On July 24, a federal court declared bitcoin as a form of money under the Washington DC. Money Transmitters Act.
The situation arose during a case hearing of the United States versus Larry Dean Harmon. Harmon had put forward a dismissal motion for the case against him for running an underground bitcoin trading platform. The operation entailed unlicensed money transmission under DC. Financial Law and laundering under federal law.
Key Aspects of the Case
Harmon, the defendant, was facing charges on three counts according to an indictment from December 3, 2019. The first count entailed conspiring to launder money, violating 18 USC. § 1956(h). The second for operating an unlicensed money transmitting platform violating 18 US C § 1960(a). The third for engaging in an unlicensed money transmission business as explained in the DC Code § 26-1001(10) and against District of Columbia’s Money Transmitters Act (MTA), DC Code § 26-1023(c).
The court charged him with running Helix, an underground and unlicensed bitcoin transmission platform on the Darknet. The Darknet is only accessible to a group of anonymous users for illegal transactions away from the Law. The platform exchanged over 350,000-bitcoin equivalent to approximately $311 million.
Harmon moved the motion to dismiss the second and third counts arguing that the court did not clearly define the offences. He brought up two questions: the first asking if bitcoin was money as per DC’s MTA. The second if Helix was an unlicensed money transmission business under 18 USC. § 1960(b) (1) (B) for running as a bitcoin transmitter.
After careful consideration, the court dismissed the motion stating bitcoin as money per MTA Helix; therefore, it was illegal money transmitting business as far as the federal law was concerned.
Bitcoin – Commodity, Security or Currency?
In the past, DC did not have any regulations regarding bitcoin or any other cryptocurrency as a state.
However, the Money Transmitters Act describes money transmission as “engaging in the business of receiving money for transmission or transmitting money within the United States, or to locations abroad, by any means, including but not limited to a payment instrument, wire, facsimile, or electronic transfer.” DC Code § 26-1001(10).
As much as the MTA does not describe money, it adopts the general meaning for the same. Chief Judge Beryl A. Howell described money as a “means of exchange, payment, or store of value.” She added that bitcoin met these conditions hence adopting the meaning, although it is not necessarily restricting to money.
These descriptions are the primary reason the court ruled against Harmon, further denying the release of 160 bitcoins locked by the government. Judge Beryl ruled the possibilities of the involvement of other funds on Helix in drug-related endeavours as the basis for the denial.
Many grey areas surround the ruling considering the lack of a clear money definition by the M.T.A. Every state has its definition of bitcoin and other cryptocurrencies, which prevents a consensus. Nonetheless, every business conducting cryptocurrency transmission requires a license from the state.
Overall, any money laundering activities involving cryptocurrencies are subject to rules under federal money transmission laws as per The Treasury Department Financial Crimes Enforcement Division.