Federal Judge Rules Bitcoin Qualifies as Money in Landmark Manhattan Court Decision

The Core Argument

A federal judge in Manhattan delivers a ruling that shakes the foundation of cryptocurrency regulation in the United States. On September 19, 2016, U.S. District Judge Alison Nathan of the Southern District of New York declares that Bitcoin constitutes “funds” under federal criminal law, rejecting a defense motion to dismiss charges against an accused operator of an unlicensed cryptocurrency exchange.

The case centers on Anthony Murgio, who faces federal charges for allegedly running Coin.mx, an unlicensed Bitcoin exchange prosecutors say laundered money for hackers connected to a massive cyberattack against JPMorgan Chase and other financial institutions. The hack exposed personal data belonging to more than 100 million people, making it one of the largest data breaches in U.S. history at the time.

Murgio attempts the same legal strategy that succeeds in a Florida courtroom just months earlier: arguing that Bitcoin does not qualify as currency or “funds” under the law. Judge Nathan disagrees. In a comprehensive 36-page memorandum and order, she writes that “Bitcoins are funds within the plain meaning of that term,” establishing a precedent that carries weight well beyond this single criminal case.

At the time of the ruling, Bitcoin trades at approximately $609, with a total market capitalization hovering around $9.68 billion. Ethereum sits at $12.43 with a $1.05 billion market cap. The cryptocurrency ecosystem remains in its early stages, and every judicial decision about how to classify digital assets sends ripples through both the legal and financial communities.

Legal Precedents

Judge Nathan anchors her ruling in a careful reading of existing law. She notes that the relevant criminal statute fails to define “funds,” so she turns to the term’s “ordinary meaning.” Her reasoning draws from dictionaries, existing case law, and the statute’s legislative history, all pointing to the same conclusion: Bitcoin functions as pecuniary resources.

“Bitcoins can be accepted as a payment for goods and services or bought directly from an exchange with a bank account,” Judge Nathan writes. “They therefore function as pecuniary resources and are used as a medium of exchange and a means of payment.”

The ruling stands in stark contrast to the July 2016 decision by a Florida state judge, who rules that Bitcoin is not money. In that case, involving defendant Michell Espinoza, the judge reasons that Bitcoin “cannot be hidden under a mattress like cash and gold bars,” dismissing money-laundering charges. Florida appeals the decision, but the conflicting rulings expose a growing rift between state and federal courts on the fundamental question of what Bitcoin actually is.

The patchwork of regulatory classifications adds further confusion. The Internal Revenue Service treats Bitcoin as property, subjecting it to capital gains tax. The Financial Crimes Enforcement Network, a bureau of the U.S. Treasury Department, treats it as currency for anti-money-laundering purposes. The Commodity Futures Trading Commission classifies it as a commodity. Judge Nathan’s ruling adds a fourth perspective: for purposes of federal criminal law, Bitcoin is money.

Potential Scenarios

The Manhattan ruling opens several paths forward for cryptocurrency regulation in the United States. In the most immediate scenario, Murgio stands trial on the money transmission charges, with the “funds” classification now firmly established for his case. He still faces six additional unrelated criminal counts, including allegations of stock manipulation and operating fraudulent online casinos.

More broadly, the decision provides federal prosecutors with a powerful legal tool. If Bitcoin qualifies as funds under federal criminal statutes, operators of unlicensed exchanges can be prosecuted under the same laws that govern traditional money transmitters. This dramatically lowers the barrier to enforcement actions against illicit cryptocurrency businesses.

For legitimate businesses operating in the cryptocurrency space, the ruling carries a dual message. On one hand, regulatory clarity tends to encourage institutional adoption by reducing uncertainty. On the other hand, the classification as “money” means more compliance obligations, including licensing requirements and anti-money-laundering protocols.

Attorney John Londot, a shareholder with Greenberg Traurig LLP, observes that a consensus appears to be building among federal judges who view Bitcoin and similar networks as currencies in their own right. However, the tension between state and federal case law raises constitutional questions under the Commerce Clause, since Bitcoin transactions frequently cross state and international borders.

The Timeline

The legal battle traces back to August 2015, when authorities arrest Murgio and charge him with operating Coin.mx as an unlicensed money-transmitting business. Prosecutors allege that Gery Shalon, an Israeli citizen, owns the exchange and uses it as part of a broader criminal enterprise that includes the JPMorgan hack. Shalon pleads not guilty and awaits trial in a Manhattan correctional facility.

The Coin.mx case draws attention to the murky world of unregulated cryptocurrency exchanges. Prosecutors describe a scheme in which the exchange processes millions of dollars in Bitcoin transactions without registering with federal authorities or implementing anti-money-laundering controls. The connection to the JPMorgan hack amplifies the stakes, linking cryptocurrency enforcement to the broader fight against cybercrime.

Judge Nathan’s ruling in September 2016 represents just one step in a long legal process. Murgio’s attorney, Brian Klein, maintains his client’s innocence and signals an intention to fight the charges at trial. Meanwhile, the state of Florida continues its appeal of the Espinoza ruling, setting the stage for potential appellate decisions that could either harmonize or deepen the split between jurisdictions.

Final Outlook

The Manhattan ruling represents a watershed moment for Bitcoin’s legal status in the United States. By classifying Bitcoin as “funds” under federal law, Judge Nathan provides a degree of regulatory clarity that the cryptocurrency community has long sought, even if the answer is not universally welcome.

Ben Lloyd Pearson, an open-source technologist and Bitcoin user, tells the Christian Science Monitor that he hopes the decision helps cut through the legal gray areas that discourage wider adoption. “One of the biggest issues with business is that you don’t want to deal with a lot of uncertainties,” Pearson says.

The road ahead remains complex. Multiple federal agencies continue to classify Bitcoin differently for their own purposes, and state courts produce conflicting rulings. But Judge Nathan’s thorough 36-page opinion gives the cryptocurrency industry something it desperately needs: a serious, well-reasoned judicial acknowledgment that Bitcoin has crossed the threshold from novelty to financial instrument.

Disclaimer: This article is for informational purposes only and does not constitute legal or financial advice. The legal rulings described are specific to their respective jurisdictions and case contexts. Readers should consult qualified legal professionals for advice regarding cryptocurrency regulations.