Cryptocurrency Crimes

Virtual currency has boomed among American businesses over the last five years. Bitcoin and other types of cryptocurrency have proven to be beneficial for its users and businesses. Unlike standard currency, cryptocurrency cannot be traced and is not taxed. In fact, cryptocurrency has no ties to any banks or financial institutions and can only be found digitally.

The North American Securities Administrators Association describes virtual currency as “an electronic medium of exchange that, unlike real money, is not controlled or backed by a central government or central bank.” Despite the mysterious nature of cryptocurrencies, everyday people around the nation use them to purchase goods or services and to move or store funds.

The anonymity and prevalence of bitcoin and other cryptocurrencies does give leeway for criminal activity. Virtual currency can be used for various criminal offenses including tax evasion, purchase of illegal goods, and money laundering. Texas legislation and law enforcement are catching up to those committing cryptocurrency crimes.

If you or someone you know has been charged with a crime related to virtual currency, it’s vital that you seek trusted legal representation.

Bitcoin Attorneys in San Antonio, Texas

Bitcoin and virtual currency logistics can be complicated. Often, there is no traceable records of any transactions. Additionally, no financial or other institution can “issue” cryptocurrency, instead it is “mined” by users. With such complex technologies, you want an attorney who is well informed on virtual currency.

The attorneys at Goldstein, Goldstein, Hilley & Orr are proud trailblazers when it comes to defending newly developed offenses. We are dedicated to preserving our client’s rights and the ability to use any sort of currency they choose. Our attorneys understand the multifaceted nature of bitcoin and other cryptocurrencies. Find an attorney who is skilled at defending white collar crimes with Goldstein, Goldstein, Hilley & Orr.

Goldstein, Goldstein, Hilley & Orr accepts clients throughout the greater San Antonio area and nearby communities including Live Oak, Elmendorf, Universal City, Selma, Converse, Somerset, and Helotes.

Call us now at (210) 226-1463 for a free consultation today.

Overview for Bitcoin Crimes in Texas


What is Virtual Currency?

Cryptocurrencies such as bitcoin are a type of digital currency that can only be bought or sold online and stored in an electronic wallet, or e-Wallet. Groups and individuals can create, hold, or use virtual currency for their own financial means. It can be sold, purchased, and exchanged with other cryptocurrencies or real currencies, such as the U.S. dollar.

There is no intrinsic value to virtual currency, the only value is what the buyer is willing to pay for it. This is because bitcoin and other alternate digital coins do not have an intermediary medium such as a financial institution or bank. Consequently, virtual currencies transmissions cannot be traced. Instead, the receiver provides a digital address to the sender, and the sender will authorize the transaction with a private key.

All virtual currency transactions are recorded on a public ledger or database which is known as the Blockchain. The Blockchain documents every transmission and records associated Bitcoin transaction dates, addresses, and the time. However, there is no disclosure of the sender or recipient’s identity. Law enforcement are wary of this type of anonymity, and users may use virtual currency for criminal activity.


How Does Bitcoin Work?

Bitcoin is a digital currency that was created in 2009 by a programmer named Satoshi Nakamoto. It operates on a peer-to-peer (P2P) network, and does not have a centralized server, website, or organizer. Bitcoin has surged in popularity over the last five years. It has even been used by large online entities such as Google and Reddit.

Since Bitcoin has no centralized operator and is only run by the user’s computer, it is resistant to any type of regulation. Individuals “mine” for bitcoin by having their computer’s software solve complicated math problems. If the users are successful, they are rewarded by being given newly created bitcoins. This process occurs rather slowly, and some users designate whole computers to just mining bitcoin. The mining process of Bitcoin does give individuals an opportunity to make a whole lot of cash without being traced.

Bitcoins can also be purchased. A user can purchase Bitcoins from any other current holder by exchanging a Bitcoin address and private key. Transactions have no identifying information about the users involved. Since Bitcoin accounts are free and there is no limit to how many a person can have, a Bitcoin address can be disposable. A person can create a new address once they have made a transaction with an old one.

The nameless users and anonymous nature of Bitcoin can lead to suspicious activity. Bitcoin is well known for being used on the “Silk Road,” which is a dark website that sells illegal goods and services. Users can also mine a large amount of Bitcoin, or transfer U.S dollars into Bitcoin and then hide or move it to evade tax costs. Law enforcement and the IRS are cracking down on those who use Bitcoin or alternate forms of virtual currency for crimes.


Types of Cryptocurrency Crimes

Virtual currency can be pivotal for those committing financial crimes. No users can be traced, accounts can be made and disposed, and the only records for transmissions are on the Blockchain. However, U.S. law enforcement is increasingly stretching financial laws to prosecute those doing unlawful digital currency exchanges. The following are some common types of cryptocurrency crimes.

Money Laundering

Money laundering is when a person attempts to disguise the source or destination of criminally attained funds. Bitcoin and other virtual currency users can move large amounts of money without being traced. Additionally, Bitcoin accounts can be disposed so a person can create multiple financial transactions to create ‘layers’ between the money’s origin and intention. Consequently, cryptocurrency users can easily commit money laundering crimes.

Texas Penal Code § 34.02 lists the following penalties for those who commit the offense of money laundering.

A person who launders funds valuing at:

  • $2,500 or more, but less than $30,000 may face a State Jail Felony
    • Punishable with a minimum of 180 days and a maximum of 24 months in jail, and a possible fine of up to $10,000.
  • $30,000 or more, but less than $150,000 may face a Third-Degree Felony
    • Punishable with a minimum of two years and a maximum of 10 years in prison, and a possible fine of up to $10,000.
  • $150,000 or more, but less than $300,000 may face a Second-Degree Felony
    • Punishable with a minimum of two years and a maximum of 20 years in prison, and a possible fine of up to $10,000.
  • $300,000 or more may face a First-Degree Felony
    • Punishable with a minimum of 5 years and a maximum of 99 years of life imprisonment, and a possible fine of up to $10,000.

Tax Evasion

Cryptocurrencies can be a haven to those wishing to commit tax evasion. It can be incredibly difficult to trace Bitcoin or other cryptocurrencies. This means the IRS will have difficulty calculating your taxes if cryptocurrencies are a large part of your income. The anonymity of Bitcoin and other cryptocurrencies also gives leeway for offenders to commit tax evasion.

Texas law indicates that if a person knowingly fails to pay taxes to the government, he or she will face the following penalties:

A person who intentionally fails to pay tax amounted at:

  • Less than $50 may face a Class C Misdemeanor
    • Punishable by a fine of up to $500.
  • $50 or more, but less than $500 may face a Class B Misdemeanor
    • Punishable by up to 180 days in jail, and a possible fine of up to $2,000.
  • $500 or more, but less than $1,500 may face a Class A Misdemeanor
    • Punishable by up to 12 months in jail, and a possible fine of up to $4,000.
  • 1,500 or more, but less than $20,000 may face a State Jail Felony
    • Punishable with a minimum of 180 days and a maximum of 24 months in jail, and a possible fine of up to $10,000.
  • $20,000 or more, but less than $100,000 may face a Third-Degree Felony
    • Punishable with a minimum of two years and a maximum of 10 years in prison, and a possible fine of up to $10,000.
  • $100,000 or more, but less than $200,00 may face a Second-Degree Felony
    • Punishable with a minimum of two years and a maximum of 20 years in prison, and a possible fine of up to $10,000.
  • $200,000 or more may face a First-Degree Felony
    • Punishable with a minimum of 5 years and a maximum of 99 years of life imprisonment, and a possible fine of up to $10,000.

Illegal Transactions with Bitcoin

One of the most commonly thought of offenses involving bitcoin is the purchase of illegal goods and services. Typically, unlawful transactions are made on a part of the Internet called the “dark web.” Websites that are not indexed by web search engines make up the dark web. Dark websites are hard to trace and are only constituted by P2P networks or networks created solely for the dark web like Tor.

Many people use the dark web in countries where Internet usage is heavily regulated. However, some use the dark web to access websites that sell illegal goods and services. Bitcoin and other virtual currency coins are exclusively used on these sites due to their anonymity. The “Silk Road,” for instance, is a large well-known black market that uses Bitcoins for currency. The penalties for these illegal transactions are dependent on what goods, services, or even persons were paid for.

The following are some different types of illegal transactions a person can make on the dark web using a form of cryptocurrency.

  • Deadly weapons;
  • Illegal firearm modifications;
  • Exotic animals;
  • Stolen identifying information;
  • Hit men for hire;
  • Illegal drugs;
  • Child pornography;
  • Gambling instruments; or
  • Victims of human trafficking.

Additional Resources

Bitcoin.org – Visit the official website for the Bitcoin network and find more information how Bitcoin is mined, the logistics of the block chain, and how Bitcoin transactions work. Gain access to resources for e-Wallets, Bitcoin news, documentaries about Bitcoin, and alternative forms of e-Coin.

Bitcoin and Beyond – Visit the official website for Texas Comptroller of Public Accounting and gain access to an article regarding Bitcoin and cryptocurrency. Find more information surrounding virtual currency, how Bitcoin operates, and the inforgrams for the economics surrounding Bitcoin demand.


Cryptocurrency Lawyers in Bexar County, Texas

If you or someone you know has been charged with a cryptocurrency-related crime, it’s essential that you gain trusted legal representation. Texas legislation and law enforcement are beginning to add virtual currency in unlawful financial offenses. Contact Goldstein, Goldstein, Hilley & Orr to speak to an attorney who is experienced in virtual currency logistics and criminal defense.

Goldstein, Goldstein, Hilley & Orr represents those accused of cryptocurrency crimes throughout Bexar County and surrounding counties in Texas including Blanco County, Kendall County, Comal County, Medina County, and Wilson County.

Call us now at (210) 226-1463 to speak to an attorney regarding your case.


This article was last updated on November 7, 2018.

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