Texas judge rules Bitcoin is a currency governed by U.S. law

By on August 8, 2013, 8:30 AM
judge, money, bitcoin, sec, currency, trendon shavers

A federal judge in the Eastern District of Texas has ruled that Bitcoins are a currency or form of money and are therefore subject to applicable US laws. The ruling relates to the case of Trendon T. Shavers, a Texas man that was recently charged by the Securities and Exchange Commission with running an illegal Ponzi scheme using Bitcoins.

Shavers claimed regulators had no jurisdiction in the case due to the fact that transactions governed by the SEC must involve an investment of money. Instead, the investors all used Bitcoins under the promise that they’d receive a one percent interest rate per day on their investment.

The judge said the SEC’s Ponzi scheme case could move forward as the investments meet the definition of contract, and, as such, are securities. That means the $4.5 million in Bitcoins that Shavers received (now worth around $60 million) is considered true currency.

Shavers’ case aside, the ruling is significant as it further governs the use of Bitcoin. Earlier this year, regulators issued guidelines recommending that several parties in the Bitcoin economy qualified as Money Services Businesses under US law. MSBs, as they are referred to, are required to register with the federal government, collect information about their customers and take steps to prevent money laundering.

Furthermore, the Justice Department along with the US Global Illicit Financial Team shut down one of the largest online banking services back in May. Liberty Reserve went offline and still remains down to this day. Visitors to the site are instead greeted with a warning that the domain has been seized.




User Comments: 13

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misor misor said:

I agree with the judge for the simple reason that

bitcoin = bit + coin

since bit = digital and coin = a form of money

therefore, bitcoin is a form of digital money

1 person liked this | MilwaukeeMike said:

I should hope they're a form of money. They're definitely not tangible property or a piece of digital intellectual property like software. If they're not considered money how could you prosecute someone for stealing them? The entire defense would be "I didn't steal money, they're just numbers on a computer screen that aren't worth anything", and that of course isn't true.

treetops treetops said:

Something does not have to be money for you to be charged with stealing it. lol there are so many online currencies whats next pokemon island points? wow gold? treetops dollars? disney dollars? etc etc etc etc etc etc etc etc etc

RzmmDX said:

Texas, where the Internet is srsly bizness.

Guest said:

Anything that has value can be used as currency. What's sad is that the only actual value a dollar has is a promise by the government that it is worth what they say. Its not actually worth any more than monopoly money. And they print it just as such.

Don't worry, it will all come crashing down soon when the rest of the world figures this out and stops accepting them.

1 person liked this | davislane1 davislane1 said:

Something does not have to be money for you to be charged with stealing it. lol there are so many online currencies whats next pokemon island points? wow gold? treetops dollars? disney dollars? etc etc etc etc etc etc etc etc etc

Personally, I'm hoping they recognize virtual gold as legal currency. I have a few hundred thousand sitting in my Diablo III account that I'd really like to use to buy an R8.

Guest said:

Personally, I'm hoping they recognize virtual gold as legal currency.

Virtual gold IS legal currency. For example: You could buy something on craigslist as long as the seller agrees to accept it. There are no laws saying you cant use oxen or beanie babies as currency to purchase something. You just cant use an official foreign currency.

You may have noticed that some state or federal buildings don't accept credit cards. That's because by law, they MUST accept US currency. But can deny any other form of payment. Anyone else can accept anything they want.

To sum up: Sorry, but even though Diablo gold is real currency, It isn't worth jack squat in the real world. And next time you get a BS speeding ticket. Pay with pennies. They have to accept it!

davislane1 davislane1 said:

@guest

You pretty much described its function in barter system, not as a currency.

As for Diablo gold not being worth squat... This is why it needs to be recognized as a real currency and its USD per-unit value tied to 1/64 the spot price of the commodity. Diablo III will finally be worth playing.

cliffordcooley cliffordcooley, TechSpot Paladin, said:

Next phase is taxation of Bitcoins, because it is being governed. Defeats the purpose of creating Bitcoins, just to have it become another form of regulated and traceable currency. As long as Bitcoins stay in digital form or not protected by law, I will not be investing in it. I still say Bitcoin should be banned and labeled as a Black Market currency where it should be, because in my mind that is where it was created and needed.

Guest said:

I can not imagine how a Bit Coin has any value greater than the imagination. Can I go down to a car dealer with this imaginary money and buy a car?

1 person liked this | davislane1 davislane1 said:

I can not imagine how a Bit Coin has any value greater than the imagination. Can I go down to a car dealer with this imaginary money and buy a car?

The same can be said about fiat currency, and yet we've Dollars, Euros, Francs and Yen (to name a few). And yes, you can buy a car with Bitcoins if the dealer accepts them as payment. Just don't expect to finance.

ypsylon said:

I can not imagine how a Bit Coin has any value greater than the imagination. Can I go down to a car dealer with this imaginary money and buy a car?

Some people have no bloody idea what they talking about. You think Bitcoins are created for free or what? It takes a looooooot of computing power and electricity to mine (even with ASICs).

treetops treetops said:

@guest

You pretty much described its function in barter system, not as a currency.

As for Diablo gold not being worth squat... This is why it needs to be recognized as a real currency and its USD per-unit value tied to 1/64 the spot price of the commodity. Diablo III will finally be worth playing.

You can sell your d3 gold for money in some of the less unsavory places of the internet. lol iv been reading to much nightside, but really you probably can sell your gold on some outside sites. Imagine being taxed for your in game gold lol. This diablo 3 tax helps pay for roads!

p.s. idc about bitcoins and the people stupid enough to buy them, its just like d2jsp they are just making the bitcoin creators rich, well that is if I have any indication what bitcoins are, you can buy it with real money is my guess

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