The New York district judge presiding over the criminal case against Ross Ulbricht, the alleged creator of underground online drug market Silk Road, has decreed that cryptocurrency Bitcoin is functionally the same thing as real money. Ulbricht had argued that he could not be charged for money laundering for his alleged part in creating Silk Road, as Bitcoin was not a real currency, but Judge Katherine Forrest rejected his defense. "The money laundering statute is broad enough to encompass use of Bitcoins in financial transactions," Forrest wrote in a ruling released on Wednesday. "Any other reading would in light of Bitcoin's sole raison d'être be nonsensical."

Bitcoin clearly acted as money on Silk Road

Ulbricht's argument against the money laundering charge centered on statements from the IRS and the US Treasury's Financial Crimes Enforcement Network in which the bodies said Bitcoin did not qualify as "funds" or a "monetary instrument." The IRS defines the cryptocurrency as "property," but Forrest said the governmental bodies had no position to define money laundering laws. "Sellers using Silk Road are not alleged to have given their narcotics and malicious software away for free — they are alleged to have sold them," Forrest writes, with Bitcoin clearly acting as money in the transactions.

In addition to money laundering, Ulbricht is also accused of a range of criminal charges including narcotics trafficking conspiracy, hacking conspiracy, and "continuing criminal enterprise" for setting up and running Silk Road. Ulbricht, who was also accused of hiring assassins to kill six people, had argued that he did no wrong in providing a platform that was later swamped with nefarious sellers of illegal items, but Judge Forrest rejected that argument too.

Silk Road was "a drug dealer's dream house"

"Silk Road was specifically and intentionally designed for the purpose of facilitating unlawful transactions," she said, noting the difference between the dark-web marketplace and other sites that sometimes unknowingly host illegal content. Forrest also quashed Ulbricht's defense that he should be seen more like a landlord for a "crack house" in which drug deals take place than a kingpin, saying that his taking of a share of the site's profits gave him a more active role. "Ulbricht's alleged conduct is more akin to a builder who designs a house complete with secret entrances and exits and specially designed traps to stash drugs and money," she said, describing Silk Road as "a drug dealer's 'dream house.'"

Forrest's decisions will make life difficult for those such as Ulbricht and Bitcoin Foundation founder Charlie Shrem, who are currently trying to fight Bitcoin money laundering charges, but they'll also have important consequences for the cryptocurrency's legal standing. While Bitcoin might not be real money just yet, in the eyes of the law, it's close enough to get you arrested.