In a court proceeding watched closely in tech and financial circles across the United States and the world, an economist testified last week that bitcoin isn’t really money and thus not subject to money-laundering laws. The judge’s decision—not expected for several weeks—could have a major impact on the future of the cryptocurrency.
Charles Evans, an economics professor at Barry University in Miami, was called upon Friday to testify as an expert witness for the defense in the case of Michel Espinoza, who stands accused in Florida of laundering $1,500 in bitcoins and selling them to undercover FBI agents who claimed they would use the bitcoins to buy stolen credit card numbers. Espinoza’s legal team has sought to have the charges dismissed on the grounds that Bitcoin isn’t really money and thus the money-laundering charges against their client don’t really apply, reports the Miami Herald.
“Basically, it’s poker chips that people are willing to buy from you,” Evans told the court, saying Bitcoin is less a currency than something collectors assign value to, like baseball cards and comic books. Evans’ expert witness fee—$3,000—was paid in Bitcoin.
The prosecution rejected that claims. “You don’t purchase a hamburger with a comic book,” prosecuting attorney Tom Taggerty said. “You usually purchase it with cash, or in this case, a bitcoin.”
The case is being closely watched around the world because it is believed to be the first money-laundering case involving Bitcoin, and the judge’s decision regarding Evans’ testimony could offer a glimpse into how the courts will deal with Bitcoin moving forward.
Unlike other currencies, such as the U.S. dollar, Bitcoin is created by software—a technology called the Blockchain—and its value is not backed by a government or by a precious metal, such as gold. Because Bitcoin operates semi-anonymously, it functions somewhat like cash that can be transferred electronically and has been used in criminal activities, most famously to purchase narcotics and on the now-shuttered Silk Road. Bitcoin is also increasingly accepted as a form of payment by mainstream businesses. Regulators and law enforcement have struggled to grapple with not only how to deal with Bitcoin, but with more complicated questions like what, exactly Bitcoin is, which is why the judge’s decision in the Espinoza case is being watched so intently.
Miami-Adde Circuit Judge Teresa Mary Pooler isn’t expected to issue a decision for several weeks, but in court gave a nod to the questions at issue in the case.
“This is the most fascinating thing I’ve heard in this courtroom in a long time,” she said.