Slashdot Mirror

← Back to Stories (view on slashdot.org)

Florida Arrests High-Dollar Bitcoin Exchangers For Money Laundering

Posted by timothy on from the if-we're-not-peeking-you're-not-allowed dept.

tsu doh nimh writes "State authorities in Florida on Thursday announced criminal charges targeting three men who allegedly ran illegal businesses moving large amounts of cash in and out of the Bitcoin virtual currency. Experts say this is likely the first case in which Bitcoin vendors have been prosecuted under state anti-money laundering laws, and that prosecutions like these could shut down one of the last remaining avenues for purchasing Bitcoins anonymously."

2 of 149 comments (clear)

  1. Can a bitcoin advocate explain.... by mark-t · · Score: 5, Interesting

    ... why, if news stories are any indication, there seems to be such a high percentage of money laundering activity or the like compared to what happens with other forms of currency?

    This is a sincere question... not a challenge to the usefulness or benefits of bitcoin, but just a question that, if bitcoin is to really have any kind of future, I think that people who *are* law abiding and might want to use it someday really need to understand.

    --
    File under 'M' for 'Manic ranting'
    1. Re:Can a bitcoin advocate explain.... by QuasiSteve · · Score: 4, Interesting

      I'm not a Bitcoin advocate.. At least, not of the currency - the technology is marvelous, however. Nevertheless, here's a shot at answering your question...

      I think one of the issues here is that it concerns a very specific type of money laundering - if it can even be called that.

      Basically the seller is acting as a money services business, without being licensed to do. As such, they do not formally have AML (anti-money laundering) and KYC (know-your-customer) compliance anywhere on their radar. That, in turn, can lead to the actual money laundering allegation.

      I say allegation, because there's no 'money laundering' going on when you decide to sell your PS3 for $100 to buy some BTC with that somebody just mined on their rig. Nowhere in that entire exchange chain would there be an illicit aspect.

      That explains one aspect of why 'money laundering' seems to pop up relatively often.

      Another aspect is that you, me, and everybody can fairly easily buy, and sell, Bitcoin to whoever we want. If you want to buy Euros, you'll have to go to an exchange bureau. If you want to sell them again, you'll have to go to an exchange bureau. Those are, of course, licensed money services, but there's also far fewer of them - generally only at major international ports (be that airport or seaport and maybe the odd exchange bureau at border towns).
      Loosely tied into this is the fact that in the U.S. you really don't have much use for alternative currencies. Sure, you can buy some Canadian dollars or some Pesetas. But why would you, unless you were to go to those countries? You can't exactly spend it at a website. With Bitcoin, you can. So there's far fewer such exchanges occurring 'in the wild' to begin with.

      And, lastly (well there's a few more, but I see these as the major ones) - well, let's face it.. Bitcoin em used for quite a few illicit purposes. Be that the well-known Silk Road aspect, or people in other criminal circuits trying to look clean, or even just people who want to hide some of their money from the IRS.

      Oh, and also, it's actually a fair bit easier to identify the parties in these cases. If you're a major Bitcoin exchange, you undoubtedly have a business address or have some other way to be found. If you're a user of localbitcoins.com then you can simply be invited for an exchange and could be arrested on the spot. Finding out money laundering operations, locations, etc. in the traditional movie-/TV-show-popularized sense is, quite frankly, a lot harder.