Defense Motion: Bitcoin is not “money” within the meaning of 18 U.S..C. § 1960 [pdf]
storage.courtlistener.com
storage.courtlistener.com
Here's a particularly egregious example: https://old.reddit.com/r/grandrapids/comments/lvqr6k/geek_gr...
So even from the outside and without knowing the details, it looks pretty bad. Pretty bad as in cult guru bad. When you read the article, actual sex trafficking is mentioned where people give ""consent"" based on being poor and being offered a roof on their heads in exchange for sexual favors, which is arguably also not good consent.
To be clear, i'm not against sex work. One makes a living the way they wish, and many people i know (including myself) would rather sell sexual favors than work for Mac Donald's or an evil tech startup/multinational. However, being pro sex-workers means considering the level of personal autonomy sex workers enjoy. When you materially depend on a single "client" who recruited you for your "weakness" (lack of economic privilege) and is actually your pimp, we may consider basic concepts of sex-work consent are being neglected.
[edit] It feels like Scrodinger's asset class. It's a commodity when it's being attacked for being a security. It's a currency when it's attacked for being a commodity. At the end of the day I don't care, if it's good at being laundered then you can call it whatever you want, AML/KYC is going to have to apply.
[edit] Further, entrapment is a specific legal construct wherein the government tricks you into committing a crime. If the government comes up and says "hello, do you want to do a crime?" and you say "damn right I do" that's not entrapment, that's just crime.
https://www.law.cornell.edu/wex/entrapment
I'm no lawyer, but I'm having trouble from a reading comprehension point of view seeing how this wasn't a to the textbook definition of entrapment.
> The key aspect of entrapment is this: Government agents do not entrap defendants simply by offering them an opportunity to commit a crime. Judges expect people to resist any ordinary temptation to violate the law. An entrapment defense arises when government agents resort to repugnant behavior such as the use of threats, harassment, fraud, or even flattery to induce defendants to commit crimes. [1]
[1] https://www.nolo.com/legal-encyclopedia/entrapment-basics-33...
Edit: Also, Inducement: a motive or consideration that leads one to action or to additional or more effective actions
In this case, a "simulated drug transactions" proceeds was presented by the Government, thereby bringing all the factors into place for a crime that wouldn't have happened except for the Government having facilitated it.
A LICENSED financial institution has the additional burden of being bound by BSA/KYC/AML/registering with FINRA/FINcen. They were not that.
You can expect people to shy away from doing anything illegal, yet we have a special caste of people that are hyper specialized in making the determination whether something is conclusively illegal or not. I find this legal axiom to be I'll informed by common sense and life experience, but that's just me.
> In this case, a "simulated drug transactions" proceeds was presented by the Government, thereby bringing all the factors into place for a crime that wouldn't have happened except for the Government having facilitated it.
The idea is that the government didn't force you to engage in this activity, you chose to - they merely provided a venue. Therefore you would have chosen to engage in the same way had the government not been that one that afforded you the opportunity. It was your propensity to criminality.
Similarly, if the government hands me a gun and asks if I want to shoot someone, then I do, I'm very much still guilty of murder. It's no different in these cases just because the action was more 'white collar.'
I would encourage you to check out the comic @papercrane linked: https://lawcomic.net/guide/?p=633
I'm not a lawyer and I am 100% confident this is not entrapment.
> ... yet we have a special caste of people that are hyper specialized in making the determination whether something is conclusively illegal or not.
Indeed which is why if I ever start a money services business, I'll be hiring an attorney.
A legal system that allows common words to take on a contrary character from what the populace understands/speaks is fundamentally daft, and part of the reason all laws should have sunset dates and need to be replaced regularly by legislative dicta.
To not do so essentially creates the necessary preconditions for jargonic engineering.
This comic by a lawyer is a good primer on the subject https://lawcomic.net/guide/?p=633
That kind of reasoning is seen in crypto forums, but it hasn't gone very far in court.
Imagine someone tells you "I am a drug dealer, I have bottle caps I got for selling drugs and would like to launder them through you. Could you help me?"
And you respond "Sure."
And she comes back saying "it's me again, the drug dealer. Here are my bottle caps. That I got for selling drugs. I need to launder them. Because I got them from selling drugs. Because I'm a drug dealer." [1]. And you give them money for their bottle caps.
What do you think will happen? Do you think "but your honor, bottle caps aren't money" will help?
[1] Inspired by https://www.bloomberg.com/news/newsletters/2021-06-21/money-...
So then
A) All the fanbois should stop calling these scams cryptocurrencies; and
B) Bit"coin" should change its name to something that doesn't sound like it's money.
this is part of the FUD campaign against Bitcoin. If they committed other crimes, etc, sure charge them if you have proof. If not this is literally a waste of taxpayers money.
Yes you can buy lumber (e.g.) but for it be really useful, you're going to need to convert that back to cash, and the only real way to store large amounts of money safely is in the banking system. Some people may speak bitcoin, but everyone speaks US greenbacks.
KYC is about companies depositing large sums of money from questionable sources. You start depositing 10M a week without any reported business income, and you're going to set off red flags.
Pretty sure everyone in the Cannabis Space would disagree with that.
I'd pretty much guarantee if they could, they'd rather have their money in a bank somewhere, rather than holding onto it in cash or
> Real estate has long been a preferred vehicle for money laundering. All too often, the proceeds of crime and corruption is used to purchase homes. Once the real estate is re-sold, the capital involved becomes legally acquired. The trick is to mask where the money comes from: Criminal networks do this by setting up anonymous companies to hide their connection to the purchase of the property. This briefing reveals the scope and seriousness of this problem and makes recommendations for what must be done to fix it.
---
[0]: https://www.globalwitness.org/en/campaigns/corruption-and-mo...
And if you tell your realtor that you're using drug money to finance your downpayment, and they let you go through with the transaction, they are going to be sharing your cell when the law catches up to you.
If they facilitate the transaction unknowingly, they are in the clear. Unfortunately for the defendant in this case, they were knowingly engaged in money laundering.
It has to be a fungible store of value, that can reasonably convertible into cash.
> Do stores need to not sell anything to someone they know does illegal things because they could sell those things on as a form of money laundering?
If a store is selling something that itself can be effectively resold, yes. Gift cards, for instance. Loaves of bread, not so much. Real estate, yes. Automobiles, yes. A cellphone, not so much. A cargo-container full of cellphones? Maybe.
> The implications seems pretty broad for all sorts of businesses if they sell anything to a criminal.
No, the implications are not broad if you sell to a criminal.
They are broad if you sell to a known-to-you criminal. This is not a strict liability offense.
This isn't that complicated a concept. If a killer hires an Uber to drive him to the scene of the crime, the driver isn't an accomplice. If that same killer hires an Uber, and tells the driver why he's taking the trip, he is. If I ask to crash on your couch, while I'm running from the law, you aren't aiding a fugitive. If I tell you that I need a place to hide from the cops until things blow over, you are.
Don't knowingly[1] help people commit crimes, and you'll have a lot fewer legal problems in your life.
Yeah, there was this guy who did a lot of deals with more or less shady Russians, for properties in Florida and flats in this eponymous Tower he has in New York city and so on...
15,16,17 - are the counts that deal with selling the BTC to the undercover cop who said they sold cocaine.
https://www.courtlistener.com/docket/59692375/1/united-state...
Whenever someone tells you about All the Crime They Are Doing, I think you should assume that you are dealing with an actual cop, stop doing business with them, and cut off all contact.
[1] https://www.wired.com/2013/03/alfred-anaya/ [2] https://www.washingtonpost.com/local/indiana-man-accused-of-...
like back in USSR - honest people can't possess such money.
For example, before Covid I did at lot of Couch Surfing and related stuff. [1] One of my hosts illegally sold MJ for extra cash. He was very careful how he communicated with his supplier and not to flaunt this income. But he basically told me all these things on the first day I met him.
[1]https://www.rollingstone.com/culture/culture-features/jeffre...
The ones that get caught do.
So what? Just cut out the "assume that you are dealing with an actual cop" bit. What you're saying is no argument against the GP's
> Whenever someone tells you about All the Crime They Are Doing, I think you should [...] stop doing business with them, and cut off all contact.
Unless you're saying one's goal should just be to avoid sting operations, but not to avoid abetting or participating in actual crimes?
Somewhat related: https://georgetownlawtechreview.org/the-bona-fide-acquisitio...
He still needs to sell those candybars to get clean money. Using illicitly obtained money to buy something that can then be resold for clean money is a very common money laundering technique. But it's the person buying and reselling assets who is committing the crime, not the entity initially selling goods. Otherwise Walmart would be the biggest "money launderer" in the country.
The "selling bitcoin is not transmitting money" seems more likely to me, at least as long as the sums are small. If they're selling more than $10k worth of bitcoin then it sounds like they're engaging in banking, if not money transmitting.
But if they're selling a lot of bitcoins, they know perfectly well that it's a mechanism for moving money around. The fact that they don't know the destination doesn't make it not money laundering. If people are bringing large sums of money to some dipsticks rather than buying it on the open market, they're almost certainly trying to avoid visibility.
Also, effective money laundering OFTEN involves the facilitators NOT knowing the nodes in the graph; that's what makes it effective in the first place.
According to the statute in question (and also the Uniform Commercial Code), it is.
The statute reads, in part,
"Money,” in its common use, is some kind of financial instrument or medium of exchange that is assessed value, made uniform, regulated, and protected by sovereign power."
... the Uniform Commercial Code defines money as “a medium of exchange *currently authorized or adopted by a domestic or foreign government...”
https://davidgerard.co.uk/blockchain/2021/07/11/el-salvador-...
Each dollar bill or Euro or Yuan, etc, has a serial number. That means you can lay claim to an exact bill, just like with Bitcoin. But we call money fungible because we don't actually care which dollar bill it is we are holding. They are all the same from a value standpoint.
[1] http://www.bairdfinancialadvisor.com/brennanjandricgroup/med...
> OCCASIONAL SALES—A sale by (and purchase from) a person who is not engaged in a business requiring a seller’s permit is exempt from sales and use taxes. These types of sales are “occasional” sales (some states have similar exemptions for “casual” sales). Generally, a person who makes three or more sales for substantial amounts in any period of 12 months is required to hold a seller’s permit. A person who makes a substantial number of sales for relatively small amounts is also required to hold a seller’s permit. (The 12 month test period can be the 12 months before the sale in question, the 12 months after the sale in question, or any other 12 month period in which the sale occurs.) A person holding two garage sales with no other sales in any 12 month period in which the garage sales are held are regarded as making exempt occasional sales. A business that is not required to hold a seller’s permit would be making an occasional sale when making a single sale of its assets upon termination of its business. Such persons should be aware that making two or three sales in anticipation of final liquidation will generally result in all the sales being subject to sales tax.
Hmm? AFAIK there's no such thing as a particular bitcoin it's all just totals in the ledger that is the blockchain.
"Money" means a medium of exchange currently authorized or adopted by a domestic or foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more countries.
This motion to dismiss is going to be pretty hard for him to defend.
Seems that post is actually saying the opposite
UCC §1-103 was brought up[1] when El Salvador announced they would adopt bitcoin as legal tender[2] on September 7, 2021. The defense should perhaps remove this argument from their motion as a result.
[1] https://twitter.com/CaitlinLong_/status/1401334424160047107
[2] https://www.reuters.com/world/americas/el-salvador-approves-...
So is all money. 99% of fiat is stored in digital ledgers.
Yet, as it turns out, it's not a human rights violation to place restrictions on how, and by whom those digital ledgers can be updated.
Comparing I-OWE-U ledgers to religion is an absurd reduction that does a disservice to both. Freedom of religion isn't a thing because we care about letting people believe in truths, it's a thing because without it, millions of people start killing eachother.
That's from the first amendment. How is Bitcoin any different than religion in this framing? Bitcoin is functionally equivalent to a peaceful gathering where people write characters on paper in order to agree on something.
> Freedom of religion isn't a thing because we care about letting people believe in truths, it's a thing because without it, millions of people start killing eachother.
This is very silly. What if people start killing each other because they are sick of being financially controlled puppets? Is that the reason we should allow things?
Thank you for officially confessing that Bitcoin — and, by extension, all the other crypto"currency" online Ponzi schemes too — are not, in fact, currencies at all, but cults.
So, Bitcoin is a fancy way of exchanging USD, similar to trading cars, or pogs. If the transaction involves some kind of an official title transfer, then we're going to pay taxes in USD...not a fraction of a pog.
So far Bitcoin is a currency in El Salvador. That means, you can presumably do commerce and pay taxes in Bitcoin over there. But, I highly doubt anyone selling goods and services for Bitcoin wants to then pay their taxes in said Bitcoin because of the expectation that it will be worth much more in the future.
It does make sense from that perspective but the idea that it is going to rule the world is absurd.
I'm not sure what your point is.
It’s one thing to accuse someone of attempted murder when they actually tried killing someone, it’s another thing to accuse someone of attempted murder for suspecting them about thinking about killing someone.
Thinking isn't a crime. Doing is.
Weren't they operating a money transmitting business without being properly licensed before the FBI got involved?
> The Government sent an undercover officer to visit The Geek Group and purchase bitcoin and, while doing so, mention that he sold cocaine.
which was a bald-faced lie.
entrapment is a thing.
What he did was show they were happy to deal with a supposed criminal, even knowing the money had come from his crimes.
I guess money was the goal and he was willing to compromise himself in its pursuit.
Besides, many other juridsictions would not consider this entrapment either.
Trading with someone who previously sold plants or compounds to a third party is not per se a moral or ethical quandary, despite apparent laws to the contrary.
If that were the worst thing this person did, I suspect he'd have far more support.
I am skeptical of the other whispers of unsavory behavior; they remind me of the whisper smears against Ross Ulbricht. Let's see how the thing develops.
Cocaine is dangerous?
How so?
Cliffs and electrical outlets are also dangerous. Are they illegal?
Cocaine: all you have to do is not consume it.
No need to involve govts in that whole business.
https://old.reddit.com/r/grandrapids/comments/lvqr6k/geek_gr...
Furthermore,
> Stated simply, “[o]rdinary people in everyday life know this [i.e., that bitcoin is not money] intuitively; the average person who hears the term ‘money’ will think of government-issued ‘dollars’ or instruments, like checks, money orders, credit cards, or notes, directly connected to dollars.”
This is making pretty unsubstantiated claims about "ordinary people", who are using apps like Venmo and "Cash" (Square Cash) more and more. Thinking of a cryptocurrency as a form of money seems perfectly understandable, even if false.
See "Application of FinCEN's Regulations to Persons Administering, Exchanging, or Using Virtual Currencies"[1]
A user who obtains convertible virtual currency and uses it to purchase real or virtual goods or services is not an MSB under FinCEN's regulations. Such activity, in and of itself, does not fit within the definition of "money transmission services" and therefore is not subject to FinCEN's registration, reporting, and recordkeeping regulations for MSBs.
So, if you are selling things for Bitcoin, that doesn't make you a money transmitter.
An administrator or exchanger that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN's regulations, unless a limitation to or exemption from the definition applies to the person.
The definition of a money transmitter does not differentiate between real currencies and convertible virtual currencies. Accepting and transmitting anything of value that substitutes for currency makes a person a money transmitter under the regulations implementing the BSA.
But if you swap Bitcoin for USD as a business, in either direction, you're a money transmitter.
Separate from this, there's a threshold of US$1000/day, below which you don't have to register as a money transmitter.
[1] https://www.fincen.gov/resources/statutes-regulations/guidan...