Miami CSI – Bitcoin entrapment 101


US undercover agents regularly adopt overt criminal pretexts for the purchase of bitcoin to see who will fall in the snare.

It is quite apparent, that the problem with money laundering regulation is that people have the naively-dangerous misapprehension that somehow this is a job for a bank to do and not them. If you have a lemonade stall and Don Corleone walks up to you with a tommy gun, cigar and suitcase full of cash to buy all of your lemons, then it is not your lucky day by any means. Your only amnesty from you becoming a accomplice in this, albeit caricature of a money laundering scheme, is to report your suspicion to the police and co-operate with the authorities.

Something Michell Espinoza, a Miami resident seemingly failed to do. Espinoza is accused of selling bitcoins to undercover officers who asserted they needed the bitcoins to buy stolen credit cards.

Interestingly, in Espinoza’s defence, his lawyers are arguing that bitcoin is not money under the law in Florida and, therefore, money laundering charges do not apply. The prosecutors in this case claim that bitcoin is being used ‘as money’: “You don’t purchase a hamburger with a comic book […]You usually purchase it with cash, or in this case, a Bitcoin” (that is an expensive burger indeed). In any event, this court case should provide some needed clarification on the definition of bitcoin in the state of Florida.

Lastly, in a somewhat uncanny replay of a CSI series, the article in the Miami Herald mentions how one of the witnesses at the trial called Evans was previously accused of operating an unlicensed money transmission business (selling bitcoins on LocalBitcoins) but entered into a plea bargain whereby he would teach the police about bitcoin in return for a mitigated sentence. As put by the Miami Herald: “Evans was the one doing the teaching in court on Friday.”