made by the defense, but let it be noted that petty things such as legality have never stood in the way of governmental criminal trials before...
An attorney for Ross Ulbricht, the man accused of masterminding the online drugs marketplace Silk Road, has asked that the money-laundering charges against his client be dropped on the basis that Bitcoin, Silk Road's preferred medium of exchange, doesn't count as money. Ulbricht was arrested in San Francisco in October after a …
made by the defense, but let it be noted that petty things such as legality have never stood in the way of governmental criminal trials before...
OK. So it's not legal tender. It is property. That property, (it my be claimed), are the proceeds of crime.
Yes but there is no property laundering laws and as such the money laundering charges have to be dropped.
As for the proceeds of crime, running a website isn't a crime just because said users used it for crime otherwise Google would be in trouble.
The law isn't about right or wrong, justice or injustice. It's always about the letter of the law. There are going to be some serious precedents set no matter who wins this.
>The law isn't about right or wrong, justice or injustice
No its about who has the most money. Innocent until proven broke. Which the government seems to have a done a good job on him already. Bet that is one reason the lawyer wants the bitcoins returned.
"Yes but there is no property laundering laws . . ."
There should be. For example: Thou shalt wash thine socks.
>there is no property laundering laws
Use drug money to buy property and see what happens when the feds knock on your door.
"Use drug money to buy property and see what happens when the feds knock on your door."
That's not PROPERTY laundering, that's MONEY laundering.
Actually not, and that the defense has moved so rapidly from "my client did not break the law" to "the law under which my client is charged does not apply" is pretty indicative of strong evidence against him.
The government may need to prove a larger operation for the money laundering, but since the bitcoin are exchanged for cash, it's still a money laundering operation. Just because he only had the subcontract for exchanging property doesn't invalidate the operational basis.
In that particular case, I think they skip knocking.
"The government may need to prove a larger operation for the money laundering, but since the bitcoin are exchanged for cash, it's still a money laundering operation. Just because he only had the subcontract for exchanging property doesn't invalidate the operational basis."
Ah but your argument falls flat as the bitcoins hadn't been exchanged to cash. They were still bitcoins.
Rob was paid in bitcoins (which are property) and he left them as bitcoins (still property). You can't argue it was money laundering because at no stage while in Robs possession was it turned from or to an actual currency.
You can argue proceeds of crime but you can't argue money laundering without money. The government needs to declare bitcoins a legal currency or they need to drop the money laundering charges.
At the end of the day, the law is an ass.....
What Rob was or was not paid in is irrelevant.
All that's relevant is that BitCoin are readily convertible to and from cash, which at least until the fall of the two biggest exchanges, they were.
So are baseball cards but last time I checked, they're not a currency either.
I think people are confused because bitcoins have the word coin in the name. The law states that it's property and until they law says that bitcoins are money, you can't get charges with money laundering (at least until you exchange them for money)
He is going away for decades and it will have nothing to do with bitcoins. They are going to nail his ass on conspiracy to commit murder (6 counts even) which is a fairly sound legal concept at this point. At best he is just eliminating some concurrent sentencing.
I'm not sure at exactly what point RICO kicks in. They may need both sets to really start the property seizures.
Given that Bitcoins are untraceable by design, what is the point of laundering them?
You got that bit wrong. Bitcoin is most certainly traceable. Much more so than cash. It is however possible to make it very difficult.
@Richard Pennington - "Given that Bitcoins are untraceable by design, what is the point of laundering them?"
The Bitcoins *ARE* the laundering.
That is not a given, it's not even true.
Bitcoins are completely traceable, by design. Bitcoins work by having a public ledger of every transaction which are then verified by other machines. Every transfer between wallets is a matter of public record.
All you have to do tie the wallet to a real person.
> Bitcoins are completely traceable, by design.
No, no, no. "A transaction was made by anonymous party X to anonymous party Y" is not traceability.
"No, no, no. "A transaction was made by anonymous party X to anonymous party Y" is not traceability."
Right. That's only metadata, and of no value whatsoever.
What's the betting the feds will come up with a defence along the lines of "Well, we didn't want that many BitCoins cluttering up the place and putting temptation in our underpaid operatives' way, and there was this nice chap in Japan running a sort of secure online locker who had a storage special on that week, so we thought, you know, why not let his MtGox thingie look after it for us until after the trial, and......."
I know *I* would.
If you actually have to exchange "money" for money laundering. If you could exchange gold, diamonds, Ferraris, or something else that's not legal tender in the US and avoid money laundering charges, you'd think no one would ever be guilty of it.
After all, the end goal of money laundering is to take something of value received for illegal transactions that may link you to those transactions and replace them with something of value that won't link you to those transactions. All that is required is that you can exchange that "something of value" for something else you want. Sure, untraceable bales of $100 bills is best, but ownership certificates for a warehouse full of copper ingots in New Jersey or Beijing will serve the same purpose, as you'd be able to borrow money against it and use that money to buy Ferraris, beach houses and hookers, which are all a drug lord really wants in the end.
Not sure I get what you mean, Doug. The point of money laundering is that it starts with cash, is cycled through a bunch of businesses but possibly also assets including as you mention gold, diamonds, cars etc and then bck into 'clean' money. This is already prosecutable as money-laundering.
I think the point the defense attorney is making is that the defendent was paid directly in bitcoins (not cash) and never converted teh bitcoins into anything else, so it can't have been laundered. In the same way that if a drug dealer exchanges a tonne of drugs for a Gold-plated Ferrari with diamond-encrusted steering wheel, and keeps the Ferrari, then you can accuse them of drug-dealing but not of money-laundering.
It's a sound argument and (caveat of not knowing full details of the case), I would agree with the defence on this point. Of course as other posters have pointed out, there's plenty else he's indicted for and quite possibly guilty of.
"and use that money to buy Ferraris, beach houses and hookers, which are all a drug lord really wants in the end"
Isn't that what we all just want?
The lawyer is trying to confuse the issue.
The whole idea of money laundering is to take money or other financial instruments, shovel them through some path that anonymises the value and "clean" money cones out the other side.
The bitcoin does not have to be a currency to achieve this. The money laundering process begins when the bitcoin was bought (or money changed hands for the goods that were then traded for bitcoin).
Money laundering can happen with or without the bitcoin being considered currency.
Was he laundering money himself.
Or was he providing a website service, which could be used by other people. If they sold narcotics or laundered money through it, then the charge should be on them, not on him as the host.
I think they could charge him with some form of aiding and abetting.the laundering operation.
If payment in bitcoin is accepted by him (i.e. some arbitrary real or virtual item of no intrinsic value is nonetheless accepted by mutual agreement to represent some value), but he then does not count bitcoins as money (which can be defined as some arbitrary real or virtual item of no intrinsic value which is nonetheless accepted by mutual agreement to represent some value)
Legal wrangling about words without looking at their meaning. Par for the course in court, I suppose
"Ladies and gentlemen of the supposed jury...."
Or should that be "the alleged jury"
Only so long as he wasn't spear recruiting them to his website. Given what we know publicly about Dread Pirate Roberts communications, it wasn't incidental. Since the claim of the prosecution is that they can tie him to the alias, the charge stands.
"The bitcoin does not have to be a currency to achieve this. The money laundering process begins when the bitcoin was bought (or money changed hands for the goods that were then traded for bitcoin)."
That's true except Rob didn't change the format. He was paid in property (bitcoins) and left it as property (bitcoins). It's not until Rob changes it to actual cash that they can claim it. Considered the police seized bitcoins instead of cash, their argument falls flat.
Just image Rob was paid for with an expensive painting and hung the painting on his wall. You can claim laundering if he sold said painting for cash but you can't for him keeping it instead.
You can only do it if you declare paintings as a form of currency (and not property) or make a property laundering law.....
Asking to dimiss charges for illegally selling drugs is pretty funny. I wonder if this moron has heard the expression "a snowball chance in Hell"?
So what you're saying is that Ulbricht himself sold drugs to people?
I would like to see proof or any indications for that, please.
I'm not sure I get this... he denies any involvement, yet his lawyer wants the seized Bitcoins returned to him? I think $83 Million worth indicates some kind of involvement even as a customer which he denies.
Yes lawyers have it both ways. It is perfectly reasonable for a lawyer to put forward the following defence.
He didn't do it.
If he did do it in this case it wasn't illegal.
If it was illegal then the circumstances around the act mean that he should get the minimum sentence.
Note that the last defence assumes guilt, but the prosecution can not use that to get past the first defence.
So having some bitcoins is proof of illegal activity now? No wonder Satoshi Nakamoto doesn't want to be identified.
No, you missed the point. He denies having any "involvement" but I'd say being a customer of any company is being "involved". The more you spend as a customer, the more involved your are. And let's be real... $83 MILLION dollars worth of "property" stashed in an exchange is "involvement". It may not be illegal, but if you put that kind of change into something, a bank, a financial institution, you are involved even if it's just being satisfied that the owners won't run off with your money. If he'd had that kind of dosh in MT GOX, would you say he wasn't involved? How about an $83 Million investment in say... Twitter? To invest that kind of cash requires some re-assurance that it will be safe or at least getting a return on that investment.
So I still see a paradox.. I'm not involved, I didn't run the place, I didn't influence anyone, I didn't do anything except park my cash there for no return on investment, but I want my really big big dollars back.
Laundering money means anonymizing the money, making it impossible to tell what the source was. Bitcoins are always anonymous, that's the whole point of bitcoins: they're always freshly laundered and smelling faintly of lavender.
Also, you launder _money_, and as the defense points out, bitcoins aren't money.
Of course, that completely misses the prosecution's point as what's being laundered are ill-gotten _dollars_, made anonymous by converting them to bitcoins, but it's still a good diversionary defense.
> Bitcoins are always anonymous, that's the whole point of bitcoins: they're always freshly laundered and smelling faintly of lavender.
Not sure what you mean by "anonymous", but they are traceable. That's the whole point of the chain. The equivalent of laundering would be the pooling shops that mix the content of wallets, making the coins hard to trace -but not impossible.
"Not sure what you mean by "anonymous", but they are traceable. That's the whole point of the chain. The equivalent of laundering would be the pooling shops that mix the content of wallets, making the coins hard to trace -but not impossible."
No it's impossible to trace without the police having everybody's wallet. The wallets are anonymous and short of getting caught with the wallet, the police cannot identify the owner, let alone what the coins were spent on.
Think of it like anonymous credit cards. You can see the flow of money but without linking the cards to people, you can't see who's buying or selling.
> Not sure what you mean by "anonymous"
I mean anonymous. That one can show that a transaction has taken place is irrelevant if you can't tell who gave the money to whom -- and you can't. That's the battle the people who've had their bitcoins swiped from corrupt exchanges are facing: there's no way of tracing the bitcoins to them, so they can't prove in court that the bitcoins ever were theirs, or that they are stolen.
Bitcoins are intentionally designed to be impossible to trace, the whole point of bitcoins is to be able to hide money from the law and the taxman.
and therefore a monetary instrument even if it does not count as a currency in its own right.
Surely by that argument government bonds(gilts) are not real money (risks notwithstanding)
According to the IRS it's property. So is a bond or a stock. A treasury, gilt or other government bond is "money" in the sense that it can function as a deposit from a retail bank to a central bank.
Essentially it's money if you can pay your taxes with it. If you need to sell it to an intermediary to get the cash then it's property.
I'd like to turn up to pay my tax with goods. Maybe a head of goats, just drop them at the office :)
It was always going to end in tears.
Bitcoin - it's money when it suits and not when it doesn't. How on earth anyone can justify buying into this is beyond me.
I could argue the same for expensive paintings and wines. It's property that can be exchanged for money.
According to the law, it's property and never money.
is an oft-used preamble to UK laws, where something gets defined so as to make it fall under the law.
Drink-driving (for example). You'd think that if you drove pissed on your own land, you'd be immune to the charge, in the same way as you would for speeding. Not a bit of it. The law starts by defining "public road" as any road the public has access to - even if it's on private property. I believe there has been precedent set where people have been convicted even when the land had a closed gate, as the court decided the public could still access the land by climbing the gate.
Yet you try and get your local council to tarmac your drive, and it instantly becomes "private property".
@Jimmypage: And rightly so.
If they win and the Bitcoins must be returned then it would be mildly amusing if the Bitcoin hashes end up being published on the public domains of the net.
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