Florida is First in Bitcoin Money Laundering Arrests


The Miami-Dade State Attorney is the first local prosecutor’s office in the United States to charge suspects with money laundering related to the transfer of Bitcoins for illicit purposes.  Mitchell Abner Espinoz and Pascal Reid were arrested for providing unlicensed money services (FSS 560.125) and for violating Florida’s Money Laundering Act (FSS 896.101).

For the uninitiated, Bitcoins are virtual currency used for online trading of goods and services.  The trading is done peer-to-peer and can be anonymous.  It is the anonymity and lack of government oversight that have made Bitcoin popular for drug dealers and money launderers.  A Bitcoin tutorial video is posted below.

Espinoza was a trader of Bitcoins using localbitcoins.com.  He was approached by an undercover agent of the U.S. Secret Service Electronic Crimes Task Force, working in conjunction with the Miami Beach Police Department and Miami-Dade SAO, who told Espinoza that the agent was going to use $30,000 in Bitcoins to buy stolen credit cards.  Espinoza agreed to the transfer and was arrested.

In a separate transaction, Reid, also a localbitcoins.com user, made an agreement to sell $30,000 of Bitcoins to an undercover agent who said he would use them to purchase credit card data stolen in the Target Corporation computer hack.  Reid had over $300,000 dollars worth of Bitcoins in his cell phone’s virtual “wallet.”

BitInstant, another Bitcoin exchange, was closed last year when CEO Charles Shrem was arrested for money laundering by New York authorities.  Millions of dollars of Bitcoins were allegedly sold by Shrem to Robert Faiella, of Cape Coral, who was using them on the Silk Road virtual black market for anonymous illegal drug purchases.  The federal indictment states Shrem knew the Bitcoins were being used to buy drugs.

The subject of Bitcoins came up late last year in our detective bureau when an email thread was forwarded about a “Bitcoins and Law Enforcement” webinar.  When the email rolled down from our IT to the police department administration, no one seemed to know what a Bitcoin was.  Two of us in DB had read articles about it, so we were jokingly deemed “the experts.”  Rrrright.

My agency has not taken any crime reports related to the digital currency, but who knows?  Technology is forcing us to adapt to new criminal methods at an ever increasing pace.



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2 Responses to Florida is First in Bitcoin Money Laundering Arrests

  1. Bitcoin Advocate says:

    Let’s have a debate…

    So based on the FSS 560.125 law, the State government can control how much of your personal wealth from one form to another? What if I exchange $20,000 of fiat US Dollars for an equivalent value in gold, silver, clams, or Canadian Dollars? Is this illegal? If so, why? Who is the government to tell me how to exchange my money of one form for another? The FSS 560.125 no controls the People’s exchanging of wealth and now, once again, you need a “license” to do so. Just like you need a license to cut someones hair, to get married, or to have a small business.

    You point out in your article about how Bitcoin can be used for “Money Laundering”. Well what about Money Laundering with fiat US dollars, that has been going on for the past 100 years? What about the Federal Reserve Bank devaluing the US Dollar, and the hard earned money of the People of the USA? Although Bitcoin can be anonymous if you’re smart about it, there is the open and widely public World Wide Ledger view of the Bitcoin Blockchain that any one can view and see transactions occurring at anytime between two entities. Visit http://blockchain.info to see for yourself.

    So with this case with the two individuals, Mitchell Abner Espinoza and Pascal Reid, now that we have more vanglourious laws to confiscate wealth from the public, along with Civil Asset Forfeiture schemes across the USA, these two are now “arrestable” in the eyes of the State government. How do you know that those two were actually going to buy $30,000 in stolen credit cards. This is starting to get into the realm of thought crimes, like the Minority Report movie. What if he actually purchased a really nice car, and the seller only accepted Bitcoin? I’m sure there are plenty of other CC scam artist out there accepting US Dollars, Gold, or other valuable bartering items.

    The whole story about Bitinstant is a farce, the Feds said that some guy transferred money through that website, and for that reason alone, the arrested the CEO Charlie Shrem who had zero knowledge of it… So what happens with Mr. Joe Blow deposits money into one Chase Bank account, and then wires just under $5000 to another bank account with Bank of America with the intent to do some supposed nefarious deed with those funds on the other end. Should the CEO’s of those banks be arrested? Plus, BitInstant isn’t a bank, it’s an exchange, just like many others out there doing harmless transactions.

    A very reputable company called BitPay did start in Orlando, FL, but since the laws are too strict in Florida, the owner moved his operations to Georgia. That company complies with all of the typical KYC (Know Your Customer) laws. Another good company is Coinbase, and they too have to follow the big brother laws.

    In recent news, the founder of the Silk Road website Ross Ulbricht, was sentenced to life in prison for operating that website on the “Dark Web”. What’s funny is that two of the Federal Law Enforcement investigators got caught up in that website, and continued to run it to sell drugs and make money for four months, after arresting Ross. It is absolutely ridiculous how the “Drug War” has developed over the past 30 years. It has caused more deaths than the drugs themselves, plus I’m sure many more people have died from prescription drugs than “illegal” drugs in the USA. The Drug War unnecessarily creates the added violence and guns of this manufactured black market. Just like now exchange different forms of money, as stated earlier, is going to create another black market. One big reason why the Drug War will be nearly impossible to end by revoking the unnecessary laws that created it, because it’s such a big money maker for law enforcement. Also, since the Feds give out grants like candy to local and county law enforcement agencies, they know they aren’t biting the hand that feeds and will lay the thump down on the locals. If local law enforcement was only provided funds by the local tax dollars to operate, I think you may see a more polite, and less eager police force to layeth the smack down on its local citizens.

    All in all, Bitcoin is here to stay, or other forms of cryptocurrencies to come. Bitcoin is FREEDOM and LIBERTY for the people to control their own wealth, and governments will not be able to stop it. The only way to attempt to stop it, is to continue this trend of more and more tyranny against the People of the USA. Not even China can stop it with their Big Brother internet service.

    Video’s and articles for your enjoyment:

    • Randall says:

      “How do you know that those two were actually going to buy $30,000 in stolen credit cards. This is starting to get into the realm of thought crimes, like the Minority Report movie. What if he actually purchased a really nice car, and the seller only accepted Bitcoin?” Espinoza and Pascal agreed to make the illegal transactions in front of Federal agents. Government-backed currency or cryptocurrency, civilians or LEO’s, illegal is illegal. I have nothing against Bitcoin specifically.


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