The lawyers of two men accused of laundering money and running an unregister money services business through the LocalBitcoins.com trading website are hoping to use recent I.R.S. tax guidance on bitcoin as a means to drop charges, according to Fox News.
Michell Adber Espinoza and Pascal Reid were arrested in February of this year in a police sting that involved the Miami Beach Police Department and the United States Secret Service.
The two were picked up when agents posed as criminals, vocalizing their intentions to secure bitcoin in order purchase stolen credit card information online.
Reports in February indicated that the agents first transacted a $1,000 trade for one bitcoin (high above market value) in an apparent trust-building transaction.The men were picked up when a follow-up high-stakes deal of $30,000 was arranged.
The case: bitcoin isn’t money
Because the Internal Revenue Service has deemed bitcoin as property and not currency, Pascal and Espinoza’s legal counsel is using this to their advantage, citing that bitcoin isn’t money. Meanwhile, Miami-Dade Country prosecutors are saying that the charges related to money laundering fit the crime.
This tactic may seem familiar, and that’s because it’s been used recently in a high-profile case surround alleged Silk Road founder Ross Ulbricht. Ulbricht’s legal counsel motioned to have his charges dropped for the very same reason.
Not surprisingly, Espinoza and Reid have both pleaded not guilty.