
Miami money-laundering case may define whether Bitcoin is really money - jackgavigan
http://www.miamiherald.com/news/local/crime/article80421072.html
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Animats
This was settled back in 2013. Here's the judicial decision, from the Trendon
Shavers case. Shavers was running a Ponzi scheme ("Make 1% a week")
denominated in Bitcoin. The judge ruled that, no matter what thing of value
your Ponzi scheme uses, it's still a Ponzi scheme and illegal.

The SEC and the CFTC have agreed that Bitcoin will be treated as a commodity
for regulatory purposes, so the CFTC regulates it.

[1]
[https://ia800904.us.archive.org/35/items/gov.uscourts.txed.1...](https://ia800904.us.archive.org/35/items/gov.uscourts.txed.146063/gov.uscourts.txed.146063.23.0.pdf)

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notpirateat40
Point of order on the "1% a week":

Initially launched as btclending.com it was 1%/day, invite/referral only and
payouts were every 3 days. Effectively it was 7%/week, compound into something
like 3300% APR.

That being said as the website ui and backend transitioned from btclending.com
to "First Pirate Savings & Trust" and ultimately btcst.com (Bitcoin Savings &
Trust) more people started "getting in on the action" rules were changed,
payouts went to once per week, blah blah... obviously a ponzi doesn't scale
well. In the end minimum balances were required to stay in the "7%/week
bracket" where balances <1000BTC were only earning 5.5%/week.

If anyone that sets off your ponzi red flag detectors - well done.

I can say that there were a handful of early GPU miners with truckloads of sub
5 dollar bitcoins and no where to invest them. GPU Miners who built mining
rigs that literally ROI'd in days or weeks, not months. Did some people get
burned? Obviously. Did others milk free interest? Most likely.

Where I think Trendon and many others have ultimately failed - and this
especially goes for Espinoza and his failed "bitcoin isn't money" argument -
NOT PRACTICING KYC.

There's a lot of smart people out there that know to walk from the transaction
when the counterparty mentions tor/fraud/crime/buying stolen credit cards.
Espinoza obviously didn't think facilitating the purchase of stolen credit
cards was a problem (or didn't care)

I'm not sure this specific article mentions it or not but the agents doing the
undercover buy from localbitcoins told the seller Espinoza it was for fake
credit cards. Huge Red flag for the bitcoin seller.

In general though, I would agree with OP that bitcoin is some type of money
already defined by precedent and Espinoza is getting reamed for no MSB license
and not practicing KYC.

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scott00
This is an interesting article (about an interesting case) but the title is
rubbish. There isn't really a single answer to the question "Is bitcoin
money?" It depends on the context. Different laws dealing with money
transmission, foreign currency exchange, and the like define things
differently.

For the case that is the subject of the article, the relevant question is "Is
someone who exchanges bitcoins for US dollars a 'money services business' as
defined by chapter 560 of the Florida statutes?"

Read a few definitions from the statute and you'll likely be able to answer
the question:
[http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Displ...](http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0500-0599/0560/Sections/0560.103.html)

Based on my (non-lawyerly) reading, I would say bitcoin is not a currency, and
thus a bitcoin dealer is not a foreign currency dealer, but it is almost
certainly a "payment instrument" which means selling bitcoins makes you a
seller of payment instruments, and a seller of payment instruments is a "money
services business".

Interestingly, you get different results depending on what laws you're looking
at. For instance I reach the opposite conclusion when reading the Illinois
statutes, and think you can probably sell bitcoins there legally.
([http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=1201&](http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=1201&))
Though this guy sold them even though the undercover cops told him they were
going to use it to buy stolen credit card numbers. That's just dumb, and I
would guess prosecutors can find something to charge you with if you do that
in almost any state. (And it's definitely a violation of US Federal anti-money
laundering law if you don't file a SAR)

~~~
jcslzr
no the answer is really simple. bitcoin is like the dollar a currency. Why?
because it does not have intrinsic value. The only money there is. Its gold
and silver. check mike malhoney videos in yt

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grondilu
Fun fact : there was a "The Good Wife" episode years ago in which this is
issue was basically discussed in court. There the judge ruled bitcoin as a
currency after about thirty seconds.

[https://www.youtube.com/watch?v=KCJpJgyxKEg](https://www.youtube.com/watch?v=KCJpJgyxKEg)

~~~
goodcanadian
I'll admit to not reading the article, but I would not be surprised if a real
judge ruled that way almost as fast. It seems to me that it doesn't matter
what it is (pieces of paper, bits of metal, whatever); the important point is
what it is used for. I suspect that cigarettes or bottles of laundry detergent
would also be considered currency in a money laundering case if that is the
purpose that they served.

