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Florida’s Bitcoin Sting Should Cast Doubt on Law Enforcement’s Priorities and Money Laundering Laws

Florida’s Bitcoin Sting Should Cast Doubt on Law Enforcement’s Priorities and Money Laundering Laws

Authorities in Miami recently arrested two men in what may be the first instance of citizens being charged under state law for engaging in “too-large” bitcoin transactions. The two were contacted by undercover officers who were looking to exchange $30,000 dollars each for bitcoin, an amount which violates the state’s money laundering laws. According to Miami-Dade State Attorney Katherine Fernandez Rundle, undercover police officers conducted the stings looking for “individuals engaged in high volume Bitcoin activity.”

It’s difficult to imagine a world in which undercover officers targeting people engaged in voluntary exchanges is a good use of law enforcement resources.Earlier this year, police in Florida found over 100 untested rape kits, some of which have been sitting in storage, untouched, since 2005. The state has 11 of the 100 most violent cities in America.

Florida’s anti-money laundering law makes exchanges above $10,000 illegal without offering information to the government. The state also forbids frequent unlicensed transactions of more than $300 but less than $20,000 in any 12-month period.

The prosecutor’s office justified using resources to seek out bitcoin users byclaiming that“Bitcoins are often seen as a perfect means of laundering dirty money or for buying and selling illegal goods, such as drugs or stolen credit card information.” Indeed, the state claims one undercover agent told one of the arrested men, nicknamed Michelhack, that he wanted to use the Bitcoin to purchase stolen credit cards online.

But as Katherine Mangu-Ward has noted for Slate, bitcoin is far from an ideal, or even particularly popular, method for laundering money.

Money laundering is the process of throwing needles into a haystack. The idea is to lose dirty cash in a jumble of legitimate transactions. About $8 billion worth of transactions were conducted in bitcoin from October 2012 to October 2013. During 2012, Bank of America processes $244.4 trillion in wire transfers and PayPal processed $145 billion. The bitcoin haystack just isn’t big enough or messy enough to be a useful place to launder money right now. A better option: cash-heavy businesses, such as casinos or—yes—laundromats.

“High level international cybercriminals have not by-and-large gravitated to the peer-to-peer cryptocurrency, such as bitcoin,” Secret Service Special Agent Edward Lowery said. “Instead, they prefer “centralized digital currency” that is based somewhere with looser regulations and lazier enforcement.

Jon Matonis has called money laundering the thoughtcrime of finance. Buying into the idea that citizens owe the state of Florida an explanation for voluntarily selling bitcoin for dollars means, in practice, that everyone owes it to the government to get involved in enforcing other laws.

Perhaps the trade would be worth it if money laundering laws helped the state prosecute violent criminals. But that’s not the case. Most laundered money is used in crimes whose violence stems from their being illegal, such as gambling and the drug trade.

At no point should the citizens of Florida owe it to the government to divulge information on voluntary transactions. That the law is written this way is totally inappropriate. Money laundering laws violate privacy, are extremely expensive to comply with, are incredibly ineffective as a means to thwart other crimes. But that Florida authorities are actually seeking out peaceful bitcoin sellers to ensnare for failing to give up information is especially galling. Florida officials are wrong in their assessment of bitcoin, and they’re wrong to apply badly-written laws in an effort to quash it. Charges against these two men should be dropped immediately, and the laws rewritten to reflect useful priorities for law enforcement.

This post originally appeared in Bitcoin Magazine.

Podcast Interview: What Can Libertarians Learn From Feminists?

Podcast Interview: What Can Libertarians Learn From Feminists?

I sat down with Austin Petersen at The Libertarian Republic for a few minutes at ISFLC to chat about freedom, feminism and other awesome topics. Check out his post, or listen below!

Bitcoin’s Impact On So-Called Social Issues

Bitcoin’s Impact On So-Called Social Issues

This morning, I awoke to an individual on Twitter letting me know, in no uncertain terms, that bitcoin and social issues were unrelated. Since literally everything is related to everything else in some way, I’ll assume what he meant is that bitcoin and social issues are particularly far apart in terms of overlap.

This is of course absurd. While “social issues” is a term which needs to be defined prior to further discussion, the “social issues” that particularly interest me are issues of poverty, class, mobility, equality of opportunity and access to resources.

Access to banking and credit

Credit is one of humankind’s most important innovations. The introduction and mainstreaming of lending at a profit is directly responsible for untold wealth creation and innovation. However, currently, access to credit is anything but evenly distributed.

Bitcoin addresses this inequity in two ways. First, it offers banking to millions who otherwise are not able to access traditional banking services. In America alone, up to a third of the population is unbanked or underbanked. Regulations and risk combine to ensure that offering services to certain segments of the population is unprofitable. Bitcoin vastly decreases the cost and risk of extending those services to people with low-incomes and poor credit scores.

Second, the Bitcoin protocol offers the promise of Smart Contracts. By creating and enforcing contracts through the blockchain instead of the state, people who currently don’t have access to credit will be able to enjoy vehicles, places to live, and other necessities, allowing entrance into the middle class.

Remittances and fighting oppressive regimes

The ability to transfer money globally is a very powerful tool in the fight against poverty. Currently, the process is extremely slow and expensive. Bitcoin offers instant, nearly-free overseas remittances.

In addition, bitcoin offers an escape hatch to people trapped under oppressive regimes. For example, the price of bitcoin spiked when people began moving their money from bank accounts to bitcoin in Cyprus after the government announced plans to seize cash from the country’s bank accounts.


The subreddit /r/Bitcoin makes up the vast majority of funding for Florida’s mosteffective and innovative homeless shelter, Sean’s Outpost, whose operating budget is almost entirely made up of bitcoin donations by reddit users. In addition, the BitGive Foundation exists to harness bitcoin’s tremendous power to innovate the way we tackle charitable giving.

Bitcoin is no panacea. A term like social issues is clearly meant to encompass a huge swath of legitimate concerns, some of which are more closely related to bitcoin than others. However, the idea that bitcoin and cryptocurrency is somehow unrelated to the social would have to rest upon the contention that concerns like access to credit, global poverty and oppressive regimes are not social issues. On the contrary, there is nothing more social than a voluntarily transaction. And giving more people worldwide access to mutually beneficial exchange is one of the most important social issues a system could take on.

This post originally appeared at Bitcoin Magazine.

Postcastabulous – Liberty Panacea

Postcastabulous – Liberty Panacea

Sunday night I co-hosted the Liberty Panacea podcast with Matt McKibbon for the second time.

It’s a call-in show, so if you’d like to know when I’ll be on next, follow the show on Twitter.

Listen below, or here.

Online Politics Radio at Blog Talk Radio with Liberty Panacea on BlogTalkRadio
Letting Go of the God of the Gaps

Letting Go of the God of the Gaps

Last night, best-selling Christian author Ken Ham and Emmy Award-winning educator Bill Nye (“the Science Guy”) debated evolution and creationism. Before the debate, BuzzFeed writer Matt Stopera asked 22 self-identifying creationists at the event to write a message, question or note to the other side. What they said made my Christ-loving heart sink and my empiricism-loving head hurt.

Folks, listen. It’s time to let go of the God of the gaps.

The Southern Baptist congregations that helped raise me in Alabama prioritized faith and relationship over critical thinking and scholarship. When my mother couldn’t scrounge up money for Christmas presents or church camp, the church was there. When she needed a last-minute babysitter, the church was there. But when I and my petulant teenage friends had questions about some of the seeming inconsistencies in the way the Bible had been taught to us, the church was not really there for us.

However, when I got to my Baptist college, Samford University in Birmingham, Alabama, I took a class that I may credit with my ongoing faith. It was called Biblical Perspectives, and it was taught by Scott McGinnis. I’d gone to church literally twice a week for as long as I could remember, but it was he who taught me, for the first time, about the people who most likely actually wrote the Bible. He taught us the scholarship behind the texts, how the books came together. He was the first fervent Christian I’d met who was eager for the challenge of critical thinking and hard questions.

One lesson we learned in that class that I’ll never forget is to let go of the “God of the Gaps.” It appears the syllabus recommends this text. I’ll try to summarize. Throughout history, everyone from superstitious pagans to religious leaders have looked at natural phenomena which they could not explain, and decided that it was God at work. There’s evidence to suggest that mis-attributing random events as supernatural is adaptive. Given this predilection, religious leaders have found it effective to use unexplained natural phenomena to “prove” God exists. Who else causes the sun to rise and set?

However, the problem with a God of the gaps is that, inevitably, the gaps close. We know what causes the sun to rise and set, and it doesn’t require the supernatural. And as these gaps narrow, so too does that God.

And when they’re found? No God?

When we find out, will you then stop believing?

“Proving” the existence of God is a fool’s errand. Actually, nothing can be proven or disproven. The best we can do is observe and report phenomena, and compare our findings with that of others. But God is, by definition, supernatural. What that means is that individual’s experience with the “phenomena” of God at work can only be described to others. No one can show anyone else God at work. God only exists and moves in the realm of that which is beyond measurement or observation by others.

“Now faith is the assurance of things hoped for, the conviction of things not seen.” Hebrews 11:1. Something caused the people in my churches to be there for my family when we were, by all measures a drain on their resources. I will never be able to prove to anyone else that it was God. I don’t even know myself. But the best any of the people in the photographs can do to convince others of the existence of a divine creator is to show his love to them.

The great chasms of what we cannot explain about the world around us have narrowed into gaps. They are narrowing further now. Instead of looking for God in those crevices, we must as Christians give people the chance to experience what might be God by showering those who do not yet know him with his love.

This post was originally published at The Federalist.