In a major setback for the cryptocurrency community, a Florida court has ruled that bitcoin has a long way to go before it is deemed to be the equivalent of money.
Defendant Michell Espinoza was charged with unlawfully engaging in business as a money services business and a ‘money transmitter’, as well as two counts of money laundering, having sold £1,500 of bitcoins in exchange for cash to an undercover Miami beach detective.
However, Circuit Court Judge Teresa Pooler in Miami-Dade County on Monday (22 July) granted an order to dismiss the case, agreeing that bitcoin – which is treated as ‘property’ for federal tax purposes – is not real money.
Finding that the defendant’s sale of bitcoin was not a ‘money services business’, Judge Pooler said: “Nothing in our frame of reference allows us to accurately define or describe Bitcoin.
“Bitcoin may have some attributes in common with what we commonly refer to as money but differ in many important aspects. While Bitcoin can be exchanged for items of value, they are not a commonly used means of exchange. They are accepted by some but not by all merchants or services providers.”
The Judge also highlighted bitcoin’s volatility as a factor to be held against it in being considered money.
She added: “Bitcoin is a decentralised system. It does not have any central authority, such as a central reserve, and Bitcoins are not backed by anything. They are certainly not tangible wealth and cannot be hidden under a mattress like cash and gold bars.
“This Court is not an expert in economics, however, it is very clear, even to someone with limited knowledge in the area, that Bitcoin has a long way to go before it is the equivalent of money.”
With regard to the charges of money laundering, the defendant argued that the sale of bitcoin did not meet the definition of ‘financial transaction’ or ‘monetary instruments.’
The Judge found that as bitcoin had been exchanged for money, it was likely that a financial transaction had occurred.
However, the defendant had purchased his bitcoin legally, the Judge said, and the fact the detective had described a “nefarious reason” for acquiring the bitcoin did not amount to evidence of criminal activity.
The Judge said: “This court is unwilling to punish a man for selling his property to another, when his actions fall under a statute that is so vaguely written that even legal professionals have difficulty finding a singular meaning.
“Without legislative action geared towards a much needed update to the particular language within this statute, the Court finds that there is insufficient evidence as a matter of law that this Defendant committed any of the crimes as charged.”