Crypto Frontline

An interesting occurrence from a D.C. court had come to increased media attention since it involves a Bitcoin tumbler business. Additionally, the July 24^th court ruling states that “unlicensed money transmission” had been the main wrongdoing, setting up a new precedent where a judge labels Bitcoin as a form of money.

At present, platforms exchanges in the United States need to hold a money transmitter license, which means this ruling does not necessarily make Bitcoin equal to money as we all know it. However, the situation is worth analyzing, because Bitcoin mixing services are debated as well.

The case in a nutshell

According to Cointelegraph, Larry Dean Harmon is the defendant in this case related to a Bitcoin tumbler service called Helix, operating on the dark web. For those of you that are not yet familiar with these operations, their main goal is to mix the data around BTC transactions, so traceability will become less effective.

This business saw an approximately 354k BTC flowing between 2014 and 2017, which makes Harmon guilty of three separate charges: conspiracy to launder monetary instruments, operating an unlicensed money transmitting business, and at the same time, engaging in money transmission business without a license.

As previously mentioned, the US regulation is very strict with this respect and includes even companies from the cryptocurrencies field. Although SEC’s powers to sanction crypto firms had been limited, this does not mean companies can do whatever they want, without facing any penalties.

Does the Court view Bitcoin as money?

The court document published on July 24^th, which you can find here, notes the following interesting details:

After examination of the relevant statutes, case law, and other sources, the Court concludes that bitcoin is money under the MTA and that Helix, as described in the indictment, was an unlicensed money transmitting business.

It is important to note, though, that this does not mean the coin is under a monetary classification. At present, the law requires a money transmission when dealing with cryptocurrencies like Bitcoin.

Aside from the Bitcoin classification as money, this case highlights the fact that cryptocurrencies are still used to fund illicit activities. Not too long ago, the US DHS and DoJ seized a COVID-19 website for BTC fraud. Many legit companies are wanting to innovate with different blockchain integrations and cryptocurrencies, but at the same time, we must be aware of the dark side of the industry, to protect ourselves from unwanted situations.