Filed: May 11, 2017
Latest Update: May 11, 2017
Summary: ORDER ON DEFENDANTS' MOTION TO DISMISS GEORGE Z. SINGAL , District Judge . Before the Court is Defendants' Motion to Dismiss Count One of the Indictment (ECF No. 80). For the following reasons, the Motion is DENIED. Count One, the sole count in the Indictment, alleges that Defendants Sal Mansy and TV Toyz, LLC, violated 18 U.S.C. 1960 by unlawfully operating an unlicensed money transmitting business, 1 in this case, a business dealing in the virtual currency Bitcoin. 2 Defendants conte
Summary: ORDER ON DEFENDANTS' MOTION TO DISMISS GEORGE Z. SINGAL , District Judge . Before the Court is Defendants' Motion to Dismiss Count One of the Indictment (ECF No. 80). For the following reasons, the Motion is DENIED. Count One, the sole count in the Indictment, alleges that Defendants Sal Mansy and TV Toyz, LLC, violated 18 U.S.C. 1960 by unlawfully operating an unlicensed money transmitting business, 1 in this case, a business dealing in the virtual currency Bitcoin. 2 Defendants conten..
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ORDER ON DEFENDANTS' MOTION TO DISMISS
GEORGE Z. SINGAL, District Judge.
Before the Court is Defendants' Motion to Dismiss Count One of the Indictment (ECF No. 80). For the following reasons, the Motion is DENIED.
Count One, the sole count in the Indictment, alleges that Defendants Sal Mansy and TV Toyz, LLC, violated 18 U.S.C. § 1960 by unlawfully operating an unlicensed money transmitting business,1 in this case, a business dealing in the virtual currency Bitcoin.2 Defendants contend that their business fell outside the purview of Section 1960 because bitcoins are not "money" or "funds" within the meaning of the statute. The Court disagrees and adopts the persuasive analysis of the majority of the district courts that have recently addressed this question. See United States v. Murgio, 209 F.Supp.3d 698, 707 (S.D.N.Y. 2016); United States v. Faiella, 39 F.Supp.3d 544, 545-46 (S.D.N.Y. 2014); see also United States v. Budovsky, No. 13-cr-368 (DLC), 2015 WL 5602853, at *14 (S.D.N.Y. Sept. 23, 2015) (18 U.S.C. § 1960 encompasses businesses that transmit virtual currency); United States v. E-Gold, Ltd., 550 F.Supp.2d 82, 88-93 (D.D.C. 2008) (same); cf. United States v. Ulbricht, 31 F.Supp.3d 540, 570 (S.D.N.Y. 2014) (bitcoins fall within the purview of the money laundering statute, 18 U.S.C. § 1956).
Defendants' reliance on a magistrate's recommended decision in United States v. Petix, 15-CR-227A, 2016 WL 7017919 (W.D.N.Y. Dec. 1, 2016) is misplaced. Not only was this decision never adopted by the district court, but this Court is not persuaded by its reasoning, for the reasons well outlined in the Government's Response. (See ECF No. 81, Page ID #s 255-62.) Defendants' most developed argument, that the IRS's treatment of virtual currency as "property" means that virtual currency cannot be "money" in other contexts, has been expressly and persuasively rejected by other courts. See, e.g., Murgio, 209 F. Supp. 3d at 709; Sec. & Exch. Comm'n v. Shavers, No. 4:13-CV-416, 2014 WL 12622292, at *6 (E.D. Tex. Aug. 26, 2014). Lastly, the rule of lenity does not require the Court to accept a strained reading of Section 1960 where the statute's language, structure, and purpose all point towards Bitcoin falling within its scope. See Faiella, 39 F. Supp. 3d at 547 ("[T]here is no . . . irreconcilable ambiguity requiring resort to the rule of lenity."); see also Abramski v. United States, 134 S.Ct. 2259, 2272 n.10 (2014) (stating that the rule of lenity does not apply where a statute's "context, structure, history, and purpose resolve" any seeming ambiguity).
For these reasons, the Indictment does not fail to state a criminal offense as to Defendants, see Fed. R. Crim. P. 12(b)(3)(B)(v), and therefore, Defendants' Motion to Dismiss is DENIED.
SO ORDERED.
