Florida Arrests High-Dollar Bitcoin Exchangers For Money Laundering

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."

Comments

sounds like they have a case

[NynexNinja]

If someone comes up to your business and says "hey i'm going to use this for illegal purposes", and then you agree to accept the money, you're in violation of several laws. RICO is one, and so is money laundering in some cases. His biggest mistake was at the point when they said what they were going to use the money for, in this case to buy stolen credit cards online, he accepted the deal and continued working with them. He should have said that he doesn't do anything illegal and not dealt with the potential customer at that point. That would have shielded him from liability.

Re:sounds like they have a case

[purpledinoz]

His biggest mistake was not being politically connected, like HSBC, where they have laundered money for drug dealers and terrorists. They just got a slap on the wrist with a fine. There are two classes of people in America, those who are politically connected, and are immune to jail time, and the rest of America, who are bound to infinite arbitrary laws which are selectively enforced.

Re:sounds like they have a case

[ATMAvatar]

It's less about being politically correct than it is about the amount that was laundered. If there were six more zeroes at the end of the sum, the guy would have gotten off with a warning.

Re:Why do they always make grand inaccurate claims

[Attila Dimedici]

It depends on how law enforcement first came into contact with those that were arrested. The article is somewhat ambiguous about how these guys came to the attention of law enforcement. It does appear that the only real crime these guys committed was being "unlawful money transmitters", which seems like a crime that should not exist to me. When the undercover agent told them that they wanted the bitcoins in order to do something illegal, they should have told them, "Sorry, I will not do business with you." Not because I think that they should legally have to care, but because people who genuinely want bitcoins to do something illegal are not likely to tell you that. This suggests that the person who is telling you his reasons is something other than someone who wants to conduct a transaction. It also seems likely that the reason they presented that they wanted to use the bitcoins for something illegal was because they doubted a jury would have convicted the men on the "unlawful money transmitters" charge.

Ultimately, I do not know if this was entrapment by the legal definition, but it does seem like a waste of law enforcement resources.

Can a bitcoin advocate explain....

[mark-t]

... 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.

Re:Can a bitcoin advocate explain....

[QuasiSteve]

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.

Fuck beta

[Indigo]

The new Slashdot design is based on Windows 8. That fact alone, even aside from the numerous usability issues, indicates that the new owners have no fucking idea in the world what they've acquired.

Slashdot is a technology site, a geek site, an open source site, a programming site, an Internet / Web advocacy site. But more than that, it is a Linux community site. It lives and dies by its community. That community, by and large, is made up of passionate Linux advocates who can be whipped into a frenzy at the mention of Microsoft, who think Bill Gates is the Great Satan, who sincerely believe in free and open source software, and who implement that passion in their lives, hobbies, and jobs. Sure, not everyone here fits the mold. But that's the core of the community.

As one single data point, I work on simulators in the aerospace segment. We develop and integrate specialized, whole-system, software-only simulators, supporting software development when the hardware has limited availability or hasn't been built yet. Our user community is not large, but includes key technical people at well known organizations. Like others we interface with, our work has gone from Windows and Linux in the beginning, to mostly Linux, plus Windows if we have to. That's how we like it. Linux works for us - it's developer friendly, it's rock solid, it's quite deployable, and it lets us do what we need to do. And a bunch of us come to Slashdot to catch the news on Linux and other geek-worthy subjects, and discuss it with others.

And now the owners, having acquired this rather unique and valuable site, want to make it into Windows fucking 8 - the friendly, cuddly, but unusable Fisher-Price operating system that represents everything we despise? The mind reels. You might as well just make it a SEO parking page for Microsoft.

Seriously, DICE, do not do this thing. I know you don't care about the history, community, or shared values of this site, but this move will destroy them, and take the site with it. It will become a ghost town, abandoned by its residents, only visited by tourists and people that got lost on their way somewhere else.