A U.S. District Judge in a case involving a Florida man, Robert Faiella, allegedly participating in a scheme to sell approximately $1 million worth of bitcoins to Silk Road users is making headlines in the bitcoin community.
During the case, prosecutors requested that the New York federal judge dismiss one of two counts placed against Faiella: operating an unlicensed money transmitting business. The reason for this is that prosecutors do not qualify digital currency as money.
However, according to Reuters, U.S. District Judge Jed Rakoff disagreed and argued that bitcoins “clearly qualifies as ‘money’ or ‘funds,'” citing dictionary definitions, which has been an important aspect of legislative history in viewing the law.
“Bitcoin can be easily purchased in exchange for ordinary currency, acts as a denominator of value, and is used to conduct financial transactions,” Rakoff wrote.
Furthermore, Judge Rakoff dismissed Faiella’s defense that his actions on Silk Road did not comprise of “transmitting” money under federal law. The attorney representing Faiella attempted to allude to the recent guidance announcement from the Internal Revenue Service (IRS), which proclaimed that bitcoin should be treated as property for federal tax purposes.
The case being reported on is the U.S. v. Faiella, U.S. District Court, Southern District of New York, No. 14-cr-00243.
Charlie Shrem is the other accused man. Shrem, who has been one of the most prolific individuals in the bitcoin industry, is scheduled to face trial on Sept. 22. He recently stepped down as vice president of the Bitcoin Foundation, a trade group that advocates various positions including the peer-to-peer decentralized digital currency.
Last month, U.S. District Judge Katherine Forrest also averred that bitcoin constitutes as money because any other interpretation of the law would “be nonsensical.” Judge Forrest made the remarks in a case involving Ross William Ulbricht for allegedly partaking in money laundering activities.
