CoinDesk reports that a recent motion filed by Pascal Reid’s legal team, arguing that state laws requiring money transmission licensing are not applicable to individuals, was shot down by Judge Fleur Lobree of Miami-Dade County’s Circuit Court.
Reid was arrested along with co-accused Michel Abner Espinoza by undercover officers in Miami in February. They were charged with money laundering using bitcoins and engagement in unlicensed money operations. The money laundering charges were reportedly dropped in May.
Judge Lobree ruled that a “plain reading” of the state’s statutes on money transmitter businesses indicates that an individual is bound. It reads, “A person may not engage in the business of a money services business or deferred presentment provider in this state unless the person is licensed or exempted from licensure under this chapter.”
Reid’s attorney, Ronald Lowy, was confident that the ruling will not stand up during a jury trial next year. He argued:
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“This law wasn’t intended to apply against individuals who simply exchange bitcoins. It would be no different than if an individual were to sell rare coins, rare stamps or to conduct a garage sale and give anything of value in exchange for currency.”
Thus, applying the laws to individuals “would basically make everyone in our capitalist society in violation of the statute.”
He also argued that bitcoin is not a currency under US law, and therefore money transmission laws may not apply. However, similar arguments have been rejected by courts in the Ulbricht and Faiella cases. Updated FinCEN guidance, albeit published after the arrests, also stipulates that virtual currency businesses are bound by their rules.
As to the applicability of money transmission laws to individuals, it should be pointed out that of primary consideration is whether the party was acting in a commercial/business capacity. Even if the sale of bitcoins to undercover agents was not a commercial endeavor, these agents went undercover in the first place due to suspected commercial activity.