Bitcoin Deemed ‘Money’ Under D.C. Financial Services Law (1)

The virtual currency known as Bitcoin is a form of “money” covered under the Washington, D.C., Money Transmitters Act, a federal court said Friday.

The court declined to dismiss criminal charges against Larry Dean Harmon, the operator of an underground Bitcoin trading platform, for running an unlicensed money transmitting business under D.C. law and for laundering money under federal law.

Harmon, who allegedly portrayed his platform as a service for stripping Bitcoin of any link to illegal transactions, was indicted by a federal grand jury in 2019. He sought to dismiss the illegal-money-transmission claims, arguing that Bitcoin isn’t “money” under the MTA and that his platform wasn’t a “money transmitting business” under the U.S. Code.

Money “commonly means a medium of exchange, method of payment, or store of value,” Chief Judge Beryl A. Howell wrote for the U.S. District Court for the District of Columbia. “Bitcoin is these things.”

The D.C. law adopts that meaning even though it doesn’t strictly define “money,” the court said.

The service, located on the Darknet, was allegedly advertised as a way to mask drug, gun, or other illegal transactions from law enforcement. It was used to exchange the equivalent of around $311 million dollars between 2014 and 2017, the indictment said.

The court also denied Harmon’s motion for release of 160 Bitcoins seized by the government. There was a high likelihood that all funds involved in his platform were also involved in alleged drug trafficking conspiracy, making them subject to forfeiture, Howell’s order said.

The case is United States v. Harmon, D.D.C., No. 19-cr-395, 7/24/20.