Florida court rules police can target unregulated crypto sales

January 31, 2019
Chris Wheal

As more laws governing cryptocurrency are being developed in the U.S., so is their enforcement. This Wednesday, the Third District Court of Appeals ruled a Miami judge was wrong to dismiss the felony conviction against the Florida-based web designer, Michell Espinoza, who was caught selling $1,500 worth of Bitcoin to an undercover cop in 2016.

bitcoin court

The initial defense strategy was based on the statements from Espinoza’s lawyer on the fact that bitcoin is not considered a legal tender under the Florida law and is barely “poker chips that people are willing to buy from you.”

However, the appeals court ruled on Wednesday that Espinoza was indeed involved in “money transmitting” without the proper registration under the Florida’s Office of Financial Regulation. Additionally, the judge stated that Espinoza was not selling his own personal bitcoins, he was “marketing a business.”

The U.S. law is considered to be “open,” meaning that a new precedent can be always set by a new court ruling, and judges do tend to look to the recent rules on similar cases at a trial. The precedent created with reinstating of Espinoza’s criminal conviction means more crypto players may be potentially prosecuted by Florida’s law enforcement for illicit cryptocurrency use. However, according to John Londot, a lawyer who is also a member of the Digital Currency & Ledger Defense Coalition, this ruling is not likely to have a major effect in the industry, due to the fact that most crypto businesses in the U.S. are already properly registered. The country’s regulatory stance on cryptocurrencies is pretty clear and straightforward – they are treated as securities and are under the Securities and Exchange Commission (SEC) regulation.

According to Londot, the practical effect of this ruling will most likely be felt only “in the margins” – instances, where people buy and sell currencies in order to avoid banking, law enforcement, or for tax evasion purposes.

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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