''Alleged Silk Road owner says he can't be guilty of money laundering if bitcoin isn't money''

[TopWargamer]

http://mobile.theverge.com/2014/4/1/5570984/alleged-silk-road-owner-says-he-cant-be-guilty-of-money-laundering

Ross Ulbricht, who stands accused of running the Silk Road black market under the name "Dread Pirate Roberts," says that new federal bitcoin laws make the charges against him invalid. In a filing over the weekend, Ulbricht's lawyers defended him against charges of hacking, narcotics trafficking, operating a criminal conspiracy, and money laundering. The first three charges, his lawyers argue, are "unconstitutionally broad" and can't be applied to the normal operation of a website, even one whose business is illegal goods. And the last charge, they say, makes no sense if there isn't actual money involved — a possibility implied by a recent IRS decision.

LOOPHOLES! I mean, I don't approve of what the guy was doing, buuuuuut he technically has a point. This court case just got a whole lot more interesting. Your move IRS.

[Guest]

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[SirRoderick]

How is narcotics trafficking not a valid charge?

[Oshino Shinobu]

Watch them change Bitcoin to a currency just for this, then change it back as fast as they can. 

[420istoday]

HAHA! And technically, he's not guilty of drug trafficking, unless they can prove he specifically bought and sold on his own network, which would be really dumb, even I know you only invest in drug dealers, you make money without getting your hands dirty.

[Guest]

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[qwertywarrior]

http://mobile.theverge.com/2014/4/1/5570984/alleged-silk-road-owner-says-he-cant-be-guilty-of-money-laundering

LOOPHOLES! I mean, I don't approve of what the guy was doing, buuuuuut he technically has a point. This court case just got a whole lot more interesting. Your move IRS.

rofl hahahah !!!!

i havnt thought if it but its right !

[SirRoderick]

because he never trafficked narcotics. He hosted a website were they were sold... He is being charged for hiring an assassin and money laundering. He knew were to stop unfortunately

Surely he would be at least an accessory if he did nothing to stop obvious criminal use of his website. It's nto a grey area like piracy, this is physical goods.

[onionring]

Surely he would be at least an accessory if he did nothing to stop obvious criminal use of his website. It's nto a grey area like piracy, this is physical goods.

this is not the main point of this post,

of course he tries to defend himself with any good or bad arguments he can find.

but the interesting part is how he uses the current definition of bitcoin to troll the court.

[dragosudeki]

So either he is free of charge or the court has to change how they define bitcoin again.... More regulation coming soon to a bitcoin exchange near you!

[Puppet]

It's hardly a loophole, if I had loads of untaxed cash and put it all into diamonds, the IRS or HMRC or whoever are still going to ask where you got the money for the diamonds and if you can't provide a legitimate paper trail then I would assume you would get prosecuted?

 

Is not not the same as spending untaxed cash on mansions and cars, I don't understand this, I'm probably missing something though?

 

Maybe they have a hard time valuing what his bitcoins were worth at the time he received them? 

 

Edit: Scratch that, what am I thinking (just woke up :lol:), It was never cash to begin with, but would that really work too? Could I sell $10m of cocaine secretly in exchange for a mansion (gift) and not get taxed? And presumably his deals were not secret and they have a record?

 

So many question marks :lol:

 

Edit 2: This is kind of interesting: http://www.irs.gov/taxtopics/tc420.html

 

He is still expected to pay tax even if using a bartering system, so my thoughts are that he could still be prosecuted for tax evasion.

[onionring]

It's hardly a loophole, if I had loads of untaxed cash and put it all into diamonds, the IRS or HMRC or whoever are still going to ask where you got the money for the diamonds and if you can't provide a legitimate paper trail then I would assume you would get prosecuted?

Is not not the same as spending untaxed cash on mansions and cars, I don't understand this, I'm probably missing something though?

Maybe they have a hard time valuing what his bitcoins were worth at the time he received them?

Edit: Scratch that, what am I thinking (just woke up :lol:), It was never cash to begin with, but would that really work too? Could I sell $10m of cocaine secretly in exchange for a mansion (gift) and not get taxed? And presumably his deals were not secret and they have a record?

So many question marks :lol:

Edit 2: This is kind of interesting: http://www.irs.gov/taxtopics/tc420.html

He is still expected to pay tax even if using a bartering system, so my thoughts are that he could still be prosecuted for tax evasion.

no it s really simple,

he s accused of money laundering.

the guy never touched real money or the products, he only traded bitcoin(might as well be cards for the gouvernement)

so he didn t launder money since bitcoin isn t considered money. (that s his reasoning)

he laundered bitcoins tho but that s not what his accusation are about(and that s how he hopes to get away with it).

i m in no way saying what he did was right, only clarifiying what i think his point of view is.

[Puppet]

no it s really simple,

he s accused of money laundering.

the guy never touched real money, he only traded bitcoin(might as well be cards)

so he didn t launder money since bitcoin isn t considered money. (that s his reasoning)

he laundered bitcoins tho but that s not what his accusation are about.

 

(See edit 2) As Bitcoins are now classified as property he is using a bartering system, which according to the IRS link I posted (Ironically named Topic 420 :lol:) still has to be accounted for in tax reports.

 

I did find it odd, surely they wouldn't have let money laundering be that easy.

[Jasmin]

(See edit 2) As Bitcoins are now classified as property he is using a bartering system, which according to the IRS link I posted (Ironically named Topic 420 :lol:) still has to be accounted for in tax reports.

 

I did find it odd, surely they wouldn't have let money laundering be that easy.

Now. Only recently bitcoins have been made into property. Before he could have traded bazillions of them with no tax. Also once you file charges incorrectly judge has to make a verdict based it and you cannot be sued again for the same thing if it was dropped. Will be interesting to watch how they work out their way out of it.

[onionring]

(See edit 2) As Bitcoins are now classified as property he is using a bartering system, which according to the IRS link I posted (Ironically named Topic 420 :lol:) still has to be accounted for in tax reports.

I did find it odd, surely they wouldn't have let money laundering be that easy.

well the point isn t about tax evasion but more about the accusation of money laundering, which is to make money look legit when it isnt. I guess it s on that point that he s trying to find a hole. (he isn t acused of tax evasion yet as far as i m aware)

and you can t launder goods i think, only money. you could launer money with goods but then you need to touch both the goods and the money. like a bitcoin exchange would.

but i m no lawyer so idk...

[Puppet]

well the point isn t about tax evasion but more about the accusation of money laundering, which is to make money look legit when it isnt. I guess it s on that point that he s trying to find a hole. (he isn t acused of tax evasion yet as far as i m aware)

and you can t launder goods i think, only money. you could launer money with goods but then you need to touch both the goods and the money. like a bitcoin exchange would.

but i m no lawyer so idk...

 

Yeah I'm no laywer either, I run a small business so I am always curious about tax laws. To me money laundering and tax evasion are very similar, the only reasons to have illegitimate money would be to avoid tax and/or if you were worried about the legality of your business.

 

 

Now. Only recently bitcoins have been made into property. Before he could have traded bazillions of them with no tax. Also once you file charges incorrectly judge has to make a verdict based it and you cannot be sued again for the same thing if it was dropped. Will be interesting to watch how they work out their way out of it.

 

Yeah this is what I found curious about that decision, I know very little about US laws, but maybe the reason for this decision was so that they can prosecute people for tax evasion going into the future in cases like this. I think you are right, it would be unfair to retroactively prosecute him for a recent change in the law, but they do have tangible evidence as to the rough value of his Bitcoins based on the records of the cut he would have taken from all the trades on SR.

 

I'd say they are panicking and he has a good chance of getting away with it, but he'll probably be the last person to do so.

 

It's all pretty interesting to me, I'm from the UK and the HMRC has similar rules, I have occasionally bartered and I am only now realising that I didn't include them in my tax returns, I will of course be paying them back  .

[Blue fellow]

This guy is wrong.

 

http://www.law.cornell.edu/uscode/text/18/1957

 

First section A

 

 

(a) Whoever, in any of the circumstances set forth in subsection (d), knowingly engages or attempts to engage in a monetary transaction in criminally derived property of a value greater than $10,000 and is derived from specified unlawful activity, shall be punished as provided in subsection .

 

Then F-1

 

 

 

the term “monetary transaction” means the deposit, withdrawal, transfer, or exchange, in or affecting interstate or foreign commerce, of funds or a monetary instrument (as defined in section 1956 ©(5) of this title) by, through, or to a financial institution (as defined in section 1956 of this title), including any transaction that would be a financial transaction under section 1956 ©(4)( of this title, but such term does not include any transaction necessary to preserve a person’s right to representation as guaranteed by the sixth amendment to the Constitution;

 

http://www.law.cornell.edu/uscode/text/18/1956

 

 

(1) Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity—

 

So they have the correct charges. The government isn't stupid enough to let people launder by using gold bars or any other form of property with value.

[Misanthrope]

(See edit 2) As Bitcoins are now classified as property he is using a bartering system, which according to the IRS link I posted (Ironically named Topic 420 :lol:) still has to be accounted for in tax reports.

 

I did find it odd, surely they wouldn't have let money laundering be that easy.

 

You got it, I'm also all but certain this is why now all of the sudden bitcoins are classified as property otherwise it would be easy to money launder anything you would otherwise need to go to gangsters and other career criminals to launder.

 

EDIT: The other loophole he might slip through however, is that the law can't be applied retroactively, meaning anybody who now tries to do the same (knowingly trade in bit coins as the proceedings of drug or other illegal goods and services) wouldn't be able to get away with it but this guy might since bitcoins were not properly during the time he was running the show. In fact the irony is that that if before the new law it was a grey area a case could have been brought up anyway, subject to lots of interpretations and appeals, but now that bitcoins are black letter law it gives him a defense (you just NOW made em property henceforth implying that they weren't property before)

[Puppet]

You got it, I'm also all but certain this is why now all of the sudden bitcoins are classified as property otherwise it would be easy to money launder anything you would otherwise need to go to gangsters and other career criminals to launder.

 

EDIT: The other loophole he might slip through however, is that the law can't be applied retroactively, meaning anybody who now tries to do the same (knowingly trade in bit coins as the proceedings of drug or other illegal goods and services) wouldn't be able to get away with it but this guy might since bitcoins were not properly during the time he was running the show. In fact the irony is that that if before the new law it was a grey area a case could have been brought up anyway, subject to lots of interpretations and appeals, but now that bitcoins are black letter law it gives him a defense (you just NOW made em property henceforth implying that they weren't property before)

 

It is kind of messed up isn't it, he should obviously be paying tax, even if he does wriggle free due to poorly written laws I suppose now he will pay the tax when he goes to convert his Bitcoins into a legal currency as they would be seen as an investment. But will he just pay tax on the increase in value since they were acquired? or is that irrelevant due to the recent changes? It is quite confusing.

 

I think its all just proof that politicians and lawmakers are far too focused on the now rather than the later, like with copyright and IP laws.

[Blue fellow]

You got it, I'm also all but certain this is why now all of the sudden bitcoins are classified as property otherwise it would be easy to money launder anything you would otherwise need to go to gangsters and other career criminals to launder.

 

EDIT: The other loophole he might slip through however, is that the law can't be applied retroactively, meaning anybody who now tries to do the same (knowingly trade in bit coins as the proceedings of drug or other illegal goods and services) wouldn't be able to get away with it but this guy might since bitcoins were not properly during the time he was running the show. In fact the irony is that that if before the new law it was a grey area a case could have been brought up anyway, subject to lots of interpretations and appeals, but now that bitcoins are black letter law it gives him a defense (you just NOW made em property henceforth implying that they weren't property before)

 

The IRS policy is retroactive so I doubt he'll have much of a case there.

[Misanthrope]

The IRS policy is retroactive so I doubt he'll have much of a case there.

 

Well he's just screwed then. I don't get why IRS law is retroactive, it shouldn't be since it would be a sure fire way to fuck people out of all of their money if and when they choose to. But I'm no expert I'll take your word for it.

[Jasmin]

The IRS policy is retroactive so I doubt he'll have much of a case there.

How can something be declared a property retroactively? It would mean that anybody who ever made a transaction using bitcoins would be a criminal.

 

They are also in trouble since US gov stated many times that bitcoins aren't money before and they couldn't be considered property, same way gold in WoW isn't (you don't have to pay tax for paying in WoW gold for time spent on whatever) before the law has been written. The only real charge out there is hiring  an assassin. Not sure how he can get away from that one.

[Kamina]

lol good argument. 

[IPCharger]

[Fred Castellum]

Him this is certainly interesting, however I feel like they'll still find some way to lock him up.