[frank_jaeger]

The entire point of money laundering is to convert ill-gotten money into seemingly legitimate assets. It's not like they offered Espinoza dirty cash that he would buy for cents on the dollar with clean cash. He didn't channel their cash through legitimate business channels to obfuscate its history. He engaged in nothing resembling money laundering. This was a man who sold a commodity. Replace Bitcoin with literally anything else. If Espinoza sold them $30,000 of frozen orange juice concentrate, who cares if they're going to trade that for stolen Russian credit cards? In no way is he facilitating money laundering in either scenario.

[icebraining]

Yeah, even if he sold, say, Euros, how would it be laundering? It's amazing this even got to court.

And apparently, another guy during the same operation was charged and sentenced to five years probation for unlicensed money transmission: http://www.coindesk.com/judge-orders-localbitcoins-user-to-e...

[tim333]

Laundering is usually "the concealment of the origins of illegally obtained money." That could apply to swapping for euros or whatever. It's whether you are doing it to conceal the origins that is important.

[CoryG89]

Yeah, I think they messed this up. In my view they could have charged him with money laundering if they could have proven that the bitcoins he was using were purchased with illicitly obtained funds. The laundering would have taken place when the bitcoins were purchased, not when they were sold.

[frank_jaeger]

I'm not sure exactly what you're implying. Are you suggesting Espinoza was laundering? Or currency exchange is money laundering?

That his buddy had to cop to a plea deal with overzealous prosecutors is unfortunate, but in no way changes Espinoza's case.

[reviseddamage]

>He engaged in nothing resembling money laundering

I happen to know what money laundering is, being a certified money laundering specialist (CAMS) and all, and what he allegedly engaged in was money laundering. However, the judge was being completely fair in her statement as the prosecution did a lot of flippity flop and kept switching back the defendant's position from what is a business and a payment instrument seller. This was a relatively easy case to win for the prosecution, but pretty astounding as to how a very ill prepared prosecution and well prepared defense can go a long way.

[jperras]

> I happen to know what money laundering is, being a certified money laundering specialist (CAMS) and all

One would hope that you are, in fact, a Certified Anti-Money Laundering Specialist, since what you initially labeled yourself as implies that you routinely engage in illegal activites.

[reviseddamage]

:) thanks, careless typing. it is in fact anti-money laundering.

[guiambros]

I'm not following the logic here.

Let's say person X has lots of bitcoins (potentially mined from the early days, when it was very easy to obtain). They go and sell it for $30,000, in cash. Let's assume X has the intention to declare the gains in their upcoming tax returns.

Why this would be money laundering?

Basically X is selling a property in the form of a mathematical equation, that was obtained legally. Of course they'll have to pay taxes like in any other profit-generating transaction, but other than that I'm failing in seeing the issue.

ps: it seems that in this case they were trying to entice the guy with stolen credit cards. As that didn't work, they tried switching to money laundering.

[reviseddamage]

>Let's say person X has lots of bitcoins (potentially mined from the early days, when it was very easy to obtain). They go and sell it for $30,000, in cash. Let's assume X has the intention to declare the gains in their upcoming tax returns.

it's not what's happening here. i haven't seen where that was implied either.

>it seems that in this case they were trying to entice the guy with stolen credit cards. As that didn't work, they tried switching to money laundering.

no, they didn't entice him stolen credit cards, they, undercover, purported the sale of bitcoins/cash to him for the purpose of laundering the proceeds of the crime ( stolen credit card). Therefore, if he engaged in that sale knowingly, he willingly engaged in the laundering of proceeds of crime, i.e: money laundering. What they were weak or unable to demonstrate substantially was that his transactions thus far before the sting, were largely derived in the operations of aiding and abetting the laundering of the proceeds of crime.

[guiambros]

I don't think you have read the case [1].

They did try to entice with him with bullshit stolen credit cards. If you read carefully the first two pages, nothing was technically illegal, other than the fishy part where the defendant said he would "think about it" when offered to be paid with stolen credit cards. Had he said "No way Jose", it would have been a perfectly clean transaction, that could have happened to anyone on HN.

Still, he allegedly didn't accept the credit cards, and the detective tried to proceed with counterfeit money. In the end the defendant was charged with money laundering simply because he was selling bitcoins, which is utterly absurd. The judge was spot on to throw the case out.

I have no sympathy for crooks using bitcoins to cover their illicit actions, but I have equally no sympathy for law enforcement burning taxpayer dollars to chase ghosts.

[1] http://www.miamiherald.com/latest-news/article91701087.ece/B...(.PDF)

[reviseddamage]

I did the read the case, your premise and understanding of what money laundering is, in this case incorrect. When something is illegal it does not have a binary state of technically illegal, and nontechnically illegal. It is or it isn't. Knowing and willingly, aiding and abetting laundering proceeds of crime is considered in the same case of money laundering, whether you stole the cards, or got money for stolen cards you sold, or you helped the guy who got money for the cards he sold, or you helped the guy who helped the guy that got money for the stolen cards he sold.

It's not easy to understand the vague and imprecise world of money laundering because the laws were written to be broad.

This is not the first time stings are carried out, this is also not the first time a prosecution fails at a case that by all indications of the allegation should have been easy to close.

[blackbagboys]

Actually, the government invests quite a lot of time and resources in prosecuting people who facilitate money-laundering through the purchase and sale of commodities (look up "trade based money laundering").

[cloudjacker]

woah woah woah you are trying to make too much sense here.

Florida's money laundering statute wasn't any where as clear cut, and the judge recognized that and dismissed the case.

Honestly the part about bitcoin itself is a red herring.