems like an argument worth having. Somehow it doesn't seem like the court will decide that bitcoin isn't money, but hopefully will at least give clarity to whether bitcoin is money.

davidgerard 5y ago

This is dumb as hell. The FinCEN rules talk about this as "value that substitutes for currency", which this is absolutely doing. If you use phone cards as a money substitute, it's money transmission. If you use bottles of Tide detergent as a money substitute, it's money transmission.

nixpulvis 5y ago

There are literally bitcoin ATMs in convenience stores. It's trying really hard to act as a currency, so I'm not sold on this motion at all. Furthermore, > Stated simply, “[o]rdinary people in everyday life know this [i.e., that bitcoin is not money] intuitively; the average person who hears the term ‘money’ will think of government-issued ‘dollars’ or instruments, like checks, money orders, credit cards, or notes, directly connected to dollars.” This is making pretty unsubstantiated claims about "ordinary people", who are using apps like Venmo and "Cash" (Square Cash) more and more. Thinking of a cryptocurrency as a form of money seems perfectly understandable, even if false.

youeseh 5y ago

If we sell something in exchange for money, we are supposed to record the value in USD (if based in the US) at the time of sale, and pay taxes in USD on the sale / profits etc. So, Bitcoin is a fancy way of exchanging USD, similar to trading cars, or pogs. If the transaction involves some kind of an official title transfer, then we're going to pay taxes in USD...not a fraction of a pog.

hanniabu 5y ago
That's like saying the euro isn't money because when you exchange it you dominate it in USD for taxes. Clearly this line of thought is flawed.
- youeseh 5y ago
  Can you accept payment in Euro in the US and then pay taxes in Euro? I don't believe this is the case. As far as the IRS is concerned, everything that isn't USD is just another non-currency asset. So far Bitcoin is a currency in El Salvador. That means, you can presumably do commerce and pay taxes in Bitcoin over there. But, I highly doubt anyone selling goods and services for Bitcoin wants to then pay their taxes in said Bitcoin because of the expectation that it will be worth much more in the future.

hackcasual 5y ago

Posting one side's legal arguments isn't useful as news, it's the definition of one sided, with no attempt at objectivity

quickthrower2 5y ago
The existence of the motion is the news

Black101 5y ago

it is not money in the US because they charge you taxes every time you sell bitcoins... they need to reverse that stupid ass law

kordlessagain 5y ago

Bitcoin is a fancy pants Ponzi scheme.

_robbywashere 5y ago

According to every tired hacker news thread: Bitcoin is not money or currency, it’s a Ponzi scheme

imtringued 5y ago
It's black market money. It's money for those who don't want to use the "real" (i.e. government issued) thing. It does make sense from that perspective but the idea that it is going to rule the world is absurd.

Animats 5y ago

Not going to work. This was settled back in 2013. See "Application of FinCEN's Regulations to Persons Administering, Exchanging, or Using Virtual Currencies"[1] A user who obtains convertible virtual currency and uses it to purchase real or virtual goods or services is not an MSB under FinCEN's regulations. Such activity, in and of itself, does not fit within the definition of "money transmission services" and therefore is not subject to FinCEN's registration, reporting, and recordkeeping regulations for MSBs. So, if you are selling things for Bitcoin, that doesn't make you a money transmitter. An administrator or exchanger that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN's regulations, unless a limitation to or exemption from the definition applies to the person. The definition of a money transmitter does not differentiate between real currencies and convertible virtual currencies. Accepting and transmitting anything of value that substitutes for currency makes a person a money transmitter under the regulations implementing the BSA. But if you swap Bitcoin for USD as a business, in either direction, you're a money transmitter. Separate from this, there's a threshold of US$1000/day, below which you don't have to register as a money transmitter. [1] https://www.fincen.gov/resources/statutes-regulations/guidance/application-fincens-regulations-persons-administering https://www.fincen.gov/resources/statutes-regulations/guidan...

anonytrary 5y ago

Unrelated, but Bitcoin cannot be banned without infringing on human rights. Bitcoin is a collectively enforced source of truth, like a bunch of people gathering together and engaging in this ledger protocol with pieces of paper and ink, being paid to do it. Banning people from using Bitcoin is like banning people from gathering religiously and engaging in some harmless religious protocol or something.

vkou 5y ago
> Bitcoin is a collectively enforced source of truth, like a bunch of people gathering together and engaging in this ledger protocol with pieces of paper and ink, being paid to do it. So is all money. 99% of fiat is stored in digital ledgers. Yet, as it turns out, it's not a human rights violation to place restrictions on how, and by whom those digital ledgers can be updated. Comparing I-OWE-U ledgers to religion is an absurd reduction that does a disservice to both. Freedom of religion isn't a thing because we care about letting people believe in truths, it's a thing because without it, millions of people start killing eachother.
- anonytrary 5y ago
  > Congress shall make no law ... prohibiting ... the right of the people peaceably to assemble That's from the first amendment. How is Bitcoin any different than religion in this framing? Bitcoin is functionally equivalent to a peaceful gathering where people write characters on paper in order to agree on something. > Freedom of religion isn't a thing because we care about letting people believe in truths, it's a thing because without it, millions of people start killing eachother. This is very silly. What if people start killing each other because they are sick of being financially controlled puppets? Is that the reason we should allow things?
  - CRConrad 5y ago
    Yeah, OK, you're right. Thank you for officially confessing that Bitcoin — and, by extension, all the other crypto"currency" online Ponzi schemes too — are not, in fact, currencies at all, but cults.

otoburb 5y ago

>>The usage of the word “money” in other contexts supports this plain meaning. For example, the Uniform Commercial Code defines money as “a medium of exchange currently authorized or adopted by a domestic or foreign government. The term includes a monetary unit of account established by intergovernmental organization or by agreement between two or more countries.” U.C.C. § 1-201(b)(24). To be sure, the U.C.C. does not control the use of the term “money” in § 1960. But the U.C.C.’s widespread adoption and its purpose—to “simplify, clarify, and modernize the law governing commercial transactions, U.C.C. § 1-103(a)(1)—makes it a useful barometer of the ordinary usage for a broad, non-technical term like “money.” UCC §1-103 was brought up[1] when El Salvador announced they would adopt bitcoin as legal tender[2] on September 7, 2021. The defense should perhaps remove this argument from their motion as a result. [1] https://twitter.com/CaitlinLong_/status/1401334424160047107 https://twitter.com/CaitlinLong_/status/1401334424160047107 [2] https://www.reuters.com/world/americas/el-salvador-approves-first-law-bitcoin-legal-tender-2021-06-09/ https://www.reuters.com/world/americas/el-salvador-approves-...