Bitcoin Not Real Money According To Miami Judge

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Monday, August 22nd, 2016 | Written by Shane Larson

Bitcoin is a virtual currency that you can’t hold in your hand, but that can be used online to buy things, pay for services, and even gamble on some websites. But is it real money? A Miami judge says no, and her ruling on the matter could have a major impact on the future of bitcoin. As Judge Teresa Mary Pooler stated in her ruling:

“The Florida legislature may choose to adopt statutes regulating virtual currency in the future. At this time, however, attempting to fit the sale of bitcoin into a statutory scheme regulating money services business is like fitting a square peg in a round hole.”

About the Espinoza Case

The case in question involved a Florida man named Michel Espinoza who was charged with money laundering following an FBI sting operation in which he allegedly turned over $1,500 worth of bitcoin to undercover agents that said they were going to use the currency to purchase stolen credit card numbers.

From the outset, Michael Espinoza’s lawyer had been arguing that Florida state law does not classify bitcoin as real money; therefore, Espinoza could not be found guilty of money laundering, and the charges should be dropped.

The Judge’s Ruling

In her ruling handed down on May 25, 2016, Judge Teresa Mary Pooler concedes that she is not an expert in economics, but that based on her understanding, bitcoin has not yet met the standards required to classify as currency.

She stated that because the laws have not yet been updated to account for virtual currencies like bitcoin, the case against Michael Espinoza could not be argued in a court of law. She subsequently dismissed the case, and the defendant was free to go. Moreover, she also said that Espinoza’s alleged actions did not really fit the state’s definition of money laundering even if one did consider bitcoin to be currency, stating:

“The court is not an expert in economics; however, it is very clear, even to someone with limited knowledge in the area, the Bitcoin has a long way to go before it [is] the equivalent of money.”

A Surprising Move

The bitcoin case in Florida has captured the attention of the world as most experts had believed that the judge would proceed with the case. After all, federal regulators are already moving towards treating bitcoin similar to a federal currency for the purposes of laws and regulations, with FinCEN, the federal agency that oversees cases that involve treasury-related crime, already actively pursuing individuals using bitcoin to fund illegal activities.

The IRS also taxes bitcoins, although not as currency, but rather as personal property.

Still, Pooler felt that even if this is the direction things were headed, the law was not there yet. In her opinion and based upon the current state of regulations, there is just not enough clarity on the issue to try Espinoza. In her remarks, she said that the Florida State legislature may wish to amend the laws in the future in order to have outcomes of similar cases like Espinoza’s potentially turn out differently.

Global Impact

While it’s possible that another US judge might give a different opinion on the matter, the outcome of Espinoza’s case indicates that at the present time convicting people who are using bitcoin for illegal gambling and other crimes may be difficult, if not impossible. Testifying at the Florida trial was expert witness Charles Evans, an associate professor of finance and economics at Barry University, and later commenting on the case he explained:

“Today is a good day. The battle isn’t finished but at this particular moment we should all take our victories where we can take them and this counts as a victory.”

Furthermore, Professor Evans stated that the Miami court’s ruling will “absolutely” provide a measure of guidance for other courts across the US, as well as be used as a potential precedent in other countries. Elaborating further, Evans said that although bitcoins may not be considered a real monetary unit, they can still be used to barter, store value and act as an inflation hedge.

“Those who are not yet in the bitcoin community will be put on notice: as long as they organize their business in a particular way they can avoid the law.” Evans also added that “people who are engaged in illegal activities will continue to do what they are going to do because they are criminals.”