Florida Lawmakers Want Bitcoin Covered Under Money Laundering Law

April 23, 2017 16:05 UTC

Florida lawmakers want virtual currencies like bitcoin covered under the state’s money-laundering statute, a change that supporters claim would ensure criminals cannot use Internet-based currencies to conceal financial activities, according to The Miami Herald. Law enforcement officials support the measure but some bitcoin enthusiasts say it will undermine bitcoin.

The proposed law was crafted by Miami-Dade cybercrime prosecutors after a judge threw out charges against a man accused of selling $1,500 in bitcoins to buy stolen credit card numbers on the Internet.

Miami-Dade State Attorney Katherine Fernandez Rundle said high-tech criminals use virtual currencies to hide their illegal activities. The proposed law ensures fraudsters and traffickers cannot use Internet-based currencies to conceal and transfer illegal profits.

Bitcoin Supporters Weigh In

Some bitcoin supporters claim the law can undermine the cryptocurrency that could be helpful in promoting trade between Florida and nations like Venezuela that rely more on bitcoin since their own banking systems have crumbled.

Charles Evans, an economist at Barry University specializing in bitcoin, said the law sends the message that financial innovation is unwelcome in Florida. Governments in other countries and states that welcome bitcoin will be pleased with Florida’s law from a competitive standpoint.

A state house committee passed the bill, sponsored by Miami Rep. Jose Felix Diaz, unanimously last week. Two state senate subcommittees have also passed the bill, and a state senate appropriations committee will soon vote on it.

Money laundering applies to transactions that conceal funds earned from criminal activity under existing Florida law. Under the proposed law, “virtual currency” will be added to the list of “monetary instruments” covered under the state money laundering act. The law would define bitcoin as a “medium of exchange in electronic or digital format that is not a coin or currency of the United States or any other country.”

Prosecutors will still have to prove intent under the law, according to Andrew Hinkes, a South Florida lawyer. Prosecutors would have to show that the accused changed money for bitcoin or vice versa to conceal funds or further a future illegal transaction.

Hinkes said he did not believe the law would impact daily bitcoin users or investors. He said it could impact those exchanging bitcoin for dollars. The path to prosecution of traders for money laundering is currently clearer in Florida.

Money Laundering Case Raised Issue

Police presented a case against a website designer, Michel Espinoza, for illegally transmitting and laundering $1,500 worth of bitcoins. Undercover agents bought bitcoin from Espinoza on a bitcoin exchange, LocalBitcoins.com and told him they wanted to use the funds to buy stolen credit card numbers.

Police arrested Espinoza and another man, Pascal Reid, who pleaded guilty to acting as an unlicensed money broker. Reid agreed to teach law enforcement about bitcoin under a plea agreement.

Defense lawyers argued, however, that bitcoin is not money under Florida law. They told a judge in May 2016 that no bank or central government backs bitcoin and that regulation of bitcoin varies from state to state and country to country, and that the IRS views bitcoin deals as a form of bartering.

The judge threw out the charges against Espinoza. Prosecutors are appealing the ruling.

Also read: Economist argues bitcoin isn’t real money in Miami money laundering case

Criminals And Others Use Bitcoin

Bitcoin has been used by drug dealers. A Miramar, Florida man was sentenced to 10 years in prison after buying Chinese-made synthetic heroin from a Canadian prisoner using bitcoin.

When companies stopped accepting business from Backpage.com on account of sex trade ads, the website began accepting payment in bitcoin. Sex traffickers and prostitutes learned how to buy bitcoins to purchase ads on the website.

A handful of Miami restaurants accept bitcoin, including a South Beach hotel and The Clevelander, a club.

Featured image from Shutterstock.

Last modified: October 18, 2019 02:34 UTC

More of: florida
Show comments