In a recent article published by CoinDesk.com, four court cases are cited as being influential in how Bitcoin will be regulated in the future. The four most influential court cases are as follows;
SEC vs Trendon Shavers- Shavers, the operator of the Bitcoin Savings and Trust, was accused of illegally amassing 700,000 BTC, amounting $64MN upon his arrest, via soliciting Bitcon-related investments. The decision in this case contradicted a previous statement by FinCEN which determined that as Bitcoin was not a legal tender as it is not considered a legitimate currency under the Bank Secrecy Act. In a court document, Amos Mazzant, magistrate judge in Texas, says,
[Bitcoin] can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses […] it can also be exchanged for conventional currencies, such as the US dollar, Euro, Yen and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money.”
Furthermore, the case set a standard by which judges can assess damages amounted in Bitcoin, using the average daily price at the time of the arrest.
US vs Faiella– In this large case, Faiella was accused of collaborating with Charlie Shrem, CEO of BitInstant, in the supply of Bitcoin to individuals using it on the Silk Road. Both were charged with using an illegitimate form of currency in conducting business, failure to file a suspicious behavior report, and money laundering. Both defendants plead guilty to the charges. The presiding Judge in the case stated,
Money in ordinary parlance means ‘something generally accepted as a medium of exchange, a measure of value, or a means as payment’. Bitcoin clearly qualifies as money.”
State of Florida vs Espinoza– Pascal Reid and Michell Abner Espinoza were accused of engaging in game transactions with undercover agents through online marketplace LocalBitcoins.com, conveying $30,000 worth of cash into Bitcoin. The Bitcoin Foundation has filed an amicus brief in an attempt to dismiss the charges of money transmission. The foundation argues that the law of which Reid is supposedly in violation of specifically applies to corporations and entities that do business in Florida. They also argue that as Florida has not yet chosen how to regulate Bitcoin, there is no reason for it to apply an “ambiguous criminal statute.” The defendants have filed to have the charges dismissed, citing guidelines by the IRS that state that Bitcoin is not money.
US vs Ross William Ulbricht- Ulbricht is accused of running Silk Road, the online black market and has been indicted on charges of computer hacking, drug trafficking, laundering and engaging in a criminal enterprise. Again, in this case, the defendant attempted to argue that the charges be revoked due to the fact that Bitcoin is not considered money. The presiding judge, Judge Katherine Foster, stated,
Bitcoins carry value- that is their purpose and function- and act as a medium of exchange.
She further confirmed,
There is no doubt that if a narcotics transaction was paid for in cash, which was later exchanged for gold, then converted back to cash, that would constitute a money laundering transaction. One can launder money using Bitcoin.”
These cases are shaping the ways in which Bitcoin will be perceived by both regulators and consumers in the future. While policy makers, such as those in New York, are working to decided where the US stands on Bitcoin, it is cases such as the ones described above that are actively drawing line in the sand.
Read more here- “4 Court Cases Helping Shape the US Stance on Bitcoin,” (Tanaya Macheel, CoinDesk)
Olivia is a graduate of Villanova University where she studied Economics and History, minoring in Gender and Women's Studies. She also has experience working with federal legislatures on health care policy, women's issues, and Internet safety.