An appeals court has reinstated felony charges against a Florida Bitcoin seller for unregulated sales and money laundering.
Since Bitcoin was first created, governments have wrestled with how to define and regulate it. There’s little legal framework to go on in most cases, and many national governments have gone into contortions trying to decide if cryptocurrencies are a security, legal tender, or something else entirely. That being said, state and federal governments do take a dim view of someone brokering deals of a financial nature, even if they’re related to cryptocurrency. Case in point is a Florida man who is once again facing felony charges for selling BTC without a license.
Bitcoin Seller Busted
The person in question is Michell Espinoza, a 35-year-old web designer living in Miami Beach. He was initially charged back in 2014 with illegally transmitting and laundering bitcoins worth $1,500. The judge in the case dropped the charges, but an appeals court has now ruled that the judge was wrong and that Espinoza would have to face those felony charges in a jury trial.
The saga of Michell Espinoza is a somewhat long and twisted one. Miami police came across Espinoza in 2014 when he advertised on LocalBitcoins.com that he would sell BTC to interested buyers, but he would charge a fee for doing so.
Police detectives then arranged a meeting with him at a local coffee shop. The undercover detective paid Espinoza $500 for $416.12 in bitcoins. The detective said that he was buying the BTC in order to buy credit card numbers stolen by Russian hackers.
The next meeting took place at an ice cream shop where the detective paid $1,000 for bitcoins worth $832.44. Two more meetings took place, and Espinoza was arrested at the fourth and final meeting.
An interesting tidbit is that another man was arrested along with Michell Espinoza. The other man pleaded guilty to acting as an unlicensed money broker and just received probation. Even more intriguing is that he also taught the police about Bitcoin as part of his plea deal.
Dismissal and then Reinstatement
The initial court case went well for Espinoza. In 2016, the judge was asked by Espinoza’s defense team to dismiss all charges as Bitcoin is not money. His defense expert, Barry University economics professor Charles Evans, told the judge, “Basically, it’s poker chips that people are willing to buy from you.”
After a few months had passed, Circuit Judge Teresa Mary Pooler agreed with the defense. She said that Bitcoin was not “tangible wealth.” She added that it “cannot be hidden under a mattress like cash and gold bars.”
Fast forward a couple of years. Espinoza’s case resulted in the state legislature adding cryptocurrencies to the law that deals with money laundering. This was done after the fact that the felony charges against Espinoza were dismissed.
However, the Third District Court of Appeals overturned the decision by Circuit Judge Teresa Mary Pooler. They ruled that since Espinoza had made a profit by selling BTC to the detectives, he was taking part in “money transmitting” of an unregulated nature. They said he should have registered with the state’s Office of Financial Regulation as he “was marketing a business” as he was not selling his own personal bitcoins but, rather, acting as a broker.
All of this means that Espinoza will have to go to trial on felony charges on actions he took five years before and for not much material gain. No trial date has been set. One would think that the prosecutor will offer some kind of plea deal, but who knows for sure?
What do you think will happen to Michell Espinoza? Is the state of Florida going overkill for just $1,500 in bitcoins? Let us know in the comments below.
Images courtesy of the Miami Herald and Pixabay.