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2018 | OriginalPaper | Buchkapitel

Criminal Prosecutions and Civil Litigation Concerning Virtual Currencies

verfasst von : Rosario Girasa

Erschienen in: Regulation of Cryptocurrencies and Blockchain Technologies

Verlag: Springer International Publishing

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Abstract

In this chapter, we review the major laws affecting virtual currencies and explore in substantial detail the many cases that have arisen that required governmental intervention. Among the most egregious cases are “The Silk Road” and “Darknet” cases whereby blockchain and virtual currencies formed the basis of numerous violations of the laws of both the United States and numerous other countries. Governments have the choice of proceeding criminally against violators or civilly which requires a much lower standard of proof and consequently is much easier to prosecute successfully.

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Vorheriges Kapitel States’ Regulation of Virtual Currencies

Nächstes Kapitel Crowdfunding and the Taxation of Virtual Currencies

The table, in part, was taken from the U.S. Department of Justice press release concerning the prosecution of U.S. v. Vinnik, U.S. Dept. of Justice, Northern District Ca., Russian National and Bitcoin Exchange Charged in 21-Count Indictment for Operating Alleged International Money Laundering Scheme and Alleged Laundering From Hack of Mt. Gox, News Release, July 26, 2017, https://www.justice.gov/usao-ndca/pr/russian-national-and-bitcoin-exchange-charged-21-count-indictment-operating-alleged

18 U.S.C. §§470–477 which criminalize counterfeiting acts both domestically and internationally including uttering, dealing, possession of plates, stones, or analog, or electronic images for counterfeiting obligations securities, and §§485–489 concerning making or possession or making impressions of dies or tokens or paper used as money.

For an excellent review of federal and state statutes and regulations governing counterfeiting including that of virtual currencies, see Ralph E. McKinney, R. E., Shao, L. P., Shao, D. H., Rosenlieb Jr., The evolution of financial instruments and the legal protection against counterfeiting: a look at coin, paper, and virtual currencies, Journal of Law, Technology, & Policy, 2015(2), 273–313, http://mds.marshall.edu/cgi/viewcontent.cgi?article=1146&context=mgmt_faculty

15 U.S.C. §45(a)(1).

U.S. Federal Trade Commission, Operators of Bitcoin Mining Operation Butterfly Labs Agree to settle FTC Charges They Deceived Customers (Feb. 18, 2016), Press Release, https://www.ftc.gov/news-events/press-releases/2016/02/operators-bitcoin-mining-operation-butterfly-labs-agree-settle

Sealed Complaint, U.S. v. Murgio, No. 15-MAG-2508 (S.D.N.Y., July 17, 2015), https://www.justice.gov/usao-sdny/file/830616/download

Jonathan Stempel, UPDATE 1-Bitcoin exchange operator tied to hacks gets 5-1/2 years U.S. prison (July 27, 2017) Reuters, https://www.reuters.com/article/cyber-jpmorgan-murgio/update-1-bitcoin-exchange-operator-tied-to-hacks-gets-5-1-2-years-u-s-prison-idUSL1N1JO1BH. For a discussion of actions pertaining to electronic payments including Bitcoin, see Sarah Jane Hughes, Stephen T. Middlebrook, and Tom Kierner, Developments in the Law Affecting Electronic Payments and Financial Services (2107), at 259–261, Articles by Maurer Faculty, 2445, http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=3445&context=facpub

U.S. v. BTC-e, No. CR 16-00227-SI (N.D. Ca., Jan. 17, 2017), sealed indictment, https://www.justice.gov/usao-ndca/press-release/file/984661/download

Nikhilesh De, Alleged BTC-e Operator Claims Innocence in New Interview, CoinDesk, Sept. 11, 2017, https://www.coindesk.com/alleged-btc-e-administrator-i-do-not-consider-myself-guilty/

U.S. Department of Justice, Manhattan U.S Attorney Announces Charges Against Liberty Reserve, One of the World’s Largest Digital Companies, and Seven of Its Principal Employees For Allegedly Running a $6 Billion Money Laundering Scheme (May 28, 2013), Press Release, https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-charges-against-liberty-reserve-one-world-s-largest

Sealed indictment, United States v. Liberty Reserve, No. 13cr368 (DLC) (D.C. N.Y. Sept. 23, 2015), https://www.justice.gov/sites/default/files/usao-sdny/legacy/2015/03/25/Liberty%20Reserve%2C%20et%20al.%20Indictment%20-%20Redacted.pdf

U.S. Department of Justice, Liberty Reserve Founder Arthur Budovsky Sentenced In Manhattan Federal Court to 20 Years for Laundering Hundreds of Millions of Dollars Through His Global Digital Currency Business, Press Release, May 6, 2016, https://www.justice.gov/usao-sdny/pr/liberty-reserve-founder-arthur-budovsky-sentenced-manhattan-federal-court-20-years

U.S. v. Cazes, No. 1:17-at-00597 (N.D. Ca., July 17, 2017), https://www.justice.gov/opa/press-release/file/982821/download. See, also, commentary by the Department of Justice, AlphaBay, the Largest Online ‘Dark Market’ Shut Down, Justice News, July 20, 2017, https://www.justice.gov/opa/pr/alphabay-largest-online-dark-market-shut-down

The three offenses Hubbard pled guilty to were 21 U.S.C. §841(b)(1)(E), Conspiracy to Distribute Controlled Substances Resulting in Serious Bodily Injury and Death; 21 U.S.C. §841(b)(1)(E), Distribution of a Controlled Substance Resulting in Death, and 18 U.S.C. §1956, Money Laundering Conspiracy, https://www.ice.gov/sites/default/files/documents/Report/2017/CSReport-13-2.pdf

TOR, Tor Overview, https://www.torproject.org/about/overview.html.en

United States v. Ulbricht, 14-cr-68 (KBF) (S.D.N.Y., Sept. 27, 2013).

U.S. Bureau of Investigation, Manhattan U.S. Attorney Announces the Indictment of Ross Ulbricht, the Creator and Owner of the Silk Road Website, Press Release, Feb. 4, 2014, https://archives.fbi.gov/archives/newyork/press-releases/2014/manhattan-u.s.-attorney-announces-the-indictment-of-ross-ulbricht-the-creator-and-owner-of-the-silk-road-website

United States v. Ulbricht, 1-13 06919-JPO Civ. (D.C.N.Y. Jan. 27, 2014), https://www.usmarshals.gov/assets/2015/dpr-bitcoins/sale-order.pdf

U.S. v. Benthall, 14 MAG 2427 (S.D.N.Y. 2016), http://documents.latimes.com/united-states-america-vs-blake-benthall/

Nate Raymond, An alleged staff member of Silk Road 2.0 was sentenced to 8 years in prison, Reuters, cited in Business Insider, June 4, 2016, http://www.businessinsider.com/r-key-player-in-silk-road-successor-site-gets-eight-years-in-us-prison-2016-6

31 U.S.C.§5330. Registration of money transmitting businesses provides in part:

(a) Registration with Secretary of the Treasury Required.—
(1) In general.—Any person who owns or controls a money transmitting business shall register the business (whether or not the business is licensed as a money transmitting business in any State) with the Secretary of the Treasury not later than the end of the 180-day period beginning on the later of—
(A) the date of enactment of the Money Laundering Suppression Act of 1994; or
(B) the date on which the business is established.…

U.S. v. Faiella, No. 14 MAG 0164 (S.D.N.Y., Jan. 24, 2013), https://www.justice.gov/sites/default/files/usao-sdny/legacy/2015/03/25/Faiella%2C%20Robert%20M.%20and%20Charlie%20Shrem%20Complaint.pdf

U.S. v. Ulbricht, 15-1815 (2d Cir. Mar 31, 2017), http://caselaw.findlaw.com/us-2nd-circuit/1862572.html

U.S. v. Force, No. 3:15-cr-01319-RS-2 (N.D. Ca., Oct. 20, 2015).

U.S. v. Bridges, No. 1:15-mj-02125-BPG (D.C.Md., Oct. 17, 2016).

Benjamin Weiser and Matt Apuzzo, Inquiry of Silk Road Website Spurred Agents’ Own Illegal Acts, Officials Say, New York Times, March 30, 2015, https://www.nytimes.com/2015/03/31/nyregion/silk-road-case-federal-agents-charges.html

Andrew Blake, Ex Secret Service agent sentenced again for stealing from the government, The Washington Times, Nov. 8, 2017, https://www.washingtontimes.com/news/2017/nov/8/shaun-bridges-ex-secret-service-agent-sentenced-ag/

Stan Higgins, Rogue Silk Road Agent Carl Force Jailed for 78 Months, Coindesk, Oct. 19, 2015, https://www.coindesk.com/rogue-silk-road-agent-carl-force-jailed-for-78-months/

CNBC, Bitcoin is money, US judge says in case tied to JPMorgan hack, Reuters, Sept. 20, 2016, https://www.cnbc.com/2016/09/20/bitcoin-is-money-us-judge-says-in-case-tied-to-jpmorgan-hack.html

Rob Price, Bitcoin isn’t money, a Florida judge rules, Business Insider, July 26, 2016, http://hp.myway.com/flightsearch/ttab02/index.html?n=7839260D&p2=%5EC73%5Exdm007%5ETTAB02%5Eus&ptb=C444429A-0C1B-499B-8321-E6C4D6EF256B&si=CIO_kYacvdECFZmKswodM-4Gcw&coid=52bafe06493b4978be01745e48707b39

Florida Money Laundering Act, Ch. 2017-155, §896. 101 as amended, eff. July 1, 2017, https://www.flsenate.gov/Session/Bill/2017/1379/BillText/er/PDF

For an earlier report exhibited much frustration about the FBI in investigating crimes involving virtual currency, see (U) Bitcoin Virtual Currency: Unique Features Present Distinct Challenges for Deterring Illicit Activity (April 24, 2012), FBI Intelligence Assessment, http://www.sciencemag.org/news/2016/03/why-criminals-cant-hide-behind-bitcoin

Bret Nigh and C. Alden Pelker, Virtual Currency: Investigative Challenges and Opportunities, U.S. Bureau Of Investigation, Sept. 8, 2015, https://leb.fbi.gov/articles/featured-articles/virtual-currency-investigative-challenges-and-opportunities

John Bohannon, Why criminals can’t hide behind Bitcoin, Science Magazine, Mar. 9, 2016, http://www.sciencemag.org/news/2016/03/why-criminals-cant-hide-behind-bitcoin

SEC v. PlexCorps, 17-Civ-7007 (E.D.N.Y., Dec. 1, 2017), https://www.sec.gov/litigation/complaints/2017/comp-pr2017-219.pdf

Autorite Des Marches Financiers, Dossier PlexCoin, Dominic Lacroix condamne a la prison, https://lautorite.qc.ca/grand-public/salle-de-presse/actualite/fiche-dactualite/dominic-lacroix-condamne-a-la-prison/

Lisa R. Lifshitz, Cracking Down on a Bad Coin Offering, Canadian Lawyer, Dec. 11, 2017, http://www.canadianlawyermag.com/author/lisa-r-lifshitz/cracking-down-on-a-bad-coin-offering-15064/

Voorhees, SEC 3-15902, (2014). See, also, U.S. Securities and Exchange Commission, SEC Charges Bitcoin Entrepreneurs with Offering Unregistered Securities, Press Release, 2014-111, https://www.sec.gov/news/press-release/2014-111

In re Sand Hill Exchange, SEC 3-16598 (2015), https://www.sec.gov/litigation/admin/2015/33-9809.pdf

SEC v. Willner, 1:17-cv-06305 (E.D.N.Y., Oct. 30, 2017), https://www.sec.gov/litigation/complaints/2017/comp-pr2017-202.pdf

Securities and Exchange Commission, Release No. 82452, Jan. 5, 2018, https://www.sec.gov/litigation/suspensions/2018/34-82452.pdf

Securities and Exchange Commission, Release No. 44791, Sept. 14, 2001.

SEC v. Arisebank, No.-cv- (N.D.Tx, filed Jan. 2018). A summary of the case may be viewed in Securities and Exchange Commission, SEC Halts Alleged Initial Coin Offering Scam, Press Release, Jan. 20, 2018, https://www.sec.gov/news/press-release/2018-8. A copy of the complaint can be found at https://www.sec.gov/litigation/complaints/2018/comp-pr2018-8.pdf

CFTC v. Gelfman Blueprint, Inc., No. 1-17-cv-07181 (S.D.N.Y., filed Sept. 21, 2017).

Id.

CFTC v. McDonnell, No. 18-cv-0361 (E.D.N.Y., Jan. 18, 2018), http://www.cftc.gov/ide/groups/public/@lrenforcementactions/documents/legalpleading/enfcdmcomplaint011818.pdf

CFTC v. Dean, No. 18-cv-00345 (E.D.N.Y., Jan. 18, 2018).

CFTC v. My Big Pay, Inc., No. 18-cv-10077-RWZ (D.C. Ma. Jan. 16, 2018), http://www.cftc.gov/idc/groups/public/@lrenforcementactions/documents/legalpleading/enfmybigcoinpaycomplt011618.pdf

Order Granting Plaintiff’s Motion, for an Ex Parte Temporary Restraining Order, Jan. 16, 2018, http://www.cftc.gov/idc/groups/public/@lrenforcementactions/documents/legalpleading/enfmybigcoinpayorder011618.pdf

Reuters, Blockchain Startup R3 Sues Rival Ripple Labs, Fortune, Sept. 8, 2017, http://fortune.com/2017/09/08/blockchain-r3-sues-ripple-labs/

Ripple Labs Inc. v. R3 LRC LLC, No. CGC 17-561205 (Sup. Ct. San Fran. Sept. 8, 2017). For a copy of the complaint and other court documents, see XRP Chat, Ripple Labs v. R3 (actual court documents) (Sept. 19, 2017), https://www.xrpchat.com/topic/9857-ripple-labs%C2%A0v-r3-actual-court-documents/

R3 Holdco LLC v. Ripple Labs, Inc., No.655781/17 (Sup. Ct. N.Y. Cty). A copy of the documents filed may be found at https://www.xrpchat.com/topic/9857-ripple-labs%C2%A0v-r3-actual-court-documents/

Jeff John Roberts, Ripple Claims Early Victory in Court fight with Blockchain Rival R3, Fortune, Oct. 13, 2017, http://fortune.com/2017/10/13/blockchain-ripple-r3/

President’s Council of Advisers on Science and Technology, R3 and Distributed Ledger Technology, May 2016, https://obamawhitehouse.archives.gov/sites/default/files/microsites/ostp/PCAST/10.40%20D%20Gran.pdf

Titel: Criminal Prosecutions and Civil Litigation Concerning Virtual Currencies
verfasst von: Rosario Girasa
Verlag: Springer International Publishing
Buch: Regulation of Cryptocurrencies and Blockchain Technologies
Print ISBN: 978-3-319-78508-0

Electronic ISBN: 978-3-319-78509-7

Copyright-Jahr: 2018
DOI: https://doi.org/10.1007/978-3-319-78509-7_6