Can Bitcoin support money laundering charges?

[niseag]

Bitcoin owners and exchange operators are coming face-to-face with prosecutors focused on money laundering crimes, leading to novel legal arguments about whether the virtual currency is money, or sufficiently “money-like” to support charges of money laundering and other financial crimes. This comes in contrast to a determination by the IRS, for one, stating that virtual currency such as Bitcoin is treated as property for federal tax purposes, and by FinCEN and FATF, that it does not have all the attributes of real currency and does not have legal tender status. Within this context, FinCEN’s Director Jennifer Shasky Calvery recently told Coindesk that the agency is focused on the bad actors, and not the new technology itself.

As reported last month in Digital Commerce & Payments, a New York Federal District Court concluded in Faiella et al. v. United States, that Bitcoin is “money,” denying a defendant’s motion to dismiss a money laundering charge. The defendant was charged with unlawfully operating an unlicensed money transmitting business, but unsuccessfully tried to dismiss the charge because Bitcoin is not “money.” The court said Bitcoin “clearly qualifies as ‘money’,” as it “can be easily purchased in exchange for ordinary currency, acts as a denominator of value, and is used to conduct financial transactions.”

Another case in a Federal District Court in Texas, involves a defendant, Trendon Shavers, who argued that he didn’t violate federal securities laws because his Bitcoin investors didn’t invest in “securities”, that his transactions were all denominated in Bitcoin, and that real money did not exchange hands. The SEC took the position that the Bitcoin investments were both investment contracts and notes, and therefore, securities. Although relevant securities law says a security involves an investment of money, the court said Bitcoin could be “used as money,” “used to purchase goods or services,” and “used to pay for individual living expenses.” It can also be exchanged for money. The court’s conclusion: “Bitcoin is a currency or form of money.”

Down in Miami, Florida, Bitcoin sellers Pascal Reid and Michel Espinoza were charged in February with money laundering after selling Bitcoin to undercover police officers to whom they admitted using Bitcoin to buy stolen credit card numbers. Defense counsel said his client couldn’t have been money laundering because Bitcoin isn’t money, but a Miami-Dade Circuit Court judge said Florida can prosecute “trade-based money laundering.” Rather than argue whether Bitcoin is money, the judge looked to the currency paid to buy the Bitcoin – and said that’s what was being laundered. The case against the founder of Silk Road, Ross Ulbricht, is reaching similar conclusions.

The race to define Bitcoin continues, but early indications point to a predictable conclusion: Bitcoin’s controversial status isn’t going to help its owners or traders avoid prosecution for financial crimes.

source: Buckley Sanders www.infobytesblog.com/digital-insights-and-trends-can-bitcoin-support-money-laundering-charges/#page=1

[Penny]

Don't know much about bitcoin but I happened to read this article a while ago.


Louisiana State Republican Party Now Accepts Bitcoin

Tanaya Macheel (@tanayamacheel) | Published on September 17, 2014 at 10:19 BST

The Republican Party of Louisiana (LAGOP) is now accepting contributions in bitcoin via its official website.

Only New York state has made the same move within the Republican Party, as have the Libertarian Party of Louisiana and the Libertarian Party of Texas. The news follows guidance from the US Federal Election Commission (FEC) determining that political campaigns and political action committees (PACs) can accept bitcoin as a form of in-kind donation under current federal election laws.

Speaking to CoinDesk, LAGOP executive director Jason Doré said other states may soon follow suit as their party leaders learn more about bitcoin.

Doré told CoinDesk:

“I think the rise of bitcoin’s popularity and use is forcing many public officials to learn about it. Still, many elected officials are not aware of it. If the bitcoin community embraces the use of bitcoin to support and oppose political campaigns, the role of bitcoin will only grow.”

For the initiative, the Louisiana GOP also partnered with bitcoin fundraising consultancy and services provider BitPolitic, which helped prepare LAGOP to accept bitcoin payments. In turn, BitPolitic takes a percentage of all bitcoin donations, keeping the funds in bitcoin to fuel its business.

BitPolitic provides consulting services to political candidates, campaigns and organizations that want to learn about bitcoin technology and incorporate it into the political system.

The LAGOP is using bitcoin payment processor BitPay to accept donations.
Fears over regulation

Doré said the move by the LAGOP was partly motivated by finding better ways to reach and engage its supporters, but that bitcoin also already embodies many conservative principles, such as embracing innovation and the free market, and opposing inflationary monetary policy.

Unfortunately, Democrats may be likely to target bitcoin for regulation, he said, calling for conservatives to “actively fight attempts to impose crippling regulations on the bitcoin community”.

“We know that the leadership of the Democrat Party has rarely met a regulation and a tax it doesn’t like. We see how Democrat-controlled cities have opposed innovative transportation companies like Uber and Lyft in favor of government monopolies.”

Doré juxtaposed left-leaning attitudes on government taxes and regulation against the inflow of libertarians and conservatives that have publicly embraced bitcoin.

Most of the bitcoin-embracing political candidates on this year’s midterm election ballot are running on the Libertarian ticket.

California Lieutenant Governor Gavin Newsom, Colorado Congressman Jared Polis and California Congressional candidate Christina Gagnier are among the few Democrats that accept the digital currency for campaign donations. Although Polis in particular has been an outspoken advocate of the digital currency.

A list of some of the major US political candidates that accept bitcoin can be found here.
The view on the New York BitLicense

In the interview, Doré also took aim at the BitLicense regulations proposed by the New York State Department of Financial Services (NYDFS), which he categorized as demonstrative of New York’s liberal bureaucracy.

Doré said:

“Those who seek to tax and regulate everything they can will certainly be looking to do the same to bitcoin […] These types of regulations are meant to strangle the growing bitcoin community while it is still in its infancy.”

Further, he insinuated that the LAGOP will seek to ensure that Louisiana does not take similar steps that could threaten bitcoin and its innovative potential.

Doré concluded: “In Louisiana, we will continue to take a different approach than our friends in New York by working to create an environment where innovators flourish.”

Disclaimer: CoinDesk founder Shakil Khan is an investor in BitPay.

Correction: A previous version of this article stated that the LAGOP, not the NYGOP, is the first major state-level executive committee to turn to bitcoin payments for monetary support.