It would appear as if the legal counsel of alleged Silk Road founder Ross Ulbricht is using recent IRS guidance (and FinCEN publications) relating to bitcoin to try and get charges against his client dropped.
As a brief primer, last week the Internal Revenue Service announced that bitcoins and other cryptocurrency shall be treated as property.
As such, the attorney, Joshua Dratel, has argued in a motion that money laundering charges against Ross Ulbricht should be dropped because bitcoin does not qualify as a “money instrument”.
Bitcoin does not qualify under any prong of that definition. Both IRS and FinCEN havecategorically declared that Bitcoins are not “funds.” Also, a “monetary instrument” is either “coin or currency of the United States or of any other country, travelers’ checks, personalchecks, bank checks, and money orders,” §1956(c)(5)(i) – again, negated by IRS’s and FinCEN’s pronouncements – or “investment securities or negotiable instruments, in bearer formor otherwise in such form that title thereto passes upon delivery[,]” §1956(c)(5)(ii) – a character neither IRS nor FinCEN has ascribed to Bitcoin.
Regarding the other charges against Ulbricht, Dratel also asked for these to be thrown out as he considers them to be unconstitutionally vague.