The case of Michel Espinoza is well-known to a bitcoin community. This young computer programmer and early bitcoin trader was arrested in January 2014 and charged with dealing in currency without a money transmitter license and attempted money-laundering.
Espinoza’s lawyers are trying to dismiss the case with the argument that bitcoin is not defined as currency under Florida law, so the charges cannot apply.
Barry University economics professor Charles Evans testified for the defence, saying legal definitions of Bitcoin were messy and varied in different jurisdictions, and that the IRS defines Bitcoin as similar to barter.
The court should make a decision by June 17th after hearing further arguments.
Espinoza wasn’t trying to set up a bitcoin exchange or bank without prior criminal history. Besides, there is no current law or case history available for people to understand how to act where bitcoin trading is involved.
“Bitcoin does not fall under any of the terms used to define financial transactions” under current law, Espinoza’s attorney said, describing the attempted money-laundering charge in particular as “very weak.”
The ‘Guinea Pig’ Case
Espinoza made three transactions of $500 USD to undercover detectives posing as fellow Bitcoin enthusiasts. At a later date, he met the same individuals at a hotel room where they requested a further $30,000 trade. He did not feel comfortable making the transaction in a hotel room and requested it to take place in a bank, so he was arrested. Police initially attempted to charge Espinoza with money laundering but reduced it to attempted money laundering since the transaction never actually took place.
The detectives targeted Espinoza and a second trader, Pascal Reid, at an early stage in Bitcoin’s history – when most government agencies were only just starting to discover cryptocurrency and its uses – in what Espinoza’s legal team calls a “guinea pig case.”
Albeit it seems like an absolutely first case, in December 2014, the former CEO of BitInstant, Charlie Shrem, was sentenced to two years’ prison for a similar crime.
In Shrem’s case, he worked in partnership with Robert Faiella to trade large volumes of dollars for bitcoins, which were later used to buy drugs on the defunct online marketplace Silk Road. He was arrested at New York’s John F. Kennedy airport upon returning home from a Bitcoin conference in Amsterdam.
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