In December 2016, Canadian citizen, Louis Ong, was targeted by US department of Homeland Security federal agents for posting an advertisement online to anonymously exchange bitcoin for US dollars. Just last week he was tried in a Seattle court and convicted on one count of operating as an unlicensed money transmitter. Ong was sentenced to 20 days in US prison, three years of supervised release, and will likely be unable to return to the US after serving his sentence there. In addition, he voluntarily forfeited $1.1 million in cash and bitcoin to the US department of Homeland Security.
Initially the federal agents accused Ong of five other counts of illegal money laundering $290,000, by continually insisting their fiat was drug money and attempting to convince Ong to exchange bitcoin directly for drugs while undercover. Ong refused to exchange bitcoin for drugs and attempted to maintain his own plausible deniability by repeatedly asking the agents to stop talking about their supposed drug involvement. His Californian defense attorney, Brian Klein, experienced in Bitcoin-related criminal and regulatory matters, succeeded in having the five counts of illegal money laundering dropped. Of course, upon hearing any mention of drugs while exchanging bitcoin for cash, Ong would have been smart to terminate any contact with the undercover agents; yet, by refusing to actively participate in the drug exchange, he succeeded in defending against the more serious charges of money laundering.
On November 28, 2017, the US Senate met to discuss bill S.1241: Modernizing AML Laws to Combat Money Laundering and Terrorist Financing which proposed changing the legal definition of 'financial institution' in Section 5312(a) of title 31, United States Code to include any "issuer, redeemer, or cashier of prepaid access devices, digital currency, or any digital exchanger or tumbler of digital currency.” Apparently, as of the above conviction of Louis Ong, the US judicial system and law enforcement agencies have preemptively set new legal precedence, ahead of any actual lawful amendments of the definition of 'financial institution' contained in the US Code.
One would think it common sense to say that the business of actually rewriting and enacting new laws should at least be completed before using them to incriminate otherwise law-abiding citizens!
History has provided us with abundant examples of the end result of State agencies superseding a nation's own code of laws: The Reign of Terror, The Holocaust, The Gulag Archipelago, The Great Leap Forward. Is this really a path we want to go down... again?