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Florida bitcoin prosecution to test limits of money laundering laws on virtual currency

Bitcoin Money Laundering.JPEG

This combo made with undated booking photos made available by the Miami-Dade Corrections Department shows Mitchell Adber Espinoza, left, and Pascal Reid. The February 2014 arrests of Reid and Espinoza marked the first time any state has brought money laundering charges involving bitcoins, according to Miami-Dade State Attorney Katherine Fernandez Rundle. And it’s likely to be a closely-watched test of whether criminal law can adapt to new digital forms of payment. (AP Photo/Miami-Dade Corrections and Rehabilitation Dept.)The Associated Press

Florida has become the first state to bring criminal money laundering charges in a case involving the virtual currency bitcoin. It's a case that could test whether current law can adapt to new digital forms of payment.

Pascal Reid and Michell Espinoza were arrested Miami Beach in an undercover sting in February. Police found them by trolling a bitcoin exchange website and posed as credit card thieves looking to launder their illegal proceeds.

The two men have both pleaded not guilty and their lawyers hope to get the charges thrown out because unregulated bitcoins are not money as defined by law. Miami-Dade County prosecutors say the money laundering charges fit the alleged crime.

Law enforcement agencies are closely watching bitcoins for signs of illegal activity.

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