If you are in the tech world, you might have heard about the ongoing case of the State of Florida vs. Michell Abner Espinoza. Abner was accused of money laundering and unauthorized transmission of money, but for many, the ruling affects more than just one man’s prison sentence. The case discussed the definition and distinction of “Bitcoin,” commonly regarded as an online measurement of currency.
The case’s final ruling in July may come as a shock to many Bitcoin users. The state of Florida ruled that Bitcoin isn’t money, and selling it is not considered “transmission” under Florida law. Which means it isn’t money laundering.
How did they come to this decision?
State of Florida vs. Michell Abner Espinoza
To catch money laundering in action, Miami Beach detectives went on Craigslist and localbitcoins.com and saw Abner’s posting about selling Bitcoin for cash. This is sometimes a sign of illegal activity. Bitcoins are traded online (sites like Amazon and Target sometimes accept Bitcoin as currency) and it is regarded as physical, taxable property. However, the value of Bitcoin fluctuates wildly, and the currency is often hard to define.
Members of the task force decided to meet up with Abner on multiple occasions to trade Bitcoin for cash. Abner was profiting off of these transactions due to the fact that Bitcoin’s value was always changing.
After meeting with Abner several times, task force members offered to trade Bitcoin for stolen credit cards, as well as counterfeit cash. They also mentioned the intention to use the Bitcoin to buy stolen credit cards. Abner was hesitant, but during a third meeting in a hotel room (in which Abner was offering to sell $30,000 worth of Bitcoin), members of the task force arrested him.
Abner was charged with two counts of money laundering and one count of unauthorized transmission of money. One of the arguments posed by Abner’s lawyers detailed his distance from the detectives’ proposed illegal white collar activities. Since Bitcoin was not being used by Abner to purchase stolen credit cards or participate in other illegal activities, he was not doing anything illegal.
The biggest element of the case, however, was the use and definition of Bitcoin.
In this case, the State did not regard Bitcoin as either “money” or a “payment instrument.” This comes in part from the vague definitions of Bitcoin (i.e. the IRS’s definition of Bitcoin as property) and the overall lack of clarity as to what Bitcoin is. The judge herself mentioned that she could not define Bitcoin.
So without money to launder, money laundering cannot take place. Abner was acting legally by exchanging Bitcoin for money. The judge compared Abner’s actions to day trading rather than laundering. The charges were dropped against Abner, and have set an interesting precedent for future cases involving Bitcoin and virtual currency.
This is a unique case, and other jurisdictions in the future may take a different stance on the definition of money and whether or not Bitcoin applies.
What was Abner up against?
Charges and Penalties for Money Laundering in Florida
The state of Florida defines money laundering as using financial transactions to cover up the gains of unlawful activity. These transactions include sales, deposits, loans, transfers, investments, or currency exchange.
For example, someone who steals a large amount of cash from an ATM is not guilty of money laundering. Hiding that cash, however, by investing in stocks, or exchanging the cash into a different type of currency, is money laundering.
This is where Abner’s case got tricky. Was he part of a money laundering conspiracy?
Since amounts ranging from $500 to $30,000 were exchanged between Abner and undercover officials, Abner faced a third degree and second degree felony charge. Money laundering charges, and the associated penalties are determined by the amount of money involved, or the value of the financial transactions:
- Between $300-$20,000: third degree felony; up to 5 years in jail
- Between $20,000-$100,000: second degree felony; up to 15 years in jail
- Above $100,000: first degree felony; up to 30 years in jail.
Fines for money laundering charges are also determined by the value of the financial transaction. Florida allows judges to impose a fine on first-time offenders of either $250,000 or double the value of transactions (whichever is greater). For second-time offenders, judges can impose a fine of $500,000 or five times the value of transactions.
Abner’s use of Bitcoin saved him years in jail and potentially hundreds of dollars in fines, but not everyone who is accused of money laundering walks away free. If you are accused of money laundering or other related crimes, contact a Florida criminal lawyer immediately.
About the Author:
Attorney David W. Olson is the founder of the Law Offices of David W. Olson in West Palm Beach. He has been practicing criminal law and successfully representing clients throughout the State of Florida for over 30 years. Throughout his legal career, Mr. Olson has been honored numerous times for both his dedication and excellence in criminal law. He proudly holds the Martindale-Hubbell AV Rating, as well as being recognized as a Top 100 Trial Lawyer (2013), in the Nation’s Top One Percent of attorneys (2015), and as a 10 Best Member of the American Institute of Criminal Law Attorneys (2015). He has even received commendations from members of congress and other public officials for the fantastic work that he’s done. Mr. Olson graduated from the University of Florida’s Fredric G. Levin College of Law in 1981 and has been a member of the Florida Bar since 1983.