(GoldSilverBitcoin) U.S. Magistrate Judge Hugh B. Scott in Buffalo, New York ruled that bitcoin is not money in a money laundering case out of Buffalo. Scott ruled instead that Bitcoin is akin to a commodity, a collectible, but not currency.
Scott’s decision may not be upheld, as the district judge is reviewing it and reserves the right to take a different position, but it does raise interesting legal questions for the digital currency.
“The whole point of bitcoin is to escape the entanglement with sovereign governments,” Scott noted. “Money is not just any financial instrument or medium of exchange that people can devise on their own.”
Despite his harsh words about Bitcoin, he compared the commodity to collectibles such as “marbles, Beanie babies or Pokemon trading cards.”
Scott’s decision was based on a recommendation to U.S. District Judge Charles J. Siragusa’s, but will likely not be upheld in higher courts.
Scott’s decision came in a money laundering case against Richard Petix, a 31-year-old Rochester man with a previous child pornography conviction.
Scott’s decision, and they were obvious in the money laundering case against Richard Petix, a 31-year-old Rochester man.
Petix, who has a previous child pornography conviction, is accused of selling $13,000 in bitcoins to an undercover federal agent as part of a drug distribution and money laundering scheme. Scott recommended the money laundering charge be dropped because bitcoin isn’t money.
Despite Scott’s recommendation, Petix’s defense lawyers are withdrawing their motion to dismiss and are now planning to take his case to trial, in part because of Siragusa’s expected decision and because they want to get the matter resolved quickly. They also claim their client is far removed from the dark net and criminal element that uses bitcoin to hide its identity and location.
“This kid traded bitcoin like other people trade baseball cards, stamps or coins,” said defense lawyer Matthew R. Lembke of Rochester.
Deciding what Bitcoin ought to legally be considered for tax purposes has been a hot topic.
“It has some mainstream appeal,” said Xiang, the federal prosecutor. “And if enough people get comfortable with bitcoin, maybe it doesn’t go away. Maybe it has staying power.”