The attorney for alleged Silk Road founder is asking that the money laundering charge against Ross Ulbricht be dismissed, arguing the black-market website operated in bitcoin, ruled a ‘non-currency’ in a recent decision by a US government agency.
The motion submitted by Ulbricht’s lawyer, Joshua
Dratel, was made public on Tuesday by the Wired.
The document shows Dratel was quick to react to the new definition given to bitcoin only a week ago by
the Internal Revenue Service (IRS), which explained that virtual
money “is treated as property” and “is not treated as currency.”
The money-laundering indictment requires a ‘financial
transaction’ to be carried out with the involvement of
either ‘funds’ or ‘monetary instruments’,
Dratel argues, adding that bitcoin appears to be neither.
“Thus, an essential element of §1956 – a ‘financial
transaction’ – is absent because a necessary component thereof –
either ‘funds’ or ‘monetary instruments’ – is lacking.
Consequently, it is respectfully submitted that Count Four must
be dismissed,” Dratel says in his motion.
Apart from the money laundering one, Ulbricht’s lawyer is asking
to dismiss all of the three other charges his client is facing.
Those include drug trafficking, computer hacking and engaging in
a criminal enterprise.
Ulbricht was arrested in October, 2013, and indicted in February. Prosecution alleges he was
operating Silk Road, a clandestine website that allowed its users
to buy and sell drugs and other illegal goods and services
anonymously. The site could only be accessed through the Tor
anonymizing service and the deals were made using a bitcoin-based
payment system, which also enabled users to conceal their
identities.
Dratel described the charges as "unconstitutionally
vague” as applied to Ulbricht and compared the alleged Silk
Road founder to a landlord renting out his property.
“Yet that does not describe a co-conspirator in the
controlled substances transactions because a landlord – in this
instance, with Silk Road acting as the digital landlord for its
tenants (the alleged ‘drug dealers’, ‘unlawful vendors’ and other
‘users’ of the Silk Road website) – is a not a co-conspirator of,
and/or liable for, the criminal conduct of his tenants, under
§846 regardless whether the landlord possesses knowledge that the
premises are being used for illegal purposes.”
Silk Road had been operating for three years before it was closed
in October 2013. Prosecutors argue that among services available
on the site were drug sales, document forgery and computer
hacking.
The site was operated by administrator concealing his identity
under the name ‘Dread Pirate Roberts’. Prosecutors allege it was
Ross Ulbricht, something the accused denies.
When Ulbricht was arrested, authorities seized 173,991 bitcoins
worth more than $150 million, which they found on Ulbricht’s
computer hardware.
Apart from the four charges brought forward against him in New
York, Ulbricht has also been indicted in Maryland, where he is
accused of having solicited a murder-for-hire.