Court ruling paves way to arrest unregulated Bitcoin sales

A Miami Beach man can be prosecuted for selling Bitcoin to an undercover detective, an appeals court ruled on Wednesday in a decision that makes it easier for Florida law enforcement to target people who buy and sell virtual currencies in unregulated deals.

The Third District Court of Appeal ruled that a Miami judge was wrong to dismiss felony charges against Michell Espinoza, a website designer who was charged with illegally transmitting and laundering $1,500 worth of Bitcoins.

His defense team challenged the prosecution, arguing that Bitcoin is not actually money under Florida law. In 2016, a Miami-Dade circuit judge threw out the charges, agreeing with a defense expert that said Bitcoins are nothing more than “poker chips that people are willing to buy from you.”

But the appeals court ruled that Espinoza, who made a profit from selling Bitcoins to an undercover Miami Beach detective, was indeed engaged in unregulated “money transmitting” and should have registered with Florida’s Office of Financial Regulation.

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“Espinoza’s Bitcoins-for-cash business requires him to register as a payment instrument seller and money transmitter” under Florida law, the court ruled, adding he was “not merely selling his own personal Bitcoins, he was marketing a business.”

The felony charges against Espinoza, 35, will now be reinstated. No trial date has been set.

The practical effect on the larger Bitcoin trade, however, may only be felt in the margins, where people buy the virtual currencies to avoid the banking system, regulators and the scrutiny of law enforcement.

“Most clients in the Bitcoin business, they’ve registered as money transmitters. That’s been the trend in Florida,” said John Londot, a Tallahassee lawyer who is part of the Digital Currency & Ledger Defense Coalition, which filed a brief on Espinoza’s behalf.

Charles Evans, a Barry University economics professor who served as a defense witness, disagrees with the decision but said it shows the “virtual currency industry is finally starting to grow up.”

“The Wild West days are over. The regulators and prosecutors are trying to bring order to all the chaos — and this is part of the process,” Evans said Wednesday.


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