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.
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.
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.
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.
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.
From 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.
>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.
>The buyer dropped a hint about using it for illegal purposes, but I don't see how that's any concern of the seller.
My old roommate and I used to use the Memo line on checks to imply that the money exchanged was for "sexual favors" or "drugs" or "illegal weapons" (yes, I'm aware that lots of people do this and we weren't very clever), when it was really one person paying their share of utilities to the other. As far as I know, BofA and PNC never reported us to the feds.
> The buyer dropped a hint about using it for illegal purposes, but I don't see how that's any concern of the seller
The case turned on a Florida law which defines includes in the definition of money laundering "money services businesses" that knowingly facilitate illegal activity [1].
Miami 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.
A 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.
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.
If 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.
I 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.
If 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.
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.
This isn't ruby, not everything's an object. A subject is literally the opposite.
At least a human is "unantastbar" (inviolable, literally untouchable, in the sense of objectivity not tangable) by law. We grant dead body's almost the same respect and I wouldn't contest it, although I find that dead living being is an oxymoron.
FL 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.
Didn'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.
The 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.
Ooph. 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.
Regardless 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.
I'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].
This 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?
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.
If 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.
[+] [-] mdasen|9 years ago|reply
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.
[+] [-] frank_jaeger|9 years ago|reply
[+] [-] zhte415|9 years ago|reply
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.
[+] [-] stephanheijl|9 years ago|reply
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.
[+] [-] cloudjacker|9 years ago|reply
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.
[+] [-] bko|9 years ago|reply
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|9 years ago|reply
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.
[+] [-] jaynos|9 years ago|reply
My old roommate and I used to use the Memo line on checks to imply that the money exchanged was for "sexual favors" or "drugs" or "illegal weapons" (yes, I'm aware that lots of people do this and we weren't very clever), when it was really one person paying their share of utilities to the other. As far as I know, BofA and PNC never reported us to the feds.
[+] [-] JumpCrisscross|9 years ago|reply
The case turned on a Florida law which defines includes in the definition of money laundering "money services businesses" that knowingly facilitate illegal activity [1].
[1] https://www.scribd.com/mobile/document/319270874/Order-Grant...
[+] [-] option_greek|9 years ago|reply
[+] [-] ryandrake|9 years ago|reply
[+] [-] unknown|9 years ago|reply
[deleted]
[+] [-] vessenes|9 years ago|reply
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.
[+] [-] homero|9 years ago|reply
[+] [-] mdasen|9 years ago|reply
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|9 years ago|reply
[+] [-] bsbechtel|9 years ago|reply
[+] [-] andai|9 years ago|reply
[+] [-] charlesdm|9 years ago|reply
[+] [-] ChemicalWarfare|9 years ago|reply
[+] [-] Tomte|9 years ago|reply
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.
[+] [-] posterboy|9 years ago|reply
At least a human is "unantastbar" (inviolable, literally untouchable, in the sense of objectivity not tangable) by law. We grant dead body's almost the same respect and I wouldn't contest it, although I find that dead living being is an oxymoron.
[+] [-] dmichulke|9 years ago|reply
"anklage geldwäsche leiche verstecken jura theoretisch"
didn't do the trick.
Do you have a link?
[+] [-] gm-conspiracy|9 years ago|reply
Medium of Exchange
Unit of Account
Store of Value
Standard of Deferred Payment - eh?
That can't be the deciding factor.
[+] [-] zekevermillion|9 years ago|reply
[+] [-] gozur88|9 years ago|reply
[+] [-] gbin|9 years ago|reply
[+] [-] sebastianconcpt|9 years ago|reply
[+] [-] sebastianconcpt|9 years ago|reply
[+] [-] eximius|9 years ago|reply
[+] [-] jeffreyrogers|9 years ago|reply
[+] [-] jude-|9 years ago|reply
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-syst...
[+] [-] irln|9 years ago|reply
[+] [-] evanreichard|9 years ago|reply
[+] [-] irln|9 years ago|reply
[+] [-] bluetwo|9 years ago|reply
[+] [-] hkjgkjy|9 years ago|reply
macOS:
Save that script in ~/Library/LaunchAgents/org.torproject.tor.plistDebian 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|9 years ago|reply