A criminal case that raised questions about bitcoin and its legal status as a currency ended Thursday with a guilty plea.
Richard Petix, a 32-year old Rochester man, admitted making a false statement and operating an unlicensed money transmitting business as part of a plea deal that ends his two-year old prosecution.
Petix, who has a previous child pornography conviction, was accused of selling $13,000 in bitcoins to an undercover federal agent as part of a drug distribution and money laundering scheme.
In evaluating a defense motion to dismiss the charges, U.S. Magistrate Judge Hugh B. Scott recommended the money laundering charge be dropped because bitcoin, in his eyes, isn't money.
Scott ruled that bitcoin is similar to a commodity, something akin to a collectible, but not a form of currency. He defines currency as a financial instrument or medium of exchange that is assessed value, is regulated and is protected by a sovereign power.
To the contrary, Scott noted, "the whole point of bitcoin is to escape the entanglement with sovereign governments."
Assistant U.S. Attorney Wei Xiang said Petix lied to probation officers and law enforcement agents about his ownership and use of a laptop computer and a smartphone, a violation of the supervised release that followed his 2009 child porn conviction.
Petix agreed to the plea agreement just days before he was scheduled to go on trial before U.S. District Judge Charles J. Siragusa.
His guilty plea is the result of an investigation by Immigration and Customs Enforcement, Homeland Security Investigations, and the United States Postal Inspection Service.