State prosecutors filed charges on February 6 against two Florida bitcoin traders, after a sting operation allegedly caught them in violation of two major statutes. Michell Espinoza and Pascal Reid are accused of felony violations of Florida’s laws licensing money services and prohibiting money laundering. Right on the heels of BitInstant CEO Charlie Shrem’s arrest last month, these are only the second and third charges for bitcoin money laundering ever made in the state of Florida.
Espinoza and Reid are heavy bitcoin traders, highly rated and with hundreds of thousands of dollars of successful transactions.
An undercover agent contacted Espinoza claiming interest in purchasing credit cards stolen in Target’s recent data leak. After an initial $1,000 transaction was complete, the agent returned, interested in a $30,000 deal. Upon arriving at a face-to-face meeting with the agent to finalize details, Espinoza was promptly arrested. Reid was arrested on the same day, at a separate meeting intended to finish a different $30,000 transaction.
Nicholas Weaver of the University of California, Berkeley, says that he is unaware of any other cases in which states have prosecuted bitcoin vendors, but he expects “many more state cases like this one because it will act to strangle the lifeblood of the online dark markets.”