Miami Money-Laundering Case May Define Whether Bitcoin Is Really Money (ibtimes.com)

David Gilbert, reporting for IBTimes: Michell Espinoza, a 32-year-old computer programmer, was arrested for attempted money-laundering in 2014 when he sold $1,500 worth of bitcoin to undercover FBI agents who said they were going to use them to buy stolen credit cards. Now in a Florida courtroom, Espinoza and his lawyers are trying to get the charges dismissed on the grounds that bitcoin, under Florida law, should not be defined as actual money. (Editor's note: the source has annoying auto-playing videos. Alternatively you can use the link below.) This is thought to be the first case of its kind and the ruling by Miami-Dade Circuit Judge Teresa Mary Pooler will be watched with great interest not only in the U.S., but around the world. "This is the most fascinating thing I've heard in this courtroom in a long time," Pooler said on Friday. A ruling is not expected for several weeks yet.The report also cites the take of Charles Evans, Associate Professor of Finance and Economics at Barry University, who provided evidence on behalf of the defense and told the court that bitcoin, in his opinion, is not money. He said, "Basically, it's poker chips that people are willing to buy from you." Miami Herald has more details.

Comments

All money is poker chips

[ArmoredDragon]

At the end of the day, any fiat currency is only worth whatever you think it's worth. So you can really identify any money as poker chips.

Re:All money is poker chips

[Kjella]

At the end of the day, any fiat currency is only worth whatever you think it's worth.

I wish. Unfortunately my money is only worth what other people think it's worth.

Re:All money is poker chips

[Anonymous Coward]

"Fiat money is poker chips" does not make all poker chips money.

Re: All money is poker chips

[Anonymous Coward]

Re the "fiat money" argument, nothing has intrinsic value: if you were drowning, would you accept a gold bar in lieu of a life preserver? It's all relative. Money works because it works, until it doesn't.
The difference in this case is that the dollar is declared legal tender in the US, backed by law. In this country, offer something in exchange for a stated price, you must accept payment in dollars or face court action. Bitcoin has no such legal standing. It's not officially money ( yet ). A confounding aspect is whether it's illegal to give something of potential value (whatever it is) to someone else knowing it will be used for a nefarious purpose. I think that may be the underlying issue.

Re: All money is poker chips

[Great Big Bird]

As a medium of exchange, nothing has intrinsic value. It is always based on what somebody thinks it is worth.

Re:All money is poker chips

[WarJolt]

Poker chips are money. You trade poker chips for goods and services in an isolated market (the casino). Its not a fiat currency because it's backed by the USD which is a fiat currency. You are depending on the trust in the casino to preserve the value of the currency. It's money alright whether or not the government treats it the same as the USD or other foreign currencies is a different issue.

Re:All money is poker chips

[Anonymous Coward]

You think it is worth what other people worth.

It is recursive thinking it is worth what it is worth all the way down.

A good salesman could make any thing or currency worth what he thinks it it worth, within reason. Going too far would likely fall into fraud territory.

Re:All money is poker chips

[Anonymous Coward]

The point that AC is making is that you can't buy poker chips at Wal-Mart and expect to use them at the casino.

Re: All money is poker chips

[ArmoredDragon]

The difference in this case is that the dollar is declared legal tender in the US, backed by law. In this country, offer something in exchange for a stated price, you must accept payment in dollars or face court action. Bitcoin has no such legal standing. It's not officially money ( yet ).

So then how is a bitcoin different from a euro in this regard?

Re:All money is poker chips

[ArmoredDragon]

The point that AC is making is that you can't buy poker chips at Wal-Mart and expect to use them at the casino.

It's a really poor point to make then, because nobody is talking actual poker chips. Poker chips is just an analogy. If you set up a game in your house with using poker chips in lieu of money, then you declare something like this: Red chips are worth $1, white chips are worth $3, and blue chips are worth $5.

And guess what? Everybody suddenly values them at what you said they're worth, and they'll trade them as such. This is, in principle, the same thing as a fiat currency. Within the US, only the dollar is legal tender that can be used to satisfy all debts. But suppose you wanted to settle them with euro? A euro does have value somewhere, just not within the court room that you're standing in if such a matter arises. Guess what else shares something in common? Bitcoin.

Re:All money is poker chips

[ArmoredDragon]

I wish. Unfortunately my money is only worth what other people think it's worth.

Well, not exactly. That really depends if you're the buyer or the seller.

Suppose you wanted to sell a pair of shoes. How much money would you accept for them? That's what money is worth to you.

Re: All money is poker chips

[lgw]

Only in maturity. There are no Bitcoin savings accounts yet, no currency-style regulation of it, and the Bitcoin money supply is equal to the amount of Bitcoin issued.

Legally, Bitcoin is currently treated that way gold or stamps are: a collectable with a objectively measurable value (even if one that changes fairly often). Today that makes sense. But if banks stared offering Bitcoin-denominated savings accounts, that would be exactly the same as a non-EU bank offering Euro-denominated savings accounts, called euroeuros, for historical reasons. That could happen with either Bitcoins or gold, and in both cases the money supply would become much larger than the "physical" supply.

Re:All money is poker chips

[BitterOak]

At the end of the day, any fiat currency is only worth whatever you think it's worth. So you can really identify any money as poker chips.

Not true. U.S. currency, for instance, (and most legal currencies, in fact) is considered "legal tender". That means it can be used to pay your debts to the government. The government doesn't have to accept Bitcoin or anything else other than U.S. dollars when you pay your taxes.

Re: All money is poker chips

[Applehu Akbar]

There is "currency style regulation" of Bitcoin in that the supply is limited, just by mathematics instead of by a central bank. Legally I would expect that BTC has the same status as gold coins. These are nor legal tender but have at any time a current tradable value.

Re:All money is poker chips

[Hylandr]

Money is only worth what the landlord and utilities companies can accept as payment to pay their own bills with.

Re: All money is poker chips

[WarJolt]

Poker chips are backed by the USD. You can trade them back regardless of the current value of the USD for the value of the chip. Fiat currencies aren't backed by anything. Their value can change when the government wants to. Casinos need to have cash reserves to cover their chips on the floor.

Similarly a gold based currency would need to back each dollar with gold in a reserve.

The problem with a poker chip is it's backed by a fiat currency instead of a commodity like gold and money derives value from the amount of trust you have in it and it's convenience in exchanging it for goods and services.

Re: All money is poker chips

[WarJolt]

Your landlord could easily exchange gold for rent. At some point your landlord needs to pay taxes. It's really more about taxes. We all pay them. We all benefit in some way from taxes. The government uses dollars to cover it's debts. Think of a dollar like an IOU. The government collects these IOUs in taxes everytime you have economic activity and in turn the government provides an environment for you to carry out economic activity. They have to issue IOUs to provide services that create an fair environment to conduct business. For example judges, police and prison keep you from robbing a bank. Fiat currencies value is derived from the amount of trust everyone has in the system. It's a bit more complicated than how I "feel" about a currency since trust is a little bit more objective than feelings are despite feelings playing a huge roll in the value of a currency. If you do the numbers you can figure out if a currency is undervalued or overvalued.

Re: All money is poker chips

[mbkennel]

| So then how is a bitcoin different from a euro in this regard?

In practice, because there is no substantive bond or debt market in bitcoin.

Units of exchange are a 'level 1' currency, in place for thousands of years, but modern money is 'level 2'.

Re:All money is poker chips

[Anonymous Coward]

Angel'o'sphere or joe_dragon has forgotten his password.

Re:All money is poker chips

[Anonymous Coward]

The value of Money is either tied to a Commodity (Gold/Silver), or is Fiat currency with it's stability relatively guaranteed by the government

Bitcoin is neither of these, so it's value can change based on what people think it's worth (like any other commodity),
Since it has no actual intrinsic value it's current value can be anything, and can change quickly without limit,
Being decentralised and digital it is perfect for transactions, but you should never consider it an investment

Re: All money is poker chips

[Anonymous Coward]

The Euro is backed by the EU, and so it relatively stable

Bitcoin is free floating and so can be very unstable

Re: All money is poker chips

[lgw]

There is "currency style regulation" of Bitcoin in that the supply is limited, just by mathematics instead of by a central bank.

You do understand that the "money supply" is not the supply of the underlying currency (be it dollar bills, gold, or Bitcoins), right? There are no BTC-denominated savings accounts, but if there were, mathematics wouldn't limit the BTC money supply - you get that, right? And there would also be no FDIC insurance, no reserve requirements for banks, none of the other regulation protecting you. This is exactly the case when EU banks offer USD-denominated savings accounts (eurodollars), or when US banks offer euro-denominated savings accounts (euroeuros).

Re:All money is poker chips

[Anonymous Coward]

Wow, what an incredibly stupid comment! I think he was referring to the collective you not the individual you. I can't believe your rediculous semantic attack, which entirely missed the point, received a score of 5. I weep for Slashdot and cesspit of stupidity it's become.

Re: All money is poker chips

[Applehu Akbar]

Mathematics, which includes having it be exponentially more difficult to mine new money as time goes on, does limit the money supply, unless someone hacks the algorithm. You're talking about the float, which depends purely on the market.

Re: All money is poker chips

[lgw]

You're thinking of the "monetary base", which is the total of bills and coins minted, or the total BTC mined. That's largely irrelevant tot he economy, as it represents (in the US), 10%-20% of the money used in commerce.

Inflation in the US has never been caused (yet, anyway) by actually printing more dollar bills. Fixing the USD monetary base in exactly the same way the BTC monetary base is fixed would make almost no difference. The Fed would still be figuratively printing money, or contracting the money supply through high interest rates, QE could still happen, inflation would still happen, and so on. Switching to BTC, if we had all the other stuff we expect to go with it, from savings accounts to CDs to insurance, wouldn't really change any of that.

tldr: the money supply is about fractional reserve banking, not the number of dollar bills or BTC mined.

Define: Money

[devlynh]

The question is ultimately what is money? The OED defines money as "Any generally accepted medium of exchange which enables a society to trade goods without the need for barter; any objects or tokens regarded as a store of value and used as a medium of exchange." Therefore bitcoins are money. Government definitions are usually somewhat less flexible. I would expect that this might go to SCOTUS regardless of the ruling.

Re:Define: Money

[Anonymous Coward]

Therefore bitcoins are money.

One can simply apply the "duck test" and the result will likely be bitcoin is money (or a rose by another name).

But the lawyer deserves some credit by trying to get some of the charges dismissed. That is their responsibility (to be an advocate for their client).

Re:Define: Money

[mbkennel]

Sure, here is the "duck test": Bitcoin is not 'generally accepted' or generally seen as a 'store of value' outside of niche communities.

More generally, a mature currency has a debt market around it. And there are debt markets around mature currencies.

Re:Define: Money

[Hognoxious]

Bitcoin is not 'generally accepted' or generally seen as a 'store of value' outside of niche communities.
       

Neither is the Lesotho Loti or the Vanuatu vatu. Are they not currencies?

Trading goods for illegal services is OK?

[Anonymous Coward]

So if they rule bitcoin isn't a currency that means, by association, it's now legal to trade digital items for illegal goods or services?

Oh i'm going to buy so much drugs with bitcoins now.

Re:Trading goods for illegal services is OK?

[mark-t]

No... all it would mean is that trading bitcoin would not constitute money laundering any more than anything else that somebody thinks may be worth real money.

You'd still get hung up by the fact that knowingly engaging in transactions that involve illegal goods or services is still illegal. Any absence of legal consequences that you might notice would be primarily by virtue of not getting caught, not because it is actually legal.

Re:Trading goods for illegal services is OK?

[Cederic]

It's an interesting and tricky one. Ignoring whether anti money laundering laws are a good thing*, surely converting money into a non-currency form prior to exchanging it for an illegal good or service is substantively no different to exchanging the cash itself.

It seems odd that the determination of whether Bitcoin is money is even relevant.

*No, not in their current form. Why the fuck is it 'money laundering' to use cash to buy an illegal good or service? Surely that's "buying an illegal good or service". Stop adding laws that make one crime multiple crimes, it doesn't serve justice.

Re:Trading goods for illegal services is OK?

[Coren22]

That was kind of my confusion. Why is there a money laundering charge at all, to use the earlier example of poker chips, if the FBI had bought $1500 of poker chips, could they then charge the casino with money laundering? Why would it be money laundering to just be a currency exchange? Do the charges stem from them telling him what they were going to do with the bitcoin?

   

Bitcoin doesn't make sense as currency

[timrod]

Bitcoin being currency really doesn't make a whole lot of sense. The only reason Bitcoin has value to anyone is because it can be exchanged for real currency - if it were not for the exchanges, Bitcoin would be totally worthless. I really don't see how this is any different from, say, the supposed credit card thieves buying $1500 of precious metals or stocks or baseball cards from someone while making the claim that they're going to use the metals/stocks/baseball cards to purchase stolen credit cards - and I think in any of those situations, no one would make the claim that money laundering occurred because it is clear that none of those things are currency.

For Bitcoin to be a currency, it would have to be as widely accepted as cash.. and not just by a few restaurants and a plastic surgeon, as the article states.

Re:Bitcoin doesn't make sense as currency

[U2xhc2hkb3QgU3Vja3M]

By that logic, all other crypto-currencies would be worth something but most of them are, as you say, totally worthless.

At the time I'm writing this comment, one Bitcoin is worth USD$533 but one Dogecoin is only worth USD$0.00023079, i.e. practically worthless.

Re:Bitcoin doesn't make sense as currency

[Rhipf]

Paper being currency really doesn't make sense either. The only reason paper (currency) has value is because it can be exchanged for goods that people want. If it were not for this exchange paper (currency) would be totally worthless.

I would actually argue that precious metals and stocks are currency (stocks maybe not as much but definitely precious metals). The only way this isn't money laundering is that using that currency to purchase stolen goods doesn't really clean the currency (the whole point of money laundering). You are actually using clean money to purchase dirty money in this case.

Re:Bitcoin doesn't make sense as currency

[WarJolt]

What gives a crypto currency value is trust. People pay for this trust through bitcoin mining and transaction fees. The more miners the more trust you have because it takes more to manipulate the currency.

Re:Bitcoin doesn't make sense as currency

[david_thornley]

Precious metals and stocks are valuable, but they aren't currency. Currency is what I buy stuff with, and I don't shop anywhere that will take gold or silver or 3M stock as payment. I shop lots of places that take US dollars (and occasionally one that takes pounds or euros or something like that). There are places that take Bitcoin, but so far I personally haven't noticed stores setting prices in Bitcoin, as opposed to offering to sell for Bitcoin of the value of some amount of dollars or euros or whatever.

Paper money is currency because people buy things with it. The reason it has value is that it can be exchanged for things people want. This is the exact same reason gold used to be currency: few people had that much need for gold itself, but people had confidence that they could exchange it for what they really wanted. Gold and silver tended to stay in the form of coins, and nobody has much need for coins (OK, I did use a penny as an impromptu screwdriver last week) except to buy stuff with.

"Basically, it's poker chips that people are willi

[__aaclcg7560]

"Basically, it's poker chips that people are willing to buy from you."

Daddy Trump bought $3M in poker chips to bail out The Donald when a bond payment was due.

In December 1990, a lawyer for Fred Trump walked into Trump Castle in Atlantic City and, according to reports at the time, deposited a check with the casino for $3.36 million in exchange for chips. Instead of using the chips to play in the casino, the lawyer left.

The result: an interest-free loan to Trump from "Daddy-O."

The same day that Fred Trump made his chip purchase, The Donald stunned the gaming world and his creditors by making a scheduled bond payment.

https://www.buzzfeed.com/andrewkaczynski/you-can-rely-on-the-old-mans-money

may not be money but that's irrelevant

[iggymanz]

compensation for illegal activity, even if by redeemable poker chips, is still breaking the law.

Re:may not be money but that's irrelevant

[bsolar]

It's definitely relevant: his bitcoin sale might still be illegal for other reasons but this doesn't mean the money laundering charge is appropriate. If you steal an apple you are breaking the law, but this doesn't mean you should be charged with arson...

Re:may not be money but that's irrelevant

[PPH]

Espinoza is not accused of having done anything illegal other than selling the Bitcoin. He may have earned it in some perfectly legal enterprise. The only question is whether a person has a responsibility to refuse a transaction if they become aware of potential illegal activities occurring as a result. In other words, are citizens expected to play cop?

Re:may not be money but that's irrelevant

[iggymanz]

sad news for you, it's still money laundering which even includes using other things than money to disguise and/or transfer proceedings from criminal activity

could have been vouchers for free marshmallows instead of bitcoin, still money laundering

Re:may not be money but that's irrelevant

[bsolar]

Then why is the prosecutor not using that argument to support his charge? The prosecutor is countering the defense's attempt by arguing that bitcoins *are* money instead. Also, of the 2 charges the money laundering one seems to be pretty weak anyway: the other charge is "dealing in currency without a money transmitter license" and I guess it's where the legal status of bitcoins actually matters.

Re:may not be money but that's irrelevant

[Kjella]

may not be money but that's irrelevant (...) compensation for illegal activity, even if by redeemable poker chips, is still breaking the law.

If you sell guns and crossbows and you're charged with selling a crossbow in violation of gun laws it very much matters how "projectile weapon" is defined. That's for the specific money laundering charge, but he might also be in general trouble because they wanted his assistance in an illegal act which makes him an accessory before the fact. If a person told you he's going to kill his wife it doesn't matter if you sell him a gun or crossbow or knife, it's providing a murder weapon. But the gun laws can't apply unless there was a gun involved.

Re: may not be money but that's irrelevant

[Anonymous Coward]

Too bad the prosecutor insisted they are money. The Federal Government has already said they are assets and the production of Bitcoin or the change in value are taxable events. The government already says they are not currency, but that they are assets. Personally, I'd love a ruling they were currency. Germany has a more interesting take than the US. They are assets until six months after their creation, then they magically become currency. Or did as of 2014.

Re:may not be money but that's irrelevant

[Anonymous Coward]

Lawyers don't give their opponents multiple ways to attack their arguments. They take whichever argument they feel is strongest and argue only that. If that fails, then they bring up the next one. The prosecutors feel the best argument is to insist bitcoin is money, which of course it is, so they won't bother arguing the other points. If somehow the defense manages to convince the court that bitcoin isn't money, then the prosecution will switch to the argument iggymanz brought up.

Re:may not be money but that's irrelevant

[bsolar]

I read a more detailed article on the matter and the prosecutor's line of defence is definitely more about the first charge, which is "dealing in currency without a money transmitter license" and pretty clearly requires bitcoins to be considered "currency" to stand, which is a legal grey and definitely not "of course" so. The money laundering accusation is weak no matter the legal status of bitcoins but likely there to put pressure on the defence to plead guilty on charge that matters, just as the other guy involved did (and got the money laundry charge promptly dropped).

Re:may not be money but that's irrelevant

[Anonymous Coward]

Did you consider that the Prosecutor may just have no 'legal leg to stand on' with respect to the money laundering charge but is just keeping up a front so as to put pressure on the guy in regards to the other charge? Or that the Prosecutor may just be an 'idiot' in respect to Bitcoin & thus maybe doesn't recognize his argument has any merit. I mean seriously, if 'dealing in currency without a money transmitter license' is upheld here then any transaction where I sell property (say my car, house etc.) on my own could be so charged...that of course makes 0 sense. Now if I sold my car knowing it would be used in the commission of a crime and did NOT report it to the police than I see how I could be charged with conspiracy but not a money laundering charge.

Re:"Basically, it's poker chips that people are wi

[Anonymous Coward]

That is one smart family. Can't wait for President Trump to be in charge of getting this country out of debt.

I'm confused here

[rebelwarlock]

What exactly did this guy do wrong? Let's swap "bitcoin" with "money orders" just so we can sidestep that aspect of it. In what way is it his business what anyone does with the money order after he sells it?

Re:I'm confused here

[__aaclcg7560]

In what way is it his business what anyone does with the money order after he sells it?

Selling a money order to a third-party could be construed as money laundering.

Re:I'm confused here

[SNRatio]

It becomes your business when the buyers tell you they are going to use the money orders to purchase stolen credit card numbers. http://www.int-comp.org/career... By that definition, it's also irrelevant whether the exchange is of currency, products, or services.

Re:I'm confused here

[hey!]

What exactly did this guy do wrong? Let's swap "bitcoin" with "money orders" just so we can sidestep that aspect of it. In what way is it his business what anyone does with the money order after he sells it?

A couple years ago a guy tried laundering $98K in cocaine and heroin money by dividing it up into 54 money orders of roughly $1800 each -- each well under the $2000 reporting limit. The thing is that splitting up a transaction that's mandatory to report into smaller chunks doesn't magically make it OK not to report it. It's still a $98K transaction, you're just trying to hide it.

If money laundering regs could be evaded just be restructuring the transaction so it doesn't trigger any scrutiny, then they'd be pointless because that's what money laundering is.

So not only did the prosecutors get this guy on failing to report the transaction, they slapped him with conspiracy charges to boot.

Re:I'm confused here

[Anonymous Coward]

It sounds like he could be guilty of not reporting a crime (that hadn't taken place yet), but not money laundering.

Re:I'm confused here

[Anonymous Coward]

I can't believe our society is so full of spineless whores we bend over and take it up the ass like this, with a smile on our face the whole time.

What business is it of the government's getting involved in the private dealings of two private parties?

Stopping drugs? Good luck we know that this doesn't work, you have to attack the demand side through rehab, education, counseling and maybe just leaving people the hell alone if their choice ain't impacting you.

Stopping terrorists? Ain't gonna work. These aren't a bunch of dirt poor ignorant goat fuckers like you've been led to believe. They are mostly well educated young men and women, many with degrees in science or engineering including Harvard, MIT, Stanford etc. They come predominately from financial backgrounds that range the gamut from upper middle class to OMG I can't count the digits in this bank account! They aren't getting money from bitcoin, or any other crypto, they're using THE BANKS THEY OWN! Cut the entire middle east off the global banking infrastructure you still ain't gonna stop it. You want to stop terrorism, you will need to stop messing around in the affairs of middle eastern countries. When that doesn't work, each time there is a terrorist attack on sovereign soil, bomb the home countries of each of the people involved back into the stone age using real nukes and immediately drop pamphlets with some new scriptures explaining it was Allah's will that the entire country be nuked to char because they let radicals in their midst, just like he did with Sodom & Gomorrah. Prove to them that they aren't doing the will of any god and that radicalism is false and an evil that must be rooted from their midst, else the bombings will continue. Their god doesn't mind the death of a dozen innocents so long as it kills a single non-believer, why should we? Living that life is a choice, end those who make the choice and Darwinism will begin to select away from those propensities.

Re:I'm confused here

[TechyImmigrant]

It becomes your business when the buyers tell you they are going to use the money orders to purchase stolen credit card numbers.

http://www.int-comp.org/career...

By that definition, it's also irrelevant whether the exchange is of currency, products, or services.

But they were lying. They were not going to buy credit card numbers.

Re:I'm confused here

[hey!]

Well, I'm with you on legalizing drugs, but money laundering has other applications, like hiding funds from embezzlement and extortion rackets.

Re:I'm confused here

[SNRatio]

If you want to review the legal history of sting operations and what is or is not considered entrapment, google is waiting for you.

Re:I'm confused here

[TechyImmigrant]

I don't need no stinking google to express uninformed opinions on Slashdot.
 

Re:I'm confused here

[Anonymous Coward]

BUT, BUT, BUT..it was the FBI trying to 'launder the money'...e.g. using your analogy it would be the cocaine dealer trying to launder money NOT the company selling him the $1800 money orders, let's say it was Western Union. WU would have no responsibility to report the $1800 transactions it was the cocaine dealer that had the responsibility to report the $98K & doing the laundering.

Now, if the cocaine dealer told the WU counter person 'yeah, I'm just trying to exchange this money I got from selling cocaine' AND the WU counter person didn't report it, than the WU counter person COULD be charged with a crime...though I don't see how that person could be charged with money laundering as opposed to just 'conspiracy after the fact'.

Personally I don't see how this has anything to do with whether or not Bitcoin is money or not, it was the $1500 the FBI was going to pay him that is the money being laundered. But even there I don't see 'money laundering' charges here though maybe conspiracy to purchase stolen credit cards. If someone wanted to buy my car (assuming I was trying to sell it of course) and they told me they were going to use my car in exchange for stolen properly I'd 1) get rather scared 2) string them along until I had time to report them to the police 3) hope that the police arrested them & that the criminals here didn't have friends that would come after me. The problem here being that if I don't report what I know and the police find out (catch the guys in the act of exchanging the car for stolen goods) then I could be charged with conspiracy so I have an obligation to report it to avoid being charged (saying I was scared is not going to be a lot of help to me).

Re:I'm confused here

[Anonymous Coward]

FINE! Then it's 'conspiracy to commit an illegal act'...the FBI don't actually have to commit an illegal act to charge you with a crime in conspiracy to commit an illegal act.

And its only entrapment if you had no intention to commit an illegal act but they fooled/enticed you in to it. E.g. they don't tell you why they are buying the bitcoin until after you've exchanged it for the $1500 and then they blurt out 'now we can go buy those stolen credit cards' and THEN try to charge you with a crime of conspiracy. They didn't give you the chance to NOT sell them to bitcoin knowing they'd be used for an illegal act so they can't charge you with a crime for something you had no clue was going to occur.

Push comes to shove as soon as this guy was told the bitcoin were going to be used to commit an illegal act he had a responsibility to either not sell them the Bitcoin and/or immediately report them to the police. Anything else rightly opens you up to a crime.

Because

[Anonymous Coward]

Because there's nothing like being involved in illegal activities to give something an air of legitimacy.

I suppose next step is for Watson to intentionally kill someone, so a judge can convict it of murder. Then, finally AIs will start being recognized as people, and not just talking furniture.

This is so stupid.

No difference.

[kbg]

There is no difference between poker chips and "real" money. The real question here is that if he had offered poker chips instead, would it still be a crime?

Re:No difference.

[JcMorin]

Agree, the funny part about Bitcoin is that they change the definition of it when they can to their own profit. Sometimes it's a currency, other a commodity or just a payment channel... http://www.bloomberg.com/news/...

Re:No difference.

[_Sharp'r_]

Exactly. The headline:
Miami Money-Laundering Case May Define Whether Bitcoin Is Really Money
should be:
Miami Money-Laundering Case May Define Whether Bitcoin Is Legally Money (for the purposes of money laundering statutes)

Last I checked, the courts don't determine reality by judicial fiat....

Re:No difference.

[JustAnotherOldGuy]

There is no difference between poker chips and "real" money. The real question here is that if he had offered poker chips instead, would it still be a crime?

That's a good question....I think they'd treat it as a crime since poker chips can be exchanged 1-for-1 with dollars. It's a gray area, but I would expect the government to treat it as any kind of exchangeable property with a known value.

If he had offered stamps instead of bitcoin, for example, they'd probably consider it to be a crime, just with a different form of exchange. It's not exactly the same, but it's similar. I suppose he could have offered chickens or candy bars and they'd still class it as a criminal transaction.

Re:No difference.

[Anonymous Coward]

There is no they.
Bitcoin is something new, it doesn't fit with anything that has existed previously.

It's nothing more and nothing less, than a cryptographically secure, consensus driven, timestamped ledger. The authority to write into this ledger is given through a chain of custody that is verified all the way back to the very first first transaction. The fact that people treat this authority to write the ledger as money does not make it money, until enough people treat it as money that it does in fact become money. In the meantime the closest thing you have is individualized, collectible trading cards.

Re:No difference.

[nedlohs]

Anyone who isn't retarded already knows that court cases decide legal issues not philosophical/physical/mathematical issues and thus your extra verbiage is unnecessary (anyone who know what "laundering statutes" means already knows that courts do).

Tough sell by the prosecutors

[DatbeDank]

The IRS already defines Bitcoin as "property" and not currency.They seem to have tied an arm behind themselves. From this nifty press release: https://www.irs.gov/uac/newsro...

I give it another year or so before gold, silver, and "bitcoin" have a special designation that closes this loophole.

Re:Tough sell by the prosecutors

[Agripa]

The DoJ argued that Obamacare was a tax and not a tax as circumstances required. Contradictions in court are no impediment.

hmm

[sociocapitalist]

""This is the most fascinating thing I've heard in this courtroom in a long time," Pooler said on Friday.

This just clicked with me in the way that judges are portrayed in The Good Wife.

Are judges really as bored, biased and even sometimes childish as so portrayed?

Re:"Basically, it's poker chips that people are wi

[sociocapitalist]

Daddy Trump bought $3M in poker chips to bail out The Donald when a bond payment was due.

After reading this, I actually went looking to see what he got arrested for...

Going to get a coffee now.

Re:"Basically, it's poker chips that people are wi

[Anonymous Coward]

Am I supposed to be angry? Sad? Happy?

Guy's dad gives guy a loan when he hits hard times. Film at 11, asshole.

Re:"Basically, it's poker chips that people are wi

[__aaclcg7560]

Can't wait for President Trump to be in charge of getting this country out of debt.

Trump's tax plan would add at least $10T to the debt on top of the $10T expected under existing law. We could go from $19T under Obama to $39T under Trump. As Vice President Dick Cheney once said, "Deficits don't matter."

While his plan limits certain tax preferences and deductions, it does not include any reductions in federal spending. As a result, the Trump plan increases the federal deficit over the next decade by $10 trillion or $12 trillion, according to several estimates that do not include macroeconomic changes in GDP, investment and employment. Of course, these so-called "static" estimates do not reflect the potential tax revenue from the economic growth resulting from lower tax rates. However, even under "dynamic" scoring, which takes into account a broad range of macroeconomic effects of tax proposals, his tax cuts would still expand the federal deficit over the next decade by $10 trillion â" on top of the $10 trillion increase in the federal deficit already projected under current law.

http://fortune.com/2016/03/08/donald-trumps-tax-plan-primary/

Re:"Basically, it's poker chips that people are wi

[__aaclcg7560]

Guy's dad gives guy a loan when he hits hard times.

If that was the case, why didn't Daddy Trump hand The Donald a cashier check for $3M? Why risk going to jail for money laundering?

Form and substance.

[westlake]

It doesn't matter what tokens you are carrying --- poker chips, playing cards, a pocketful of dice ---- once it becomes obvious that money is being moved along with them.

That's too low!

[Okian Warrior]

Trump's tax plan would add at least $10T to the debt on top of the $10T expected under existing law. We could go from $19T under Obama to $39T under Trump. As Vice President Dick Cheney once said, "Deficits don't matter."

Those are the old estimates!

We won't be going $10 trillion into debt, most analysts are now predicting at least $40 trillion, and that figure could top $90 trillion before his term is through!

A Trump presidency would be unimaginably bad for the country, and plummet the world into catastrophe of biblical proportions! Not fall, mind you, plummet!!!

The country is at stake; nay, even the entire world! We have to stop him at any cost!

Screw what his supporters think, ignore democratic voting, the time for civil action is over.

We have to stop Trump by any means possible!!! By any means!!!!

(And if you can't get enough people to listen to you, add more rhetoric!)

Re:That's too low!

[ColdWetDog]

All well and good. It's about time for all those dystopian science fiction novels we've all read to pan out.

Oh. Wait.

Re:"Basically, it's poker chips that people are wi

[__aaclcg7560]

After reading this, I actually went looking to see what he got arrested for...

Daddy Trump got arrested after a 1927 KKK riot in Queens.

On Memorial Day 1927, brawls erupted in New York led by sympathizers of the Italian fascist movement and the Ku Klux Klan. In the fascist brawl, which took place in the Bronx, two Italian men were killed by anti-fascists. In Queens, 1,000 white-robed Klansmen marched through the Jamaica neighborhood, eventually spurring an all-out brawl in which seven men were arrested.

One of those arrested was Fred Trump of 175-24 Devonshire Rd. in Jamaica.

https://www.washingtonpost.com/news/the-fix/wp/2016/02/28/in-1927-donald-trumps-father-was-arrested-after-a-klan-riot-in-queens/

Re:"Basically, it's poker chips that people are wi

[ColdWetDog]

You have absolutely no sense of style.

Or plausible deniability for that matter.

If not money bit coins still have value

[Maxo-Texas]

Would trading a car, or laundry soap* for stolen credit cards still be some kind of crime?

*There was a time a few years ago when the large orange container liquid laundry soap was being used as currency by drug dealers.

Re:"Basically, it's poker chips that people are wi

[__aaclcg7560]

You have absolutely no sense of style.

I would rather be correct than clever in the eye of the law.

Or plausible deniability for that matter.

You don't need plausible deniability if you maintain accurate records in your business.

So wait....

[JustAnotherOldGuy]

So either bitcoin IS money and should be treated as such, or it ISN'T money and should be viewed with a very, very skeptical eye.

Which is it?

If it is, expect the Feds to jump on it with both feet and screw with people for using it, and if it's not, expect some new laws redefining it as "currency" with all the attendant legal repercussions.

Re:So wait....

[Anonymous Coward]

Which is it?

You're trying to seek truth in a place none exists. In a courthouse, the truth is whatever the government feels to be most expedient at the given second. It's why Clinton can request the judge to declare that sexual relations is strictly penis-in-vagina so he can claim he did not have any without "lying". It's why smoking a plant you found growing in your backyard is "interstate trade". It's why a 16 year old kid can be tried as an adult for transmission of child porn for sending his girlfriend a dick pic.

Or to put it another way: Courthouses are places for the finding of facts, not the finding of truth.

Charged with believing a story

[swm]

I have a real problem with this case.

Suppose it was an undercover drug deal. The cops sell him X grams of cocaine in exchange for $1500 in bitcoins. Then they charge him with buying drugs. When it comes to trial, he pleads that he didn't know they were cops; he never would have bought the drugs if he knew they were cops. Does this matter? Not at all. Buying drugs is illegal. It doesn't matter who he bought them from, or whether he knew they were cops.

Now suppose his attorney say OK, let's see the drugs. And the cops dutifully produce a bag of white powder, and they send it out to be tested, and the test shows that it is 100% primo Dominos 10X confectioner's sugar. And his lawyer says, "Hey! He's charged with buying drugs; where are the drugs?" And the cops say, "Oh, you know, it's such a hassle checking out drugs from the evidence locker; all this paper work; all these forms; god help you if it comes back a gram light... We just went down to store and bought some powdered sugar. But it doesn't matter: we told him it was drugs; he obviously thought it was drugs or he wouldn't have paid $1500 for it." Does this matter? Absolutely. It doesn't matter what he thought: he did not do the illegal thing that he is charged with: he did not buy drugs. He walks.

Now look at this case. The cops paid him $1500 cash for bitcoins. They told him they were going to buy stolen credit cards with the bitcoins. Now maybe, if they had actually bought stolen credit cards with the bitcoins, they could have charged him with being some kind of accessory to that crime. But they didn't. There was no crime. There were never any credit cards. There wasn't even a bag of white powder. All they've got is a story. A story that he believed. Or not. Maybe he didn't know whether it was true. Maybe he didn't care. Sure, sure, you guys want to be leet haxorz buying credit cards? You got $1500 cash you can be James Bond, you can be Tony Stark, whatever.

I do not understand how this guy gets charged in connection with a crime that did not occur.

Re:Charged with believing a story

[fred911]

"Now look at this case. The cops paid him $1500 cash for bitcoins."

  Yes, this story or case stinks. Did the cops offer way over the current market pricing? Why didn't they just buy the coins from Coinbase or any of the other spot based services? Where's "the rest of the story"?

Re:Charged with believing a story

[Anonymous Coward]

I agree in theory. But what happens when during a sting investigation, you say hire at hit-man for $50,000 and get arrested. Well the hit-man was an undercover cop and never actually killed anybody. So no crime was committed, you walk free? The cops do this all day long, its called entrapment and apparently is perfectly legal. I think the bigger issue is the guy was no more then a bank teller, or a sales man. He sole some of his assets, or transacted some cash. Who the fuck cares what the other party was going to do with the cash, its not like he himself sold them stolen credit cards or even gave them a loan to buy the cards. Say I work at Gamestop and somebody sells me a game and whispers they are going to use the cash to buy stolen credit cards, what the fuck do I care. Is it even in my rights to not buy the game?

Re:Charged with believing a story

[jezwel]

The summary does not provide enough details, though as you say, why would he care what they are going to do with the bitcoins? Unlike your hitman analogy, he did not provide goods for a solicted - and illegal - service, he provided an IMO a perfectly legal service of converting between bitcoins and cash. There must be more to the story as I cannot see anyone being convicted for doing that.

Re:Charged with believing a story

[bws111]

Eh, no. The crime that did not occur was buying stolen credit cards. He is not charged with that crime. The crime he is charged with is money laundering, which is trying to hide transactions. If the money laundering law is written such that engaging in any transaction when you have reason to believe the purpose of the transaction is to hide illegal activity, then he has done that.

Similarly, for your 'drug buy', the actual law will not be merely 'buying or selling drugs'. The law will be something like engaging in a transaction with the INTENT to buy or sell drugs. How is the intent demonstated? By handing over money for what you THINK are drugs, regardless of whether or not they are actually drugs.

Re:Charged with believing a story

[david_thornley]

Entrapment is when the police suggest committing a crime, or push someone towards doing it. If a LEO tries to argue you into hiring a hitman, that's entrapment and grounds for acquittal if you can prove it. If a LEO shows up when you're trying to hire a hitman, and offers his or her services, that's a sting operation, and perfectly legal. The legal question is whether you were intending to commit the crime anyway.

Re:"Basically, it's poker chips that people are wi

[Anonymous Coward]

You're an idiot.

Re:"Basically, it's poker chips that people are wi

[__aaclcg7560]

You're an idiot.

No, I'm an asshole. I wouldn't be working in IT if I wasn't. Not sure what my work experience has to do with The Donald's tax policy blowing a hole in the federal budget.

Re: "Basically, it's poker chips that people are w

[dfenstrate]

If you weren't an asshole, you also wouldn't be dragging your personal politics into this discussion.
But as long as you're here, shouldn't you also be utterly ashamed of our current political class, whose incompetence and malfeasance have made Trump look like a credible choice?

It's simply stupidity

[Anonymous Coward]

It's a stupid trap. If you offer bitcoins or anything else, and anybody mentions illegal shit in your vicinity, take your wares and bugger off. No sale for you. Either it's real crims being incredibly stupid, or it's feds fishing with a stupid-on-its-face trap.

Because if you sell bitcoin and the customers are (undercover feds) that loudly declare "WE WILL DO ILLEGAL SHIT WITH THIS DONCHAKNOW", and you don't break off the transaction, you end up in court. Amazingly, this tends to stick in USoA kangaroo kourts, like how they "got" that weapons trader: The (undercover feds) loudly asked "CAN WE KILL 'MERKINS WITH THIS?" and he said yes, yes you can, and so he was guiltee. Because 'merkins are speshul like that.

Try that in a supermarket. Is the cashier now liable for the (made up crimes) the purchaser was proclaiming they'll surely commit?

So what do you do if you end up in USoA kangaroo kourt? Why, argue the thing being sold wasn't money, so it wasn't money laundering. That is even worse stupidity: It's playing their game for them.

Re:It's simply stupidity

[Cederic]

In the UK if you tell the bank cashier that you're planning to break the law with the funds you're withdrawing, they're breaking the law if they don't report it.

Usually the bank has a named MLRO (money laundering reporting officer) that the report will go to, that will then inform the relevant authorities.

It's the law. Whether you think it's a good one or not, people get imprisoned for breaking it.

It wasn't the bitcoin getting laundered.

[jeffb (2.718)]

Surely it was the 1500 US dollars that was getting laundered, right?

I can't see how this defense wasn't laughed out of court. If he'd been taking illegal proceeds, buying real estate with it, and then selling the real estate, could he have defended himself on the grounds that "real estate isn't money"? Of course not. What am I missing?

Re:It wasn't the bitcoin getting laundered.

[mmortal03]

What illegal proceeds was he taking by selling them his bitcoins for their dollars? Their dollars were illegal proceeds? No, this wasn't a case of individuals with past illegal proceeds trying to cover this up by selling their dollars for bitcoins. IANAL, but money laundering generally refers to the process of making illegally obtained money look as if it was obtained legally. This isn't that. This transaction may well have involved legally earned dollars and legally earned bitcoins, unless proven otherwise.

Was he convicted?

[Okian Warrior]

Daddy Trump got arrested after a 1927 KKK riot in Queens.

Really? One of Trump's ancestors got arrested 90 years ago? For brawling?

You know what's glaringly obvious? That you're not reporting that he was convicted.

What else you got?

Re:Was he convicted?

[__aaclcg7560]

That you're not reporting that he was convicted.

You need to learn how to read. The previous poster asked what Daddy Trump got arrested for. I provided a link to an article.

What else you got?

You don't know how to Google? I'm not your personal research assistant.

Re: "Basically, it's poker chips that people are w

[__aaclcg7560]

If you weren't an asshole, you also wouldn't be dragging your personal politics into this discussion.

Where did I drag personal politics into this discussion? TFA was about bitcoins, money laundering and poker chips. I linked to an article that was about money, money and laundering and poker chips. Strong historical similarities between the two cases — except Daddy Trump was never charged for committing a crime.

But as long as you're here, shouldn't you also be utterly ashamed of our current political class, whose incompetence and malfeasance have made Trump look like a credible choice?

Now that you want to bring personal politics into this discussion, I'll follow your lead. I'm so ashamed of the Republican Party that I registered as a Democrat last year. At least Hillary has a proven track record as First Lady, Senator, and Secretary of State. Trump has nothing but his ego and bluster.

How is this a crime?

[Anonymous Coward]

I don't see any laundering even if Bitcoin is money. No representation that the money exchanged was obtained illegally has been made. No representation that this transaction was to make illegally obtained money appear to be legally obtained has been made. This is just where one party said they might do something that may be illegal with the purchased item. If I give some 5 year old girls money for lemonade after they said they were to use the proceeds to buy a computer so they could hack into their Kindergarten system to change grades, have I money laundered? Bizarre.

Re: "Basically, it's poker chips that people are

[Anonymous Coward]

Creimer is not kidding about being an ass. He admits to being a troll in his post history. Claims to be #350 or so despite hitting gym and only eating 1500 calories, all kinds of antagonism.

Re:"Basically, it's poker chips that people are wi

[Anonymous Coward]

but mexico will pay for it!

Re: "Basically, it's poker chips that people are

[__aaclcg7560]

Creimer is not kidding about being an ass.

That's asshole, not ass. Big difference.

He admits to being a troll in his post history.

I admitted that I love trolling the trolls. After all, Slashdot exists to keep me amuse at work while I wait for a script to run.

Claims to be #350 or so despite hitting gym and only eating 1500 calories, all kinds of antagonism.

Here's my picture at 350 pounds. Enjoy yourself!

http://www.cdreimer.com/images/cdreimer_350.jpg

Plus there's an entrapment question

[Beryllium Sphere(tm)]

If it's the FBI who suggested the crime, if they only knew Reid and Espinoza as Bitcoin traders with no known criminal activities, then like you I've got a real problem with this case.

Re:Plus there's an entrapment question

[Anonymous Coward]

Only if the defendants were unlikely to have engaged in the exchange with someone else if the FBI did not suggest it.

FBI Doing the Money Laundering, Not Him

[FrodoOfTheShire]

The only thing the programmer did is perform a currency exchange. Hardly illegal, banks perform it all the time.

If I go to a bank and change 1000.00 dollars Canadian to US currency and I tell the bank teller I'm going to buy stolen credit cards, then is the bank money laundering? No. The bank customer is obviously.

Same for this guy, the FBI is exchanging their money for bit coins, and they are saying they will use the bit coins for an illegal purpose. From my point of view the currency exchange performed by the programmer is not illegal, what the FBI plans to do with the Bit Coins is.

I don't understand how he can be charged for an illegal act that the FBI said they were going to commit.

So what if it's not money

[Anonymous Coward]

It would have been just as illegal to use $1500 worth of gold.

Sounds like a risky defense

[Anonymous Coward]

If that's all they have to go on. And a pretty awful weak case fro the prosecution as well. I guess, we got morons on both sides of the tables, should be interesting.
If I have bitcoin I dug up myself or bought on one of the exchanges, what does it matter what teh other parties to teh transaction said they were using it for.
A: Hey give me 5000 pesos for these here 100 dollars, I'm going to buy cocaine to shoot up my ass with those pesos.
B:Whatever. I'm only giving you these here pesos, and what you do with them is none of my business, moron asshole.

Re:"Basically, it's poker chips that people are wi

[Anonymous Coward]

Yup.

Next time the US decides to default on the loans (which wont take long with the Donald at the reins), there will be Chinese and Europeans arriving here to break our collective legs.

Re: "Basically, it's poker chips that people are

[Anonymous Coward]

So you've sucked your stomach in which has pushed your moobs out to your arms and neck rolls all the way up into your multiple chins, for what? So that it doesn't look like you have a gut?

Besides, that photo doesn't refute your ridiculous claim that you haven't gone under 350lb even though you consume 1500 calories a day.

Bitcoin are poker chips

[Anonymous Coward]

That statement (poker chips) is more true than they probably realised. Look at how bitcoins are earned. You take all transactions for the last ten minutes, add the roll of a dice and publish the combined hash. If your hash is lower than everybody elses then you get some bitcoins.

So isn't that illegal gambling and not money laundering?
*hide*

Re: "Basically, it's poker chips that people are

[__aaclcg7560]

Besides, that photo doesn't refute your ridiculous claim that you haven't gone under 350lb even though you consume 1500 calories a day.

What I refuted was the impression that I was tub of lard or a butterball. I got muscle mass from working out at the gym for a decade. I'm starting my third month on my 1,500-calorie diet. It would be foolish to expect instant miracles.

Re: "Basically, it's poker chips that people are

[rpstrong]

Besides, that photo doesn't refute your ridiculous claim that you haven't gone under 350lb even though you consume 1500 calories a day.

I don't think that word means what you think that it means . . .

Re:"Basically, it's poker chips that people are wi

[Anonymous Coward]

Do you mean .... like Obama actually did? Too dumb to know that Obama is not even done with his 2nd term and he already added $10T to the debt, and slated to actually add $3T more by the time he is done. He actually added more debt than ALL the presidents before him COMBINED.

Love how ignorant political fanatics are. Throwing random numbers that actually match the damage that the leaders they follow actually did ... in real life and not in theory.

Re: "Basically, it's poker chips that people are w

[dfenstrate]

Now that you want to bring personal politics into this discussion, I'll follow your lead. I'm so ashamed of the Republican Party that I registered as a Democrat last year. At least Hillary has a proven track record as First Lady, Senator, and Secretary of State. Trump has nothing but his ego and bluster.

How much does Hillary pay her trolls these days?

Re: "Basically, it's poker chips that people are w

[__aaclcg7560]

How much does Hillary pay her trolls these days?

Minimum wage. Does Trump pay better?

Re: "Basically, it's poker chips that people are w

[Coren22]

Proven track record of committing felonies you mean. She'll make a great president, right after she pardons herself.