Will Florida’s Money Laundering Laws Apply to Bitcoin?

Lawyers of two men arrested for bitcoin transactions claim state legislation only applies to fiat, but are they right?

AccessTimeIconMar 2, 2014 at 3:56 p.m. UTC
Updated Sep 11, 2021 at 10:24 a.m. UTC
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Lawyers for the two men recently arrested in Miami for engaging in “too-large” bitcoin transactions are claiming that the men’s actions were legal because state law covers only money issued by the US or another country.

Many in the bitcoin community are hopeful that this argument is persuasive, seeing money laundering laws as an attempt to regulate thoughtcrime in finance. Others also argue that citizens do not currently owe the state of Florida any kind of explanation for why they want to buy or sell bitcoin.

Sting operation

In what may be the first instance of citizens being charged under state law for buying or selling bitcoin, Pascal Reid, 29, and Michell Abner Espinoza, 30, were charged on 6th February with money laundering and engaging in an unlicensed money-servicing business.

The two were contacted by undercover officers who were looking to exchange $30,000 dollars each for bitcoin, an amount that violates the state’s money laundering laws.

Those laws makes exchanges above $10,000 illegal without offering information to the government. The state also forbids frequent unlicensed transactions of more than $300 but less than $20,000 in any 12-month period.

However, Reid’s attorney, Ron Lowy, argues that “the language of the Florida statutes excludes and was never intended to cover bitcoins.”

It appears that, despite this, undercover police officers were conducting stings which were aimed at netting “individuals engaged in high volume bitcoin activity,” according to Miami-Dade State Attorney Katherine Fernandez Rundle.

Contrasting views

The prosecutor’s office claims that “bitcoins are often seen as a perfect means of laundering dirty money or for buying and selling illegal goods, such as drugs or stolen credit card information.”

Bitcoin is far from an ideal, or even particularly popular, method for laundering money, however.

Katherine Mangu-Ward noted for online magazine Slate: “About $8 billion worth of transactions were conducted in bitcoin from October 2012 to October 2013. During 2012, Bank of America processes $244.4 trillion in wire transfers and PayPal processed $145 billion.”

She summed up:

“The bitcoin haystack just isn’t big enough or messy enough to be a useful place to launder money right now. A better option: cash-heavy businesses, such as casinos or – yes – laundromats.”

“High level international cybercriminals have not by-and-large gravitated to peer-to-peer cryptocurrency, such as bitcoin,”said Secret Service Special Agent Edward Lowery. Adding:

“Instead, they prefer ‘centralized digital currency’ that is based somewhere with looser regulations and lazier enforcement.”

A spokesman for the Miami-Dade State Attorney’s Office told Bloomberg in a recent email correspondence, “As prosecutors, we relish the opportunity to help define the law regarding this potentially important field.”

Considering that money laundering laws are mostly useless, unevenly applied and very costly to comply with, many hope that Florida will not define the laws as applying to bitcoin.


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