US Federal Judge Alison Nathan from the District of Manhattan has given an expected endorsement of the validity of cryptocurrencies as functioning legal tender. Ruling in the case of “Unlawful Bitcoin Exchange” Coin.mx he rejected the claim that Bitcoin isn’t money and therefore existing laws are not applicable to it.
The judge determined: “Bitcoins are funds within the plain meaning of that term. Bitcoins can be accepted as a payment for goods and services or bought directly from an exchange with a bank account. They therefore function as pecuniary resources and are used as a medium of exchange and a means of payment.”
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Following the investigation of a massive JPMorgan hack, the FBI and the US Secret Service filed charges against the operators of Coin.mx, an exchange headed by Anthony Murgio. According to the allegations, they operated Coin.mx in violation of federal anti-money laundering laws and engaged in substantial efforts to evade the detection of their scheme by creating a phony front company called “Collectables Club”. This way they sought to deceive the major financial institutions through which they operated into believing that their business was a forum for items such as stamps and sports memorabilia.
In addition to lying to financial institutions, Murgio and his co-conspirators deceived credit card issuers into authorizing payments and ACH transactions to purchase bitcoins. In particular, Murgio and his co-conspirators deliberately misidentified and miscoded transactions, and limited the amount of individual transactions in order to avoid arousing suspicion from the banks. They also instructed their customers to lie to banks about the transactions and to state that they were for the exchange of collectable items.
Murgio is also charged with corruptly making payments to an officer of a financial institution, which carries a maximum sentence of 30 years in prison. In addition, Murgio is charged with: conspiracy to operate an unlicensed money transmitting business and operating an unlicensed money transmitting business, each of which carries a maximum sentence of five years in prison; conspiracy to commit wire fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison; and money laundering, which carries a maximum sentence of 20 years in prison.