I invested in Bitcoin in June of 2012 and I've done pretty well since then. Today I was posting bond for a friend of mine who was booked on a drug-related charge and I sold some BTC to cover the bond. I had to produce statements from MtGox in order to show how I obtained the money. I was grilled by the prosecution for about 30 minutes regarding Bitcoin. The prosecution had looked up some stuff in Bitcoin and they were trying to argue that I might have obtained the money by illegitimate means (i.e. laundering money), but their arguments were dismissed pretty quickly by the judge. Mind you that pretty much nobody in the court room, including the defense, had any idea what Bitcoin was when we started.
Some of the questions I was asked by the prosecution:
1. Is it true that Bitcoin is not regulated by any state?
2. You are aware that MtGox is not a registered money transmitter?
3. Bitcoin is not a real currency in the sense you can't use it in Wal-Mart, is that correct?
4. Your MtGox account is not an investment account, such as a traditional mutual fund, stock or options, correct?
5. Is it true that Bitcoin is not the official legal tender of any country or jurisdiction?
6. Is it your understanding that Bitcoin is not regulated by FinCEN?
7. Do you realize gains from the rise or fall of the current Bitcoin price?
8. Do you know how Bitcoin mining works?
9. Do you mine Bitcoins?
(there are many other questions in the span of 30 minutes, but these were the ones that stood out)
My answers:
1. Yes, it's a decentralized currency so there is no country or state that controls it.
2. Objection by defense and sustained.
3. Is that relevant? (the judge said that he's going to determine if it's relevant and I should just answer the question) ... Yes, you can't use it in Wal-Mart. It's not a traditional currency in that sense.
4. It's not a traditional investment account, but it's no different from investing in currency. (the judge and the prosecution went back and forth here about how one can invest in Dollar/Yen, Dollar/Euro and they agreed that it's an investment)
5. Objection by the defense (asked and answered) and sustained.
6. Yes. Objection by the defense, but it was overruled and I had already answered the question.
7. Yes. It works just like any other investment: you buy in at a certain price and you sell at a different price. If I have profit, then that's a capital gain.
8. Yes.
9. No.
Statements by the prosecution (most of them dismissed by the judge):
1. Bitcoin is used for money laundering and other illegal activities.
2. Bitcoin is not a real currency.
He went on about how it's not regulated, it's not real currency and it's used for illegal activities such as money laundering, but the judge dismissed it saying that it's irrelevant. They also tried to suggest that money obtained from Bitcoin is not traceable, but the judge agreed with the defense that the statements from MtGox are sufficient to prove where the money came from. The judge also made statements that this seems to be in line with any other investment and it should be accepted as a legal source for the bond.
Closing statement from the defense (this was the best part):
"Some people like to keep their money in the bank, some keep it under the mattress and some invest it in geeky stuff like Bitcoin. (the whole courtroom, including the judge, erupted in laughter) However, that's not grounds for rejecting the bond. It is entirely reasonable that the witness, who is x-years-old, not married, has no children, has no mortgage and makes x amount of money per year is capable of producing the bond amount."
All and all, it was pretty fun to be up there and testify in defense of both my friend and Bitcoin. I'll try to get the court transcripts and post them up here, it was pretty entertaining to see the prosecution struggle with Bitcoin.
