A money-laundering case in Florida has unraveled after a judge declared Bitcoins are not a valid form of money.

Judge Teresa Pooler cleared [PDF] defendant Michell Espinoza of running an unlicensed money exchange and money laundering charges on the grounds that the Bitcoins he sold to two undercover investigators were goods rather than a form of money.

Espinoza was accused of laundering after he sold Bitcoins to the undercover duo: they paid him in cash, and he transferred the digital currency to their digital wallet.

Miami police detective Ricardo Arias and US Secret Service agent Gregory Ponzi (yes, that is his real name) were posing as criminals hoping to acquire Bitcoins that would be used to purchase stolen credit card numbers. The two conducted a sting operation in which they met up with Espinoza on several occasions to pay him cash and receive Bitcoins in exchange.

Espinoza was told by the agents the Bitcoins would be used for illegal means, and declined an offer to be paid in credit card numbers. He was cuffed following the third cash transaction, and charged under state law with money laundering and acting as an unauthorized money transmitter.

Needless to say, the Arias-Ponzi scheme failed to hold up in a Miami Circuit Court.

Judge Pooler kneecapped the prosecution's case when she ruled that Bitcoins are not a valid form of money because the virtual currency is neither legal tender, nor does it fall under the "payment instrument" category of methods such as money orders and traveler's checks.

"Nothing in our frame of references allows us to accurately describe or define Bitcoin," Pooler wrote.

"Bitcoin may have some attributes in common with what we commonly refer to as money,but differ in many important aspects."

Without meeting these definitions, Pooler ruled that the unauthorized money transmitter charge be thrown out. Building on that ruling, Pooler also dismissed the money laundering charge, reasoning that simply selling a good in exchange for cash should not be considered laundering, particularly when the implied criminal activity – buying stolen credit cards – took place after the transaction.

"This court is unwilling to punish a man for selling his property to another, when his actions fall under a statute that is so vaguely written that even legal professionals have difficulty finding a singular meaning," the judge ruled. The state attorney's office told the Miami Herald it is reviewing whether to appeal the ruling. ®