back to article US federal judge: Yes, Bitcoin IS MONEY

A US federal judge has ruled that Bitcoin meets the criteria for "a form of money" under US law, paving the way for what could become a defining lawsuit for the virtual currency. The US Securities and Exchange Commission has charged Texas resident Trendon Shavers with operating a Ponzi scheme under the name Bitcoin Savings and …


This topic is closed for new posts.
  1. Don Jefe

    It sucks for everyone who is into this, but legislation was always going to be the Achilles Heel of BitCoin. The fact its first big legal test is due to some fraudulent ass only makes it worse.

    1. asdf Silver badge

      not quite

      >legislation was always going to be the Achilles Heel of BitCoin

      What legislation? Legislation implies Congress actually does something (hahaha). Far worse is unelected officials deciding for themselves BitCoin must die. The whole advantage to the currency is really the only thing they can do is try to crack down on the exchange of bitcoins to USD and back. Considering how much money gets laundered every day for things like USD to drugs and back good luck with that.

      1. Steve Knox

        Re: not quite

        What legislation?

        Existing legislation. That's what judges use to make their rulings.

      2. Richard 81

        Re: not quite

        You know we've had this thing called "money" for a while and have built up quite a lot of legislature regarding how it may be acquired, traded and used. Just because some folks think the world started with the internet, does not make it so.

        1. asdf Silver badge

          Re: not quite

          But the legislation is dealing with the idea of money in general and not bitcoin in particular is what I am saying. Yes this one judge called it money but many are still resisting doing so.

      3. Bluenose

        Re: not quite

        ' unelected officials'

        I though the US voted in its judges if the following is correct they certainly appear to in Texas,_2012

        1. asdf Silver badge

          Re: not quite

          Not talking about judges but Treasure and feds going after the system.

        2. asdf Silver badge

          Re: not quite

          This judge is not questioning validity of Bitcoin at all. In fact he is treating it just like any other money and saying the problem is the swindler not the money.

        3. oolor

          Re: Bluenose


          Actually the following link claims the judge was appointed by his current position (magistrate judge on the United States District Court for the Eastern District of Texas) in 2009 by a vote of district judges which is how the positions are filled for 8-year terms (4 if pat-time).

          He was originally appointed to the Texas Fifth District Court of Appeals in July 2004 by Gov. "I can't remember what the third department is" Perry and won elections for that position in 2004 and 2006.

          As for higher up appointments on the same court, they are by Presidential appointment. You may have confused the state judge-ships which are indeed by election with the exception of the supreme court of the state and municipal courts which have selection dealt with by local rules to each municipality.

  2. Anonymous Coward
    Anonymous Coward

    Just curious

    What makes BitCoin a currency and not a commodity? It's not a physical entity like gold is, but there is a finite supply.

    I wonder if all the global restrictions on currency trading could be side-stepped by claiming BTC is a commodity.

    1. silent_count

      Re: Just curious

      A commodity has inherent value. Currency doesn't - the only reason a US $1 note is worth more than the fraction of a cent (for the paper it's printed on) is that people agree to use it as a currency.

      I'm not in finance but thats my understanding of it.

      1. This post has been deleted by its author

      2. Graham Dawson

        @silent_count Re: Just curious

        You're discussing fiat currency. Money used to have a physical value based on a commodity, either because it was made from that commodity or because it was guaranteed by that commodity. Traditionally the commodity was gold

        Unfortunately any commodity-backed currency has two features that make it undesirable to the modern debt-bound state: You can't simply print off more money to pay off your debt and it doesn't inflate very fast (a gold-backed currency inflates as more gold is extracted from the ground, but this is a very slow process), which means you can't inflate your debts out of existence either. You can re-denominate your currency (for example, you can take $1 of gold and declare it's now worth $10), but that devalues your currency: incomes, prices and debts get an extra 0 on the end, but otherwise nothing changes. The debt remains and earning power is unchanged.

        There are advantages to a fiat currency. The biggest for the capitalists amongst us is that economic growth isn't restricted by a lack of available money in the system. The biggest for the state is that it can, as explained, print money and inflate debt out of existence (in a commodity-backed currency this would be the equivalent of finding a few-billion dollars worth of gold somewhere). Unfortunately the downsides are quite obvious: printing money will devalue it. Though it exists as a legislative construct, nevertheless a fiat currency still follows the basic rules of economics and is still in effect a commodity. The first rule of commodities is that the value is dictated by the available supply: if supply of a commodity increases, its value generally decreases. If supply is restricted, its value generally increases. In the case of a commodity like copper this would mean that the price chasnges variant with the available supply and the relative demand. In the case of money, an increase of supply means the monetary "value" - the amount that a dollar can purchase of anything - is reduced.

        If your economy inflates at about the same rate as your currency inflates, the currency will tend to retain its value. If your currency inflates faster than your economy grows (either by increasing the supply through printing, or by reducing the demand through a stagnant or shrinking economy) then the value of your currency decreases. In extreme cases you get a zimbabwe, where the supply of currency increased at the same time as the economy was destroyed by poor government behaviour. In less extreme cases you get a situation where a barista or waitress in the US earns what used to be a living wage but now has to be supplemented with tips in order to earn enough just to survive - because the wage stayed nearly static while the currency was inflated by increased supply.

        And then this ties into arguments over all sorts of economic topics, such as minimum wage, taxation, cost of staple necessities, "cheap imported labour" and so on and so forth. All this because successive governments decided to enact polices that inflated the money supply for various reasons of their own (corporate profiteering, "creation" of "wealth", or funding the latest social engineering project by "borrowing" from the first union bank of unicorn farts and rainbow fantasy). The economy appears to grow because profits and wages appear to increase in numerical terms, but the reality is that it may be stagnant or even shrinking.

    2. Charles Manning

      In this case the distinction would not have mattered

      In USA, you can be nobbled for fraud/whatever whether you're dealing with a currency or a commodity or anything else of value.

      For example, if you agree to swap to swap cars with someone in a barter transaction but do not supply the car you are trading then that is fraud.

      What was being attempted by the defence in this case this case is to argue that BC has no value at all and that the people willingly agreed to give up their assets for something of no value and thus it would not better whether or not the BC was actually supplied or not.

      Many people erroneously believe that, in the US, barter for goods or services is not taxable because no currency changed hands. They are wrong. You still need to pay tax. Even if you get paid in BC or loaves of bread.

      You are not the first person to think of trading commodities to sidestep restrictions in currency trading. This is the type of activity that falls under the heading "money laundering".

      1. Anonymous Coward
        Anonymous Coward

        Re: In this case the distinction would not have mattered

        Well, trading bitcoins as a commodity would mean it was under the restrictions based on commodity trading.

        It's not so much as to sidestep currency trading restrictions, as it is to put them under the control of a legislative framework that might "fit" better to what bitcoins actually are.

      2. Graham Dawson

        Re: In this case the distinction would not have mattered

        The taxation of barter rests on the rather dubious assumption that any cost you save in barter is the functionally same as earning that money, leading to the IRS treating it as taxable income. It further rests on the assumption that the state has the right to take your property. It seems like a rather silly assumption to me.

        Not that it matters. They can't tax what they don't know about, and unless they've found a way to assign a monetary value to every barter _and_ a way to monitor every barter that takes place they aren't going to be taxing much of it unless that information is volunteered.

        1. jonathanb Silver badge

          Re: In this case the distinction would not have mattered

          People decide, by voting for candidates with those policies [1], to give money to the government in the form of taxation, so that it can afford to do the things they want the government to do for them. They decide that a fair way to split up the bill is based on ability to pay, so they introduce an income tax.

          If you do some work in return for a bag of carrots, that is the same as if you did work for money, and then went out to the shops and bought a bag of carrots with that money, so it would seem fair to tax it in the same way.

          [1] If someone stood for election promising to abolish the NHS, benefits, road maintenance, and all the other things the government spends money on, how many votes would they get?

          1. Ian 55

            Re: In this case the distinction would not have mattered

            10,703,654 in the 2010 General Election.

        2. Charles Manning

          Re: In this case the distinction would not have mattered

          What assumptions?

          The IRS has a right to take your assets if you don't stump up with the $$$.

          It is up to you as a taxpayer to disclose all your income and assign a fair value to barter income. If you don't then the same laws apply as hiding cash transactions.

          You might not like that, I might not like that, but that is the law.

    3. Kanhef

      Re: Just curious repeatedly refers to it as a currency, as do Wikipedia and the Bitcoin wiki ( It was invented as a currency, marketed as one, and used as one, so I doubt anyone will seriously entertain claims that it's actually a commodity instead.

    4. Tom 13

      Re: Just curious

      At its simplest: currency/money can be readily traded to obtain commodities. Commodities aren't necessarily easily traded. Some things like gold can be both.

      Can currency tax laws be side-stepped? Probably, but doing so is still illegal and if you get caught you WILL be prosecuted. Remember, regardless of how convoluted and oppressive current currency laws may be, the original intent behind them was to protect people from being defrauded.

      If I were the judge I wouldn't have ruled on whether or not Bitcoin was currency. Even though the US dollars were changed by a third party, the intention of the cretin was to use bitcoin as the means by which to engage in an investment Ponzi scheme. That is, it promised you'd get more money out the other side than you put in but had no planned means of making more money in the middle. That should be sufficient to bring charges of investment fraud.

  3. silent_count


    Mr Shavers is going to jail, and he's only got himself to blame. He didn't think ahead. He should have made his Ponzi scheme more structurally complex, so it would take longer for the SEC to catch up with him. By that stage he could have greased a few politicians and, when it looked like collapsing, his scheme would be "too big to fail" and his victims' tax money would be used to bail him out.

    1. Anonymous Coward
      Anonymous Coward

      Re: TBTF

      "when it looked like collapsing, his [Ponzi] scheme would be "too big to fail" and his victims' tax money would be used to bail him out."

      But don't the TBTF banks and insurers and other such "financial services" behemoths have a legally enforceable monopoly on that role already?

    2. jonathanb Silver badge

      Re: Fool

      That didn't keep Bernie Madof or Allen Stanford out of jail.

  4. Anonymous Coward
    Anonymous Coward

    "It is clear that Bitcoin can be used as money. It can be used to purchase goods and services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan."

    Using that as a litmus test pretty much means that almost anything can be considered currency. I could sell/trade a chicken for goods or services. You know, like they did *before* money and is still practiced legally. I could also sell a chicken for money, like people who raise chickens do. Car dealers make money by trading, buying and selling cars. Does that mean that cars are considered currency as well? How about a house? How about people who barter? They are using goods as a way to pay for living expenses as well as to exchange one item for another.

    1. Charles 9 Silver badge

      Except that something that's considered a commodity (like your chicken) can't be considered a currency by default. And an exchange of commodities has another term for it: barter.

      1. Tom 13

        Re: commodity can't be currency

        Lots of things that are commodities have been currencies. Gold, silver, copper and bronze are the most obvious and most easily transported. But other things including beaver skins and tobacco have been used. As recently as post WWII cigarettes were a practical currency in Germany. The only thing that matters to currency is that it is readily accepted by most people as payment to complete trade. So if everyone accepted chickens in payment for services, chickens would be a currency.

    2. Sorry that handle is already taken. Silver badge

      In contrast to a bitcoin (and even more so than to a dollar), a chicken, a car and a house all have applications, and value, other than in trade.

    3. Kevin Fields

      All Money is Legal

      And all that you mention is taxable, and therefore, money.

  5. Skymonrie

    instant reaction

    Only three words came to mind to begin with:

    Sod off america...

    Couldn't he claim similar circumstances to what the tax dodgers here do. "I may talk and arrange business with people in the US but, when it comes to sales, all transactions are performed in another country, another dimension, namely the internet...from a dodgy web host on the darkweb at that"

    A bitter response from me I know and sorry for it. I just don't see a single thing from the american government which warrants any decision they make as legit these days.

    1. Anonymous Coward
      Anonymous Coward

      Re: instant reaction

      Dude, if lying murderer tells you water is wet, the fact that he's a lying murderer doesn't means he wrong about water being wet.

  6. Frumious Bandersnatch Silver badge


    It hardly constitutes a declaration that Bitcoin is a bona-fide currency. All that seems to have happened here is that the judge saw through a particularly transparent defence that was based only on a legal technicality.

    As the article said, if it looks like a duck and quacks like a duck, then it's probably a duck. Therefore: not a valid defence. Or, as Fry from Futurama might say, "That dog won't hunt, Monseigneur".

    1. Dave Bell

      Re: well...

      The same duck test is used by FinCEN in America, and on March 18th 2013 they issued guidelines on virtual currency. They're looking at stuff such as money-laundering and the record-keeping requirements. BitCoin was maybe a blackbox, money going in via recordable transactions and coming back out, but no imformation on what was happening, and they don't like that.

      It seems to have badly affected the virtual currency used in Second Life: a lot of people use it. A few in the game make enough profit to want to get USD out, and that process has become more difficult.

      This news isn't really a surprise.

  7. Steven Roper

    Duck test = fish test!

    "If it looks like a duck, swims like a duck, and quacks like a duck, it probably is a duck."

    This line of reasoning could also be used to define a whale as a fish, since a whale looks and swims in similar fashion - as famously (and erroneously) argued by Herman Melville via his protagonist Ishmael in Moby Dick:

    "Next: how shall we define the whale, by his obvious externals, so as conspicuously to label him for all time to come? To be short, then, a whale is a spouting fish with a horizontal tail. There you have him. However contracted, that definition is the result of expanded meditation. A walrus spouts much like a whale, but the walrus is not a fish, because he is amphibious. But the last term of the definition is still more cogent, as coupled with the first. Almost anyone must have noticed that all the fish familiar to landsmen have not a flat, but a vertical, or up-and-down tail. Whereas, among spouting fish the tail, though it may be similarly shaped, invariably assumes a horizontal position." - Herman Melville, Moby Dick, Chapter XXXII Cetology.

    Obviously this reasoning is flawed, as any primary school kid knows that a whale is a mammal, not a fish. So in similar vein, just because something looks, swims and quacks like a duck, doesn't necessarily mean that it is. It may well be that it usually is, and one could be justified for saying so, but using this argument as the basis for a legal decision doesn't bode well for rule of logic and reason. There needs to be a more solid factual basis for arguing that Bitcoin is indeed the same thing as money.

    At present, Bitcoin strikes me as having more in common with a commodity than a currency. Consider trade commodities, for example sugar or copper. Like sugar and copper, Bitcoins have a variable market price which rises and falls according to supply and demand. Like sugar and copper, Bitcoins are manufactured by a value-adding process of labour and production. Like sugar and copper, Bitcoins are bought and sold on commodity exchanges, not banks.

    So under this court's ruling, sugar and copper are the same thing as money, just as Bitcoins are. They can be used to store and retrieve value, bought and sold for profit, just as Bitcoins are. But if we start treating commodities as though they were money, we're opening a Pandora's box of trade nightmares that are going to have repercussions around the world. I'll leave it to the more imaginative commodities traders to consider the ramifications of that decision!

    1. Anonymous Coward

      Re: Duck test = fish test!

      Ah, the good old days.

    2. SBU

      Re: Duck test = fish test!

      If it looks like a duck, walks like a duck and quacks like a duck it is probably a dragon disguised as a duck.

    3. Killraven

      Re: Duck test = fish test!

      A fish does not need to surface in order to breathe, therefore a whale is not a fish.

      Your logic was inherently flawed to begin with, because it's the "duck" test not the "bird" test.

      1. lglethal Silver badge

        Re: Duck test = fish test!

        "If it looks like a duck, and quacks like a duck, we have at least to consider the possibility that we have a small aquatic bird of the family anatidae on our hands."

        -- Douglas Adams

      2. billse10

        Re: Duck test = fish test!

        alternatively, "If she weighs the same as a duck... she's made of wood!"

        1. Adam Foxton

          Re: Duck test = fish test!

          That would have been the best defence ever!

          "But your Honour, BitCoins do not float on water and are therefore nothing like a duck. Moreover, by your reasoning a Duck can be both made of wood (as it floats) and therefore a Witch (which burns as does the wood you CLAIM ducks and bitcoins are made from)- a similar line of reasoning which lead to the death of an innocent civilian documented by the respected group the Pythons.

          Your Honour, do you REALLY want to declare that a BitCoin is equivalent to a duck when it is well established that such actions can lead to the death of innocents?"

    4. Anonymous Coward
      Anonymous Coward

      Re: Duck test = fish test!

      You appear to have confused the labour theory of value with the intrinsic value of a commodity. The fact that a bitcoin is the product of computing cycles does not mean it has any value; it cannot be used for anything other than a means of exchange. If pork, wool or copper ceased to have monetary value they can still be eaten, used to make clothes, or made into useful things. But without monetary value a bitcoin is nothing.

      Labour only creates value in some circumstances. For instance, I am rubbish at carpentry, so if I rry to make something the result is worth less than the original wood. Marx didn't really address this.

    5. Gavin 2
      Thumb Up

      Re: Duck test = fish test!

      I love the smell of pedantry in the afternoon

  8. Winkypop Silver badge

    Bitcoin and Ponzi schemes

    A match made in cyber-heaven.

  9. Francis Vaughan

    Two edged

    Bitcoin fanatics should realise that this is a two edged issue.

    1. Come use Bitcoin, it isn't money, isn't taxable, and isn't subject to any government's law. Oh yeah, because of that, if you get defrauded, or otherwise ripped off, you have no legal protection. You won't see your (not) money again.

    2. Come and use Bitcoin. It is safe, because if you get ripped off or defrauded, the perp can go to gaol. Oh, yeah, that same government that sends him to gaol wants to have word about tax.

    There is no government on the planet that will not assume, right now, that they don't have a say in Bitcoin use. Just because it is so low level that it isn't worth the effort does not mean Bitcoin is somehow home free. As evidenced by this little fraud case, there is usually no new legislation needed anyway. Money, tax, and fraud have a very very long and inglorious history. Any idea that Bitcoin is somehow brilliantly novel enough to get past this is sadly naive. (It is about on the same level as teenagers who somehow think they invented sex, and no-one was ever doing it before.)

    1. nutsontheroad

      Re: Two edged

      Spot on, have yourself a pint.

  10. g e

    "It can be used to purchase goods and services"

    So can Sex, Gems, Food, Holidays, and just about anything else you can think of.

    Perhaps the test should be 'Can you go shopping in Tesco and expect to pay with Bitcoin, Gems, Food, Holidays or errr.. Sex?'

    If not, then it's not money, it's a token or barter value.

    1. Lee D Silver badge

      Re: "It can be used to purchase goods and services"

      But then you run into things where, for example, a US cheque, a banker's draft, or an American Express card, or even a US dollar isn't considered money by that test. There's no one simple such test that you can make that covers all situations, so the definition of money is usually quite broad.

      If it has value and is used to trade, it's pretty much treatable as money. If I suddenly get 10,000 chickens and sell them for gold, or toothpaste tubes, or tickets to concerts, that I give to other people and receive other goods or services in return, etc. the taxman won't really accept the argument that it wasn't trade, or taxable.

      Otherwise everyone would have stopped using cash centuries ago just to avoid tax. I'll give you 100,000 bananas for your car (for example) and it would be an untaxable transaction.

      If you define money as something that had value and was used as part of a transaction (which is basically what most laws say), then everything is technically money if you use it as such. And hence Bitcoin, something that has NO OTHER PURPOSE and touts itself as a currency is, indeed, money too.

      Quite why this is a shock, I don't know. You think that paying for drugs with Bitcoin wouldn't get you into trouble for drug-dealing because you "received no money"? No. Don't be silly. It's money. It doesn't matter WHAT you got back, it's pretty much money especially when you're so clear cut about it (Hell it's CALLED a coin!).

      The problem now that it's been legitimised is quite how much trouble is it to record financial transactions concerning it accurately? Because that question is going to hit a lot of exchanges hard and even if it reverts back to some underground, peer-to-peer, no companies involved currency, it won't have any value left in it if you can't cash it out in some way.

    2. The Commenter formally known as Matt

      Re: "It can be used to purchase goods and services"

      So gbp is money, euros, usd and yen aren't?

    3. Anonymous Coward
      Anonymous Coward

      Re: "It can be used to purchase goods and services"

      Sex isn't fungible: I can't exchange the hard shafting that my employer gives me in lieu of money wages, for beer by shagging the barmaid and the only way I can store value is by getting a doctor to certify all of my venereal diseases and even then Waitrose are reluctant, to say the least, when I make a withdraw and try to pay for my shopping...

      1. I ain't Spartacus Gold badge

        Re: "It can be used to purchase goods and services"

        Is that why the supermarkets introduced self-service counters?

        I'm always finding unexpected items in my bagging area...

This topic is closed for new posts.

Biting the hand that feeds IT © 1998–2019