Aug. 19 (Bloomberg) -- Bitcoins, the virtual currency that criminals allegedly used to buy drugs on the black-market Silk Road online bazaar, legally qualify as “money,” a judge overseeing two criminal cases tied to the site ruled.
U.S. District Judge Jed Rakoff in Manhattan today denied a request by Robert Faiella, who faces trial next month on charges of running an illegal underground Bitcoin exchange, to throw out one of the counts against him. Rakoff rejected Faiella’s argument that he can’t be convicted of operating an unlicensed money-transmitting business because Bitcoins aren’t money.
“Money in ordinary parlance means ‘something generally accepted as a medium of exchange, a measure of value, or a means of payment,’” Rakoff said in a written opinion, citing dictionary definitions. “Bitcoin clearly qualifies as ‘money.’”
Prosecutors in the office of Manhattan U.S. Attorney Preet Bharara in January charged Faiella and Charlie Shrem, former vice chairman of the Bitcoin Foundation, with conspiring to launder more than $1 million in the virtual currency. The two men are accused of engaging in a scheme to sell Bitcoins to Silk Road users, allowing customers to buy and sell illegal drugs anonymously, beyond the reach of law enforcement.
The prosecutions are part of a larger U.S. probe of crimes tied to Silk Road. Faiella and Shrem are scheduled to be tried Sept. 22. They have both pleaded not guilty.
Rakoff also today rejected Faiella’s arguments that his activities on Silk Road didn’t constitute “transmitting” money and that he wasn’t a “money transmitter” for purposes of the charge against him.
The case is U.S. v. Faiella, 14-cr-00243, U.S. District Court, Southern District of New York (Manhattan).
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