10 April 2014

Lawyers Want Bitcoin Money Laundering Charges Dropped on Technicality


crime


Lawyers representing two Florida men charged with bitcoin-related money laundering want to have the charges dropped on a curious technicality.


Adber Espinoza and Pascal Reid were arrested in February following an undercover sting operation. Police made the arrests after undercover officers took to LocalBitcoins.com posing as credit card fraudsters.


Officers were looking for someone to launder their cash and buy bitcoins needed to fund illegal activities, namely to buy stolen credit card data. Having allegedly agreed, Reid and Espinoza both stand accused of laundering money and running an unregistered money service.


Can’t launder without money


The Internal Revenue Service recently classified bitcoin as property rather than currency. Even before the IRS statement bitcoin was not considered money, at least not in the eyes of the law.


Lawyers representing Reid and Espinoza figured out a way of using this technicality to their advantage. The suspects pleaded not guilty and their defence is now looking to have the charges dropped, since bitcoins are not defined as money, hence money laundering legislation should not apply to them.


However, Miami-Dade County prosecutors disagree. The prosecution insists money laundering charges can stick and it believes they fit the alleged crime, Fox News reports.


Legal precedent or defence desperation?


According to IRS bitcoin guidance, issued on 25th March, digital currencies will be treated as property rather than currency. However, the IRS guidance only applies to federal taxes – bitcoin and other digital currencies are treated as property for US federal tax purposes, but general rules for property transactions still apply.


Miami-Dade State Attorney Katherine Fernandez Rundle says this is the first time any state decided to bring money laundering charges in a case involving bitcoin.


While it’s possible that defence lawyers may believe they have a trump card on their hands, it seems highly unlikely that Reid and Espinoza can beat the case on this technicality.


Earlier this month a similar case was made by Joshua Dratel, Ross Ulbricht’s defence lawyer. Ulbricht is of course facing serious charges stemming from his creation of online drugs bazaar Silk Road.


Dratel argues that at least one count of money laundering against Ulbricht should be dismissed, citing FinCEN and IRS guidance as proof of his argument. However, the case against Ulbricht to that involving Reid and Espinoza – as they allegedly accepted cash for their services, while Ulbricht allegedly dealt solely in bitcoin.


crimeFloridaIRSLocalBitcoins.commoney laundering



April 10, 2014 at 02:12PM



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