
Bitcoin’s not money, judge rules as she tosses money-laundering charge - ourmandave
https://www.washingtonpost.com/news/morning-mix/wp/2016/07/26/bitcoins-not-money-judge-rules-as-she-tosses-money-laundering-charge/
======
mdasen
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.

~~~
frank_jaeger
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.

~~~
icebraining
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-e...](http://www.coindesk.com/judge-orders-localbitcoins-user-to-educate-
police-on-digital-currency/)

~~~
tim333
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.

------
bko
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.

~~~
forgetsusername
> _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.

~~~
conjectures
The 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.

------
option_greek
Wow. 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.

~~~
ryandrake
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.

------
vessenes
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.

------
homero
This is great for taxes. Capital gains are much cheaper than income taxes.
Plus my bitcoin is my property which is correct.

~~~
bsbechtel
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.

~~~
jrockway
Can't the legislature just change these things? There's nothing in the
Constitution about Bitcoin.

~~~
bsbechtel
Yes, 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
you would pay income taxes and reset the basis

------
ChemicalWarfare
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.

------
Tomte
Fun 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
I 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?

~~~
bhaak
Try '"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
No, 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" :).

------
gm-conspiracy
[https://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.

------
zekevermillion
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.

------
gozur88
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.

------
gbin
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.

------
sebastianconcpt
Technically that isn't incorrect, BTCs are not money. They are currency.

~~~
sebastianconcpt
Interesting. Now I'm curious about the downvote since money and currency are
two different concepts.

~~~
JumpCrisscross
In 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
> 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
To 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.

~~~
JumpCrisscross
Nobody is arguing that gold has been a good store of value over the millenia.
What's contended is that store of value is a sole definitional requirement of
money. It is not. Houses hold their value over decently centuries, but nobody
holds houses and money as being synonymous.

A Ferrari is an incredible car, in terms of certain aspects of performance.
But a BMW owner might point out that certain vintages of Ferraris come with a
dismal maintenance record. That doesn't make it any less of a car. BMWs and
Ferraris are just optimised for different requirements.

Money is classically defined with four characteristics: a medium of exchange,
a measure of value, a standard of deferred payment and a store of value.
Depending on the economy, different blends of these characteristics may be
desired. For example, given developed capital markets and high money velocity,
medium of exchange is more important than store of value - there are other
safe things ( _e.g._ Treasuries) in which to store one's capital.

Saying a dollar isn't money because it doesn't store value as well as gold is
akin to saying Ferraris aren't cars because they cost too much to maintain.

~~~
sebastianconcpt
Properties of Currency (not money):

(-) Scarcity: finite number of the symbols (fiat currency breaks this in
batches, BTC are finite, gold can be considered ~finite until you mine it in
other planets or use a star trek replicator)

(-) Fungibility: all symbols are interchangeable, commodity like. Symbol A is
identical to symbol B, and vice versa.

(-) Divisibility: the symbols are easily divisible, so you can divide them to
smaller and smaller portions (you can't do this with houses or Ferraris)

(-) Durability: the symbols can survive the test of time and weahther and
won’t be worn out or disappear

(-) Transferability: the symbols can be easily transferred between owners
(can't do with houses or Ferrari's)

------
eximius
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.

------
jeffreyrogers
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.

------
jude-
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].

[1 shameless plug] [https://blog.blockstack.org/blockchains-for-distributed-
syst...](https://blog.blockstack.org/blockchains-for-distributed-systems-
ffd68e6341b5)

------
irln
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?

~~~
evanreichard
Click "web" right under HN's link to the article and then access it via
Google. No more pay wall.

~~~
irln
I 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
An 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.

------
bluetwo
[That Washington Post paywall is killing me]

------
hkjgkjy

      Bitcoin 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
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.

