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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