Bitcoin is not the same as real money and therefore cannot be laundered.
This is the argument being put forward by lawyers acting on behalf of Ross Ulbricht, who is allegedly the owner and operator of online marketplace the Silk Road, and known as Dread Pirate Roberts.
The case put forward by Ulbricht's defence team is that Bitcoin "does not constitute either funds' or a monetary instrument' either of which is a necessary component of financial transaction'".
A financial transaction is a necessary prerequisite in a money laundering case.
The argument takes advantage of Bitcoin's ambiguous status when it comes to currency regulation.
For example, in the UK, crypto currencies are generally not recognised as a currency, but they are treated in the same way for tax purposes as of March 2014. Previously they had been treated in the same way as vouchers.
In the US, the IRS has ruled that Bitcoins are property, rather than money, and taxed them accordingly.
Interestingly, the same claim about Bitcoin not being money was made in an earlier court case, in which a man named Trendon Shravers was accused of operating a Ponzi scheme.
The judge in that case ruled Bitcoin "is a currency or form of money", as it can be exchanged for national, non-digital currencies and used to pay for goods and services.
However, Shravers' case is not expected to come to trial until 2015, so a precedent has not necessarily been set and no laws or regulations have been passed in the mean time except in regard to tax.
Even if Ulbricht does manage to have the money laundering and drugs charges thrown out in New York, he still faces charges of allegedly trying to arrange six contract killings in Maryland.
The case continues.
