U.S. citizen Thomas Costanzo has had a motion to suppress evidence denied in a bitcoin laundering case currently making its way through the United States District Court of Arizona. But the bigger-pictureinterest in this case lies in the court’s de facto acknowledgement that bitcoins are a currency — a direct rebuttal of a Miami judge’s state–level decision in 2016 that bitcoins weren’t technically money.
Feds: Yep, This Is Laundering
Thomas Costanzo is currently facing charges pertaining to an Internal Revenue Service (IRS) sting, in which he was allegedly caught facilitating the laundering of illicit funds through bitcoins using peer-to-peer cryptocurrencyexchange LocalBitcoins.
In the latest update to Costanzo’s case, his motion to suppress evidence garnered during a search of his residence in April 2017 has been denied by the U.S. District Court of Arizona. The multi-judgefederal court issued a 16-page explanation as to why the motion was denied.
“COSTANZO explained […] that anytime someone withdrawals [sic] more than $3,000 at a time, the bank will complete a SAR for the government to document the transaction. These statements lead [the] Affiant to believe that Costanzo is aware of United States money laundering laws and currencyreportingregulations and is knowingly using Bitcoin to circumvent the law and launder the proceeds from illegal activity.”
In reading between the lines of this passage, the subtext is hugely important. Here, a federal court is formally, albeit implicitly, acknowledging that bitcoin is a currency that can be used to launder other currencies, e.g. the U.S. dollar.
And while bitcoin being a currency is already taken as a given in the cryptocurrencyecosystem, the federal response to Constanzo’s case is a major development, if not an ambiguity, as a state–leveljudge in Florida came to a polar opposite opinion in a 2016 money laundering case.
Contradicts Miami Judge’s Ruling Last Year
But Miami Judge Teresa Pooler ended up throwing Espinoza’s case out altogether. The Florida circuit-court judge ruled that Espinoza wasn’t guilty of money laundering because, as The Washington Postput it, she concluded “bitcoin is not money at all. And if you don’t have money, you can’t exactly launder it.”
“Nothing in our frame of references allows us to accurately define or describe Bitcoin.”
Is a Supreme Court case imminent? Probably not any time soon. But Supreme Court cases in the U.S. most commonly arise when ambiguity materializes between state and federal law, so the preconditions are apparently being met in comparing the Costanzo and Espinoza cases.
Images via courtlistener, refinery29
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