back to article Florida Man cleared of money laundering after selling Bitcoins to Agent Ponzi

A money-laundering case in Florida has unraveled after a judge declared Bitcoins are not a valid form of money. Judge Teresa Pooler cleared [PDF] defendant Michell Espinoza of running an unlicensed money exchange and money laundering charges on the grounds that the Bitcoins he sold to two undercover investigators were goods …

  1. Eddy Ito Silver badge

    To me it seems the real issue here is the DA & LEOs want to shutdown bitcoin exchanges and were hoping to gain a precedent in this case under money laundering statutes. I expect they'll appeal and keep working other angles to get Bitcoin and others like it banned.

    Also their "sting operation" sounds more like attempted entrapment than a sting. My understanding of a sting is to catch a law breaker actually breaking the law and last I checked buying, selling, and exchanging bitcoins isn't against the law regardless of the other party's intent to do with the bitcoins afterward.

    1. Anonymous Coward
      Anonymous Coward

      Isn't the real issue here that whilst everyone knows that BitCoin is used for many illegal transactions, there is no proper legislative framework in place to allow law enforcement to tackle that. The result is that law enforcement agencies are forced to improvise (seemingly very poorly in this case), with unsatisfactory results.

      It's another case of the politicians knowing that something is going to have to be done sooner or later lest the very fabric of civilised society crumbles under a disproportionate burden of Internet enabled criminality, but that doing that is going to be deeply unpopular. Hence their reluctance.

      I happen to think the judge has got this right. Otherwise, by extension, it'd be an offence to sell a car second hand, for it's almost certainly going to be driven beyond the speed limit at some point by the new owner. That would be absurd.

      1. The_Idiot

        Hmmm....

        @AC

        I also think the judge ha sit right. However (and merely quoting the words, not in any way taking issue with your post):

        "...whilst everyone knows that BitCoin is used for many illegal transactions..."

        As are motor vehicles, the internet, corner shop windows, firearms, fake firearms, nylon hosiary (OK - so I'm showing my age (blush), wrenches (Dr Plum, in the library I believe) - the list goes on.

        If it were me, I'd have added the words 'can be' just after 'Bitcoin' - because just like everything else in the example list I suggested above, Bitcoin can be used for many _legal_ activities as well. And even if the agents said they were going to use the Bitcoins for less than proper purposes, no unlawful act had taken place at the time of the trade, no?

        1. Anonymous Coward
          Anonymous Coward

          Re: Hmmm....

          Cash can also be used for illegal transactions.

          Having a lot of cash can arouse suspicions, but that alone isn't a crime.

          1. Fluffy Cactus

            Re: Hmmm....

            Actually, in the US, if you drive around with a lot of cash, it can be confiscated at a highway traffic stop, if the Police Officer has "reason to believe that it either was obtained illegally, or that it will somehow likely be used for an illegal purpose". How the police officer backs up that "belief", I don't know. But under US civil forfeiture laws, no crime has to be committed, no crime has to be proven, just your money is guilty.

            I don't understand how the money can be guilty. I used to go and buy a used car with cash, way back when you could buy a decent used car for $2,500. But now it's more comlpicated.

            These days, the safest way to do that seems to require several steps:

            1) I go to the bank.

            2) I call the police.

            3) I ask the police officer to first ask the bank official if the money in my account appears to have any traces "of being guilty", and if the bank official declares my money to be innocent, then I ask the police to witness my withdrawal of e.g. $4,500 from my bank account.

            5) I then ask the police officer to seal the wad of cash with an "official not guilty by US police seal", which expires within an hour, as they can't be sure what I might do with it..

            6) I ask for a police escort to the used car dealer, so the police can witness the transaction.

            7) I then pay the police their customary "witnessing fee", because, hey, it's a "user fee" and

            I am wasting their time, and they could have gone after actual criminals in the meantime.

            The above are the steps to buy a used car with cash in the USA, without running the risk of having

            your cash taken away by police, with no trial, no crime, no problem. It's all very civil.

            If any of this seems weird to you, then please research "US civil forfeiture laws", "US money laundering laws" and prove me wrong (except for the "witnessing fee" or "user fee", which could be mistaken for a bribe, and we don't want to get in trouble with the law.) If "civil forfeiture" works like that, I don't really want to encounter "US 'criminal forfeiture' laws".

            I hereby pledge allegiance to humor, satire, wit, exaggeration, insanity, comedy, hilarity, silliness, goofinity, and to the astonishing laws that still stand and prompted me write this in the first place. I also plead not guilty to anything, because the spirits of Jonathan Swift and Mark Twain have entered my body against my will, and have declared themselves captains of my soul. I am trying to fight them off, but they won't let go. You could say, more or less, that I am writing this under "undue influence". So I am totally safe.

        2. Sebastian A

          Re: Hmmm....

          Just curious, can bitcoin be confiscated under "civil forfeiture"?

    2. Andrew Moore Silver badge

      Sounds to me like they wanted to get their money back. Are they in one of those states that allows the police to keep the proceeds that are taken in evidence?

  2. Anonymous Coward
    Anonymous Coward

    Ponzi and bitcoins

    The circle is complete

  3. allthecoolshortnamesweretaken Silver badge

    Yet another Ponzi scheme...

    But I think Eddy Ito is right; this is closer to an entrapment than anything else. Which seems to me as something that reflects badly on the law enforcement agencies involved as it is both stupid and lazy. You'd think the Secret Service and the Miami PD had better things to do. Like, you know, going after criminals. As in 'people who are committing actual crimes' as opposed to setting up people who might do something that might be illegal.

    1. Pascal Monett Silver badge

      "Like, you know, going after criminals. As in 'people who are committing actual crimes' as opposed to setting up people who might do something that might be illegal."

      Setting people up is an American specialty. Like the guy at a bar asking nothing to no one, not thinking about sex and just tired from his day, who gets chatted up by a cute (cop) girl who pushes him to accept a bit of nooky for money, then gets cuffed on the premise that he accepted, so he's the one who is guilty. That's called fabricating a crime in my book, and ruining a man's life like that is a shameful thing to do. It happens all the time over there.

      Funnily enough, you don't hear about sting operations where a person was caught accepting an offer to off their spouse without having asked for it. You do hear about the stupid ones posting a request for an assassin, but never the other way around. Somehow it seems that US cops are fine with pimping their female officers to create a case, but not at ease with offering murder to a disgruntled spouse for the same result.

    2. Adrian Tawse

      In the UK the law is much more strict. The Police may in no way enable, facilitate or participate in the crime. Even if BitCoins had been declared money the police would be as guilty as the accused.

  4. chivo243 Silver badge
    Holmes

    What is money these days anyway?

    I can pay for a pizza with bitcoins... I bought a used car a few weeks ago, never even touched any money, gold or bitcoins. I made a bank transfer, there was no real money involved, currency if you will. Just a few 1's and 0's were changed, mostly 1's to 0's in my case...

    When was the last time you could ask the bank for the gold backing your cash??

    So the Judge was right to throw the case, but not on the grounds she based her decision. Entrapment is entrapment...

    1. Anonymous Coward
      Anonymous Coward

      Re: What is money these days anyway?

      There's one crucial difference: US dollars are currency by government fiat.

      1. Anonymous Coward
        Anonymous Coward

        Re: What is money these days anyway?

        Yeah, but what currency on earth is not created by "government fiat"?

        (And by that I don't mean an government employee of the "Department of Silly Walks" that happens to drive a Fiat. Because that's different.)

  5. David Roberts Silver badge

    Other laws?

    Closest comparison I can think of is someone going into a jewellers to buy a gold chain, and telling the jeweller that he is going to exchange the gold chain for stolen credit card numbers.

    Apart from the obvious question "Why are you telling me that?" what crime(s) is the jeweller committing?

    Possibly if the customer goes on to commit the crime of buying stolen property then the jeweller might be considered an accessory.

    However for this to be applicable the officers would then have to go on to commit the crime, I assume.

  6. JimmyPage Silver badge
    Meh

    what crime(s) is the jeweller committing?

    in English/Welsh law the answer would be centred around "reasonable belief" - or more precisely the prosecutions success in convincing the jury the jeweller should have had "reasonable belief" that the transaction was in furtherance of a crime.

    Generally, I am not a fan of laws which make me my brothers keeper.

    1. Anonymous Coward
      Anonymous Coward

      Re: what crime(s) is the jeweller committing?

      The jeweler should also have a "reasonable belief" of becoming a crime victim if he refused to make the sale. The police might say he should have reported it sooner, but he would've been wasting their time.

  7. Cuddles Silver badge

    Laundering?

    My understanding is that laundering money means taking money that has been acquired by illegal means and undertaking some shenanigans to make it appear legitimate. Telling someone you're going to use some money to do something illegal isn't the same thing at all. Regardless of the status of bitcoin, the charges here don't appear to have anything to do with the actual facts of the case.

    1. Anonymous Coward
      Anonymous Coward

      Re: Laundering?

      So far as I can tell, in the US "money laundering" basically means "any financial transaction at all, even normal banking, when the money was obtained in a way that the government claims is 'wrong', or is going to be used in a way that the government claims is 'wrong'". And note that I put "wrong", not illegal - people have been found "not guilty" of fraud, but guilty of money laundering for doing normal banking transactions using that not-fraudulently-obtained money.

  8. SeymourHolz

    Stay Tuned ...

    for the continuing adventures of Florida Man!

    /r/FloridaMan

    1. Francis Boyle Silver badge

      Re: Stay Tuned ...

      I'm glad to see that he's put that cannibal thing behind him. And all those other things. All in all one of his better days.

  9. MonkeyCee Silver badge

    sting versus entrapment

    IANAL, but I believe entrapment requires three criteria have to have been met:

    1. The idea for the crime must have originated from the government agents and not from the accused person.

    2. Government agents persuaded the person into committing the crime, as opposed to just giving him or her the opportunity to do so.

    3. The person was not ready or willing to commit the crime before speaking to the government agents.

    Since selling bitcoin is not in itself a crime, and the chap never actually committed any other crime it's pretty tricky to prove anything.

    It's also why you shouldn't buy drugs etc as a "favor" to a friend.

  10. Nigel 11

    Legal versus Moral

    Personally if someone told me that they were purchasing something in order to commit a crime I would tell them to go away (and possibly phone the police once they are gone - a separate moral choice). Normally people don't tell honest traders, if they intend to use what they purchase for committing a crime.

    Whether falling for temptation should be criminal or whether it is entrapment is a matter of law, but on moral grounds it is quite clear that to proceed with the sale is immoral.

    And on common-sense grounds, you have to be remarkably thick not to smell a rat. "WTF are you telling me that?" should be anyone's reaction, whether standing on moral high ground or in a deep cesspit of criminality!

    1. martinusher Silver badge

      Re: Legal versus Moral

      While I'd agree that anyone I didn't know (or basically just 'anyone') who tells me they're about to commit a crime is automatically suspect, even if its only suspicion of being terminally stupid, it is also reasonable for a vendor to ignore such assertions. A typical hardware store is also a supermarket of housebreaking tools and weapons useful for GBH; its not the store owner's job to sort out the criminals from the handymen.

      In this case there's an assertion by the government that the only use for Bitcoins is for lawbreaking so possession of these entities should itself be made illegal.This is part of a process where government would prefer to outlaw all actions except those specifically permitted (a bit like Mrs. May and her 'ban everything except what I say' drugs thing).

      As it is since the judge has ruled that Bitcoins are goods expect the next line of attack to be the tax authorities claiming sales tax on every bitcoin transaction.

      1. Allan George Dyer Silver badge
        Paris Hilton

        Re: Legal versus Moral

        @martinusher - "suspicion of being terminally stupid"

        Or flippant...

        Hardware store cashier: "What do you need all these rubbish sacks and duct tape for, you planning to dispose of a body?"

        Customer: "Yeah, and if you give me a discount, I can get rid of one for you too..."

  11. Pliny the Whiner

    Whatever kills you make you stronger. Somehow

    I'm pleased with the way this court case was resolved for the defendant, since there's nothing more desperate and pathetic than a criminal created out of thin air by law enforcement. But you have to be willfully stupid not to understand that you put real money in Bitcoin and get real money out. And you put real money in PayPal and get real money out. And you put real money in Visa prepaid cards and get real money out. Banking for the unbanked. (Or boinking for the unboinked, in the case of virtual reality.)

    In the future, Judge Poole, just dismiss the case with prejudice and call it a day. As it is, you've done nothing except kick the can down the road, transferring your mess to someone else.

  12. Herby Silver badge

    On laundering money..

    The only way to "launder" money is to pay taxes on it.

    Quote from a TV series (Orphan Black in this case).

  13. Anonymous Coward
    Anonymous Coward

    Hearing a stated purpose != committing the crime.

    Anyone can say anything.

    "I'm buying this car because I am going to rob a bank"

    "I'm buying this car because I am going to run over my ex"

    "I am buying the knife to put it in my enemies chest"

    "I am putting gas in my car to drive it through a school bus stop at pickup time"

    Truthful or not? Serious or not? Am I to be charged with planning/aiding/abetting a robbery or murder if someone says any of these things to me while I am selling them a car, a steak knife, or a gallon of gasoline? Am I to take each and everything that anyone tells me as absolute, unassailable truth such that I am responsible for any badness that anyone decides to relate to me in the course of a business transaction?

    If the purchase or trade that I am making is legal, then it's legal. I am not a mind reader. I posses no paranormal powers to determine the truthfulness of strangers. If it is not illegal for me to swap my <item XXX> for $$$$, then it is not illegal. I am not a human crazy/lie detector, and I am not required to correctly assess the truthfulness of whatever information you tell me, and take that into consideration for the exchange.

    p.s. If you tell me you are going to rape little children with <item XXX>, then I will err on the side of innocents and tell the police. But if you tell me you are going to purchase 1000 tabs of oxycodone or buy strippers or put it under your mattress... I don't care. It's like I never heard it.

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