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Judge Shoots Down "Bitcoin Isn't Money" Argument In Silk Road Trial
An anonymous reader writes in with the latest in the case against the alleged creator of the Silk Road, Ross Ulbricht. The government and legal community may still be arguing over whether bitcoin can be defined as "money." But the judge presiding over the landmark Silk Road drug case has declared that it's at least close enough to get you locked up for money laundering. In a ruling released Wednesday, Judge Katherine Forrest denied a motion by Ross Ulbricht, the 30-year-old alleged creator of the Silk Road billion-dollar online drug bazaar, to dismiss all criminal charges against him. Those charges include narcotics trafficking conspiracy, money laundering, and hacking conspiracy charges, as well as a "continuing criminal enterprise" charge that's better known as the "kingpin" statute used to prosecute criminal gang and cartel leaders.
Really. One would have to be extremely dense, or have lived in a cave for the last 30 years to not make the connection that Bitcoin is still a financial tool. Bitcoin's primary purpose is to traffic/launder money and goods. But it's not just bitcoin, it's also all those various game time cards you can buy at 7-11.
The judge dismisses the 'bitcoin is not money' portion based of a ruling that the IRS and Fed Reserve do not have the authority to define what 'money' is. (both having defined bitcoin as 'property' and not 'money') Which is all fine and good, but the US Marshal has already ruled bitcoin as property since they disposed of the seized bitcoin through a property sale. There are very particular and different rules governing the disposal of money and property. One would think the US Marshals office actions would be the statute defining action.
a "continuing criminal enterprise" charge that's better known as the "kingpin" statute used to prosecute criminal gang and cartel leaders.
Given the billion's of $US that various banks have been fined recently, for things like evading US taxes and money laundering for Syria, Iraq, and Somalia, isn't it about time that the legal system give the same treatment to bankers committing these crimes?
Why do they get to pay fines that don't have any real effect? Just look how their stock always go up after they announce a deal. If any individual ever gets fired it's always the low level person who takes the hit, and they all end up going to work for someone else and never face any real problems.
Oh, I just remembered: bribes/campaign contributions along with the revolving door and juicy high paying jobs for former regulators. To bad drug dealers can't have a revolving door with law enforcement.
Why is Snark Required?
So Russians money is not money? No other country has money because congress is the only people that can make money? Of course the contitution does NOT say that only congress has that ability, just that they are able to coin money.
Article 1, section 8 ....
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; ....
Now if you can tell me where in that line it says that ONLY congress is able to make money I will bow down to your constitutional knowledge.
When you cant win, ad hominem.
Bitcoin's primary purpose is to traffic/launder money and goods.
I was going to say something about people who are financial tools themselves...
However, I guess you're right. I want to be responsible for my money, and I want to be able to use it freely, without government snooping. If that makes me a money launderer, so be it. It's like those politically organized pirates that simply want to use a free Internet, rather than rape and pillage.
Bitcoin isn't even particularly anonymous. If you want to launder your coins, you need to trust a third party, which kind of ruins the point of a decentralized/free currency. There are much better cryptocurrencies out there for anonymous purposes.
Escher was the first MC and Giger invented the HR department.
It's called the Dormant Minting Clause. But you probably haven't heard of it...
Since we are supposed to report the value of barter transactions to the IRS at tax time, I don't think one (in the US, anyway) can ever argue in court that something used as a proxy for value cannot be treated as "money".
Method of processing duck feet
The Constitution does not say this. It states that the Federal Goverment can issue and regulate money but not that it has a moneopoly. In fact, for the majority of US history private money was very common. i.e. Bank notes issued by private banks. It was not until the Civil War that goverment money was common and IIRC not until the early 1900 when private bank notes becaome uncommon.
What makes someone a money launderer is how they employ tricks to eliminate any trace between the money exchanged in an illegal transaction and how it is being officially accounted for.
In very much the same way as a specific brand of laundry detergent is used as a currency in illegal transactions.
In the case of encryption key schemes such as bitcoin, the thing that gave it traction was how the silk road functioned through a wink and a nod, with peers agreeing that to conduct their illegal business they first exchanged their money for crypto keys, conducted the business by giving the crypto keys in exchange for illegal goods and services, and then exchanged the crypto keys for real money. The only purpose behind this scheme was to eliminate the paper trail between the money and the illegal transaction.
That's what makes it a money laundering scheme. Because its primary use is to launder money.
It's awkward to transfer electronically.
Because it does not exists... There is a Dormant Commerce Clause, but no Minting Clause..
When you cant win, ad hominem.
Seriously is it that hard to keep the utter bullshit out of the summary. The ruling made no such suggestion that bitcoin was money or close enough. She ruled you can convert bitcoin to money, the same way you can convert a bag of cow shit. In other words she ruled that bartering goods doesn't get around money laundering rules as the goods have value.
Money is anything that can be used to store or trade value. Anything *can* be money, but that doesn't mean it is.
If people are buying bitcoin, then trading it for goods, services, or other forms of money, then, de-facto, it's money.
My Other Computer Is A Data General Nova III.
But he's not charged with money laundering. He's charged with conspiracy to launder money. If dirty money comes in and clean money comes out then money laundering has occurred, whether or not some of the intermediate steps involved the exchange of non-monetary assets. So "I was only involved in transactions involving the exchange of non-monetary assets" is irrelevant: what matters is a) whether they were part of a larger chain of transactions to launder money; b) whether he was aware of that larger chain.
Its not *money*, its just simple bartering. in this case for objects that people agree on is valuable ( like pez dispensers, game tokens, or Gold Pressed Latinum...
...or little rectangles of paper with intricate designs in green ink printed all over them...
systemd is Roko's Basilisk.
Of course, if you take cash from some people and then give it to other people, well then you must be a criminal.
If you know where you stand as middle man in a criminal transaction - such as a money laundering scheme - you most certainly are a criminal yourself.
Except the IRS has declared that bitcoin is property, not currency.
Q-1: How is virtual currency treated for federal tax purposes?
A-1: For federal tax purposes, virtual currency is treated as property. General tax
principles applicable to property transactions apply to transactions using virtual
currency.
and
http://www.irs.gov/uac/Newsroo...
The money laundering statute applies to the below:
(4) the term âoefinancial transactionâ means
(A) a transaction which in any way or degree affects interstate or foreign commerce involving
(i) the movement of funds by wire or other means or
(ii) one or more monetary instruments, or
(iii) the transfer of title to any real property, vehicle, vessel, or aircraft, or
(B) a transaction involving the use of a financial institution...
http://www.law.cornell.edu/usc...
Note that "real property," is real estate, not any personal property whatsoever, and the term "monetary instrument" is likewise defined by the FDIC:
Monetary instruments.
(1) Monetary instruments include:
(i) Currency;
(ii) Traveler's checks in any form;
(iii) All negotiable instruments (including personal checks, business checks, official bank checks, cashier's checks, third-party checks, promissory notes (as that term is defined in the Uniform Commercial Code), and money orders) that are either in bearer form, endorsed without restriction, made out to a fictitious payee (for the purposes of Sec. 1010.340), or otherwise in such form that title thereto passes upon delivery;
(iv) Incomplete instruments (including personal checks, business checks, official bank checks, cashier's checks, third-party checks, promissory notes (as that term is defined in the Uniform Commercial Code), and money orders) signed but with the payee's name omitted; and
(v) Securities or stock in bearer form or otherwise in such form that title thereto passes upon delivery.
http://www.fdic.gov/regulation...
So yes, there are very different regulations depending on whether bitcoin is or is not currency. Absent legislation specifically addressing "virtual currency," the courts will have to hash out this disagreement, which is what will happen here, I'm sure, but I think it's regrettable that someone can be punished for law that isn't yet decided. If I drive 55, should I be punished for skirting speeding laws? Are racetracks circumventing legislation against street racing? The problem with calling this money laundering isn't that this guy is punished (if he's guilty of running the Silk Road); it's that it opens up a whole other class of individuals for prosecution just because they were using bitcoin to conduct transactions -- namely everyone who conducts transactions in bitcoin.
https://www.eff.org/https-everywhere
Fortunately we have laws that define those pieces of paper as legal tender, which differentiates them from little bits of hash solutions and things that people define in internet forums.
https://www.eff.org/https-everywhere
That is not how money laundering looks like. Here is what Money Laundering Looks like
Illegal gained money is given to a Legitmate enterprise (Gambling) and is returned as "profit" or whatever from the enterprise. In a very simple case, mob money is put into a slot machine, and 98% of it is returned when the jackpot is hit. The gains, now washed (legitimate) are taxed and are clean for use elsewhere (deposit into a bank). Where if you just stuck the gains in the bank would trigger all sorts of investigations. This is part of the reason why deposits of $10,000 or more in banks are automatically reported to treasury, for an audit of the money trail.
The trick in money laundering is to hide the input (initial gains being laundered) well enough that it doesn't trigger the reporting requirement of transactions of 10K or more. A series of 5000 "high risk" transactions where you lose most of the time, but win big occasionally, is typically how money is laundered. The inputs are not traceable, and the earnings become legitimate.
The goal is always to hide the initial input, obfuscate the long trail of transactions and end up with legitimate money on the back end. The transaction you describe is used to obfuscate the buyer and seller from each other, and the authorities, not the transaction. Money laundering still has to occur with the seller, as the bitcoin to currency exchange still has dirty money written all over it.
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
Butcoin was supposed to be money, but so far it's far to volatile to be used as a unit of account in any serious sense.
Using it as a a unit of account is a regulatory definition, not an economic one. Money is still money even if there is no concept of "Bookkeeping."
Volatility doesn't enter in to the equation, during the Weimar republic the Mark was still the currency of Germany, even though hyperinflation made it essentially worthless. Just because it isn't a good store of value doesn't mean it isn't a store of value. What matters is it's ultimate utility to the users.
My Other Computer Is A Data General Nova III.
"Money's" history has largely been one of property. It was gold, it was silver, it was in general immutable, you could warp it, stamp it, it was inherently worth whatever it was. The mark of the coin, provided sovereign trust that the "money" was the quantity and purity that you would expect.
This moved largely to a representation of something of value. Which would work so long as the banker or sovereign would create the right quantity of representation. This resulted in bubbles and bank runs when it wasn't done right. But it was essentiality tied to this immutable stuff. A gold standard. This has historically always failed...
Today money is the creation of debt. The commodity becomes the work that is created in society, and that debt is paid in money. Which then is used to create economy. This separates money from property, and it becomes more responsible for simply economy, the swirl of debt. The big key is that bankers and politicians are kept separate. The bankers attempt to keep it right as that is where the long term value is for them, and if they get it wrong, if it falls apart, the bankers have essentially nothing, and nothing is happening. The politicians through the power of central power get to impose a very special attribute to money. It can, and has to be accepted, for all debts public and private. This is a very important distinction that separates modern money from property based money. The value store in property based money is intrinsic. The value store in modern money becomes a balance of supply to work or debt. One of the big problems of this is when pooling becomes supra-economic and becomes a source of political power. This was severely limited before, it was extremely difficult for an individual to become this rich. It is much easier in this system. As it happens the economically powerful persuade for themselves to pool more of the wealth so that they have more power. Interestingly enough, this helps prevent inflation, and maybe actually keep the economy running, but it skews political power. This was supposed to be solved by confiscatory means of the government which then simply destroys the money as a fulfillment of self debt. But, this is precisely what the eco-political class works to overcome.
Bitcoin, is more akin to commodity. It has no special governmental blessing, protection, or edict. It can't be forced to be used for paying of debt. However, the value of it isn't intrinsic, for it isn't a thing. It is attributes of a thing. It is a tulip bulb. This allows for specialized movement and tracking, but it really isn't money. However, if wealth is created in the process, then it looks like money for a wealth tracking agency of a government, and it looks like wealth when converted back into money, no matter how many steps. If the process of conversion from money, into assets or economy, and then back into money for the purpose of obscuring the source and path of the original money, THAT is money laundering. And if the scheme tends to have that as an inherent purpose, the scheme itself can be declared illegal. This has happened a lot with insurance, banking, strip clubs, car washes. You see a ton of it sensationalized in the Sopranos. A very important place where this has been enforced, but received a lot of different views, though clear in the charging and investigation papers, was online poker. The money laundering claim doesn't require bit coin to be money. And if the entire scheme seems to be largely leverageable for laundering, and little other purpose it can be shut down for that reason. If the scheme is largely used to defraud regular unsuspecting public in can be shut down, not just for theft, but the scheme itself. Barry Madoff, Fulltilt, AB/UB are current examples. Bitcoin and crypto currency of sorts may very well find that same fate.
In very much the same way as a specific brand of laundry detergent is used as a currency in illegal transactions.
Except that doesn't happen. A 100 ounce bottle of Tide weighs about 7 lbs and sells for $10. Your friendly neighborhood drug dealer would need a fucking U-Haul to carry away the detergent equivalent of one afternoon's sales.
It's a dumb urban legend that isn't even remotely plausible.
When get get cash from an ATM, the bank associates your name with the unique ID on every bill.
No, they don't. Not even the $100 bills. My mother ran a credit union for over a decade, if the gov't tried to foist that kind of overhead on the country's credit unions you would have heard the banshee wails all the way to McMurdo Station. Whether Chase, BoA or one of the other major money laundries does for some bizarre reason it's voluntary, not a requirement.
"Think about how stupid the average person is. Now, realise that half of them are dumber than that." - George Carlin