Case 1:24-cr-00009-JMS-MKK Document 80 Filed 10/25/24 Page 1 of 23 PageID #:
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF INDIANA
`INDIANAPOLIS DIVISION
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`Plaintiff,
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`v.
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`MAXIMILIANO PILIPIS,
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`Defendant.
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`CAUSE NO. 1:24-cr-00009-JMS-MKK
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`UNITED STATES OF AMERICA, )
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`MAXIMILIANO PILIPIS’ MEMORANDUM OF LAW IN SUPPORT OF
`MOTION TO DISMISS COUNTS 1-5 OF THE INDICTMENT AND IN OPPOSITION
`TO THE GOVERNMENT’S APPLICATION FOR A RESTRAINING ORDER
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`Josh Minkler (Atty. No. 18483-49)
`Kathleen L. Matsoukas (Atty. No. 31833-49)
`Alyssa Hughes (Atty. No. 34645-71)
`Barnes & Thornburg LLP
`11 South Meridian Street
`Indianapolis, IN 46204
`Telephone: 317-236-1313
`Facsimile: 317-231-7433
`Email: Josh.Minkler@btlaw.com
`Kathleen.Matsoukas@btlaw.com
`Alyssa.Hughes@btlaw.com
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`Todd Foster
`Todd Foster Law Group
`601 Bayshore Blvd. Suite 615
`Tampa, FL 33606
`Telephone: 813-565-0600
`Email: tfoster@tfosterlawgroup.com
` Admitted pro hac vice
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`David M. Garvin
`David M. Garvin, P.A.
`2333 Ponce De Leon Blvd. Ste 314
`Coral Gables, FL 33134
`Telephone: 305-371-8101
`Email: dgarvin@garvin.law
`Admitted pro hac vice
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`Attorneys for Defendant Maximiliano Pilipis
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`The government is attempting to extract an astronomical payday1 from Defendant
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`Maximiliano Pilipis (“Pilipis”) based on a never-before-seen, shoe-horned, and ultimately
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`defective money laundering case. But the government’s case – including the Superseding
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`Indictment, the applications for restraining orders and seizure warrants, and the civil forfeiture –
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`all fail for one simple reason: AurumXchange.com’s (“Aurum”) failure to register as a money
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`transmitting business was not a crime during the time it was in operation from 2009-2013. The
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`government’s position relies entirely on their misapplication of licensure requirements and
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`misunderstanding of market activity that occurred over a decade ago.
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`Even if it was a crime from 2009-2013, the government cannot charge unlicensed
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`operation of a money transmitting business under 18 U.S.C. § 1960 or seize the alleged
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`proceeds, because the statutes of limitation for the § 1960 violation and the related civil
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`forfeiture have long since run. Despite being well aware of Aurum’s operation since at least 2010
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`and conducting a robust government-led investigation into market participants that were actually
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`facilitating criminal proceeds and activity culminating in more than 20 well-publicized criminal
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`indictments in 2013 and 2014, the government never charged Pilipis with anything. Pilipis had
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`no reason to think that his own money was the product of any illegal activity; Aurum’s
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`operations were not illegal and the government never suggested they were. Now, in an effort to
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`secure a colossal windfall 14 years later given the rise of the value of Bitcoin, the government
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`claims that Pilipis’s act of cashing his own Bitcoin on five specific instances in 2019, 2020, and
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`2021 constitutes money laundering pursuant to 18 U.S.C. § 1957 based on 18 U.S.C. §
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`1960(b)(1)(B) as the Specified Unlawful Activity (“SUA”). It is under this flawed theory that the
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`government now seeks to restrain not just the money allegedly “involved in” the money
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`1 See Exhibit 1 – Financial Information. Pilipis has separately requested to file Exhibit 1 under seal due to the
`sensitivity and confidentiality of the information therein. [See Filing No. 78.]
`1
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`laundering offenses and explicitly referenced in Counts 1-5 (all of which has already been
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`seized) but also all of the uncashed Bitcoin it alleges flowed from Aurum’s operation – despite
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`the fact that the uncashed Bitcoin has nothing to do with the alleged money laundering.
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`But the Court need not reach the question of the propriety of the restraint. Instead, it
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`should simply dismiss Counts 1 through 5 of the Indictment because Aurum’s failure to obtain a
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`license for its commercial operations – the government’s only alleged SUA at issue – was not a
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`crime before 2013. On March 18, 2013, for the first time, the Financial Crimes Enforcement
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`Network (“FinCEN”), the entity the government alleges had jurisdiction to regulate Aurum,
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`stated that a newly defined virtual currency “exchanger” like Aurum would be considered a
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`“money services business” and would be subject to registration requirements. [Filing No. 77-2 at
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`1.] Prior to that time, when Aurum was operating, the question of whether virtual currency
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`exchangers were required to register was, at most, unclear; the terms “convertible virtual
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`currency” and “exchanger” had never been defined by FinCEN, nor any other U.S. financial
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`services regulator, prior to the new 2013 pronouncement.
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`For these reasons, Pilipis, by and through his undersigned counsel, files his Motion to
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`Dismiss Counts 1-5 of the Indictment and opposition to the government’s application for a post-
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`indictment restraining order (the “Motion”) requesting that this Court dismiss Counts 1-5 of the
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`Indictment, dissolve the temporary restraining order entered on May 7, 2024 (the “TRO”), deny
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`the government’s application for a permanent restraining order, and return all seized and
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`restrained property to Pilipis. In support of the Motion, Pilipis submits this memorandum of law.
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`INTRODUCTION AND BACKGROUND
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` According to the Superseding Indictment, Max Pilipis operated Aurum, a virtual currency
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`exchange, from approximately 2009 to 2013. [Filing No. 66 ¶ 14.] Aurum’s purpose was to permit
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`2
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`an individual to exchange Bitcoin and other cryptocurrencies for U.S. currency or vice versa. Id.
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`Aurum’s transactions were solely single-party buy or sell transactions between Aurum on one side,
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`and the customer on the other. Similar to making a purchase on eBay or Amazon, Aurum’s
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`customers purchased Bitcoin from Aurum or sold Bitcoin to Aurum; in return, Aurum received
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`funds from that customer or sent Bitcoin to that customer. Aurum did not send funds between
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`customers or provide money transmission services from customers to third parties.
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`Prior to March 2013, sellers of Bitcoin, like Aurum, were not required to be licensed as
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`money transmission businesses with FinCEN because they were not considered to be “money
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`transmitters” under existing FinCEN guidance. Critically, on March 18, 2013, FinCEN issued
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`document FIN-2013-G001, entitled “Application of FinCEN’s Regulations
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`to Persons
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`Administering, Exchanging, or Using Virtual Currencies.” [Filing No. 77-2 at 2.] This guidance
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`was issued, according to FinCEN, to “clarify the applicability of the regulations implementing the
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`Bank Secrecy Act (“BSA”) to persons creating, obtaining, distributing, exchanging, accepting, or
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`transmitting virtual currencies.” [Filing No. 77-2 at 1.] In testimony on November 18, 2013, then-
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`FinCEN Director Jennifer Shasky Calvery confirmed that this was a “new, expanded definition of
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`money transmission” and “would bring new financial entities under the purview of FinCEN’s
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`regulatory framework.” [Filing No. 77-3 at 14.] Multiple other official, contemporaneous
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`government statements confirm that the March 18, 2013 FinCEN announcement regarding
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`exchangers constituted a material change to applicable licensing requirements: it defined a new
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`basis for requiring virtual currency sellers to register with FinCEN. As a result of this
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`pronouncement, Aurum ceased operations in or about May or June 2013 and thus did not violate
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`any registration requirements for virtual currency exchangers. Without § 1960 as an SUA, Counts
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`1-5 of the Superseding Indictment collapse and must be dismissed.
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`Undeterred by the lack of illegal conduct in this case, and in an effort to make an end-run
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`around the obvious statute of limitations problem, the government now seeks to prosecute Pilipis
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`over ten years after Aurum ceased operations under a phony theory of money laundering. This in
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`spite of the fact that federal law enforcement investigated Pilipis fourteen years ago, never
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`identified any actual illegality or illegal proceeds, never charged him, never civilly forfeited the
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`property, and never gave him any reason to believe that cashing the Bitcoin could be considered
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`money laundering or the proceeds of any illegal activity in any way. Further, the investigation
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`into Pilipis coincided with the federal government’s investigation of other crypto-market
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`participants in the same time period and asset class, culminating in the well-known 2013 and
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`2014 indictments and subsequent conviction of those actually responsible for supporting and
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`facilitating illicit activity and money laundering. Pilipis was investigated simultaneously in
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`connection with these markets and asset classes and was neither charged nor convicted of any
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`such illegality or money laundering, nor was Aurum ever cited by FinCEN for a failure to
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`register or obtain a license.
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`Even with the benefit of years of hindsight, the government makes no attempt to explain
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`how it can restrain the property described in items 2(b), (c), and (e) under “Forfeiture
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`Allegations” in Superseding Indictment (the “Disputed Property”) given that it is not “involved
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`in” or otherwise sufficiently connected to any of the five alleged acts of money laundering. [See
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`Filing No. 66 at 9–10.] The government agrees that the property listed in 2(e) – the uncashed
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`Bitcoin –are in separate wallets. See id. There are no allegations that those uncashed Bitcoin had
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`any connection to the five alleged acts of money laundering at all. The property listed in 2(b) and
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`2(c) constitute the proceeds of Bitcoin that Pilipis cashed for the purpose of paying his counsel
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`and also have no connection with and nothing to do with the five alleged counts of money
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`laundering. See id. Indeed, it was only when the undersigned informed the government that
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`Pilipis intended to use his unconverted Bitcoin to pay his counsel that they immediately sought
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`to restrain the property via a TRO, with no regard for the exception in 18 U.S.C. § 1957(f).
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`The government’s case requires that the Court allow the government to restrain the
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`Disputed Property indefinitely, even though the government cannot prosecute any crime to
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`which that Disputed Property is connected. The government applied for its TRO despite knowing
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`that any § 1960 prosecution or civil forfeiture was barred by the statute of limitations, and that
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`the Bitcoin to be enjoined had nothing to do with Pilipis’s alleged laundering of the Morgan
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`Stanley funds. Moreover, the government knew that there was no urgency (given that Pilipis had
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`been converting Bitcoin, according to the TRO Application, at various times over the years since
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`2015) and no risk that funds would be moved out of the government’s reach (since the
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`undersigned told them exactly where the money was going). [See Filing No. 41 at 3.] Even the
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`government’s own application admits that the converted Bitcoin funds that Pilipis was able to
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`transfer before the TRO was issued did in fact go to five separate law firms. Id. at 11-12.
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`A finding by the Court that, as a matter of law, Pilipis/Aurum did not violate 18 U.S.C. §
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`1960, would require dismissal of Counts 1-5 of the Superseding Indictment and resolve all of
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`these issues. To the extent the Court does not dismiss those counts at this time, Pilipis requests
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`that the Court vacate the existing TRO and deny the government’s request for a new restraining
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`order with respect to the property identified in its Exhibit A, because, as a matter of law, the
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`government cannot show that the property is sufficiently connected to Counts 1-5.
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`In sum, the government’s case 1) is based upon an SUA that was not illegal at the time it
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`occurred, 2) relies on a phony money laundering theory in order to circumvent the long-elapsed
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`statute of limitations, and 3) seeks to extract an exorbitant amount of money from an individual
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`they originally began investigating at least 14 years ago, when the Bitcoin at issue was worth less
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`than one dollar each.
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`LEGAL STANDARD
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`An indictment is not sufficient unless “it (1) contains the elements of the offense charged,
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`(2) sufficiently apprises the accused of what he must be prepared to meet, and (3) enables the
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`accused to plead a judgment under the indictment as a bar to any subsequent prosecution for the
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`same offense.” United States v. McComb, 744 F.2d 555, 562 (7th Cir. 1984). Under Rule 12 of
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`the Federal Rules of Criminal Procedure, Pilipis “may raise by pretrial motion any defense,
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`objection, or request that the court can determine without a trial on the merits.” Fed. R. Crim. P.
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`12(b)(1). This includes the right to move prior to trial to dismiss an indictment for “failure to
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`state an offense.” Id. at (b)(3)(B)(v). This Court lacks jurisdiction when an indictment fails to
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`sufficiently allege a federal crime, as this Indictment fails to do.
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`A defendant may also challenge a restraining order by challenging “whether probable cause
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`exists to believe that the assets in dispute are traceable or otherwise sufficiently related to the crime
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`charged in the indictment.” Kaley v. United States, 571 U.S. 320, 324 (2014) (emphasis added).
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`I.
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`ARGUMENT
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`The Superseding Indictment fails as a matter of law.
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`The government’s application cites just one SUA: an alleged violation of 18 U.S.C. §
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`1960(b)(1)(B).2 Specifically, § 1960(b)(1)(B) criminalizes the failure to comply with the money
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`transmitting business registration requirements under section 5330 of title 31 of the Bank
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`Secrecy Act (“BSA”). See 18 U.S.C. § 1960(b)(1)(B) (citing 31 U.S.C. § 5330).
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`2 The Superseding Indictment references 18 U.S.C. § 1960(b)(1)(C) but states no facts to support a finding that
`Pilipis violated § 1960(b)(1)(C). [See Filing No. 66 at 6.] At best, the Superseding Indictment merely implies that
`Pilipis’s alleged operation of Aurum without registering was attractive to users engaged in illicit activities. This case
`is about 18 U.S.C. § 1960(b)(1)(B).
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`A. Aurum was not required to register as a virtual currency exchange with FinCEN
`prior to March 2013, and therefore no SUA exists.
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`FinCEN, a bureau of the Treasury Department, is tasked with safeguarding the financial
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`system from illicit activity, countering money laundering and the financing of terrorism, and
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`promoting national security through strategic use of financial authorities and the collection,
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`analysis, and dissemination of financial intelligence.3 As such, FinCEN regularly releases
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`guidance to the industry to assist businesses and individuals in complying with the BSA and
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`related regulations. Relevant to this matter, 31 U.S.C. § 5330(a) requires that all “money
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`transmitting businesses” (as that term is defined in 31 U.S.C. § 5330(d)(1)) engaged in “money
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`transmitting” register with FinCEN.
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`Prior to March 18, 2013, it was unclear whether virtual currency sellers like Aurum were
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`required to register with FinCEN. This was because the term “money transmission service,”
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`according to 31 U.S.C. § 5330(d)(2) included “accepting currency, funds, or value that
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`substitutes for currency and transmitting the currency, funds, or value that substitutes for
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`currency by any means, including through a financial agency or institution, a Federal reserve
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`bank or other facility of the Board of Governors of the Federal Reserve System, or an electronic
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`funds transfer network.” 31 U.S.C. § 5330(d)(2) (emphasis added) [See also Filing No. 77-2 at
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`3.] At the time, according to the Superseding Indictment, Aurum was selling virtual currency.
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`[Filing No. 66 ¶ 14.] As such, Aurum’s only business was to conduct a purchase or sale with its
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`customer. Aurum did not act as a third-party intermediary, did not transmit any funds from one
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`person to another, did not utilize any banks, and was not a transmitter. Id. Additionally, prior to
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`2013, FinCEN had not made a determination as to whether the terms “funds,” “currency,” or
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`“value that substitutes for currency” included virtual currency like Bitcoin. At the time, the legal
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`3 See Mission, Dep’t Treasury Fin. Crimes Enf’t Network, https://www.FinCEN.gov/about/mission.
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`landscape was, at best, unclear even for entities that – unlike Aurum – were actually transmitting
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`virtual currency.
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`For market participants like Aurum that offered only the purchase or sale of Bitcoin and
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`other digital assets, there was also guidance from FinCEN that indicated that simple buy/sell
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`activities did not constitute money transmission. FinCEN’s 2011 Final MSB Rule provided an
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`expressly defined limitation (limitation (F)) from the money transmission definition such that the
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`term “money transmitter” would not include an entity like Aurum that “[a]ccepts and transmits
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`funds only integral to the sale of goods or the provision of services, other than money
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`transmission services, by the person who is accepting and transmitting the funds.” [Filing No.
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`77-4 at 10.] Citing a ruling from 2004, FinCEN provided additional commentary, stating in
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`pertinent part, “[P]ersons that sell goods or provide services other than money transmission
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`services, and only transmit funds as an integral part of that sale of goods or provision of services,
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`are not money transmitters.” Id. As a result, market participants involved in the simple purchase
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`and sale, i.e. non-transmitters and those not providing funded accounts or third-party transfers,
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`believed that, like other sales of goods and services, any movement of funds relating to the
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`purchase or sale of Bitcoin and other cryptocurrencies was not “money transmission” and
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`occurred incidentally to the purchase or sale of the Bitcoin or other cryptocurrency.
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`On March 18, 2013, FinCEN expanded the application of the money transmitter
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`definition when it issued official guidance titled “Application of FinCEN’s Regulations to
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`Persons Administering, Exchanging, or Using Virtual Currencies” [Filing No. 77-2 at 1.] In a
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`press release announcing the 2013 Guidance, FinCEN specifically stated that it was published
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`“in response to questions raised by financial institutions, law enforcement, and regulators
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`concerning the regulatory treatment of persons who . . . make a business of exchanging,
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`accepting, and transmitting” convertible virtual currencies, like Bitcoin. [Filing No. 77-5 at 1.]
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`The 2013 Guidance itself provided that it was issued “to clarify the applicability of the
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`regulations implementing the Bank Secrecy Act (“BSA”) to persons creating, obtaining,
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`distributing, exchanging, accepting, or transmitting virtual currencies.” [Filing No. 77-2 at 1.] In
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`so stating, FinCEN admitted that, prior to March 2013, it was not even clear to law enforcement
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`and regulators how these businesses should be treated under the BSA.
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`In fact, the 2013 Guidance was the first time FinCEN addressed virtual currencies at all
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`and the first time that it defined the term “convertible virtual currencies.” It effectively added a
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`new definition applicable to a broader scope of financial activity relating to those convertible
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`virtual currencies called “exchangers” of convertible virtual currency. FinCEN, for the first time,
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`brought individuals and businesses involved in the purchase, sale, and exchange of virtual
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`currencies within the definition of “money transmitter,” and therefore within the umbrella of
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`FinCEN’s licensing requirements. In testimony before the United States Senate later that year on
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`November 18, 2013, the then-Director of FinCEN stated that “the new, expanded definition of
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`money transmission would bring new financial entities under the purview of FinCEN’s
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`regulatory framework” (emphasis added). [Filing No. 77-3 at 14.] Other government sources
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`confirm that this was the case. For example, a 2015 Congressional Research Service report on
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`Bitcoin cites the 2013 Guidance as the point at which registration was required for Bitcoin
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`exchanges. [Filing No. 77-6 at 21.]
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`B. There is no precedent to support the government’s theory of pre-March 2013
`registration requirements for virtual currency exchangers.
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`The government is unable to locate any case in which a virtual currency exchanger was
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`criminally charged with a violation of 18 U.S.C. § 1960(b)(1)(B) for money transmission activity
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`prior to March 2013 (let alone a money laundering charge with § 1960(b)(1)(B) as the only
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`SUA). This is because, prior to the issuance of FinCEN’s guidance in March 2013, no one
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`believed such activity was obviously criminal.
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`The only arguably comparable case is United States v. $123,192.14 in U.S. Currency and
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`237.53575 Digital Currency Bitcoins (Powers), No. JKB-15-854 (D. Md. 2015), a civil forfeiture
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`case. In that case, which was never criminally charged, Eric Powers acted as a peer-to-peer
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`exchanger of Bitcoin from December 6, 2012 through September 24, 2014 (including for more
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`than a year after the March 2013 guidance was issued), including providing actual transmission
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`services, sending assets between customers. [See Filing No. 77-7 at 2.] He too was accused of
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`failing to register with FinCEN but, unlike Pilipis, was never criminally prosecuted. Instead, in
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`March of 2015, within the five-year statute of limitations for civil forfeiture, the government
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`civilly seized $123,192.14 in U.S. Currency and 237.53575 BTC. In a settlement filed with the
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`court on November 9, 2015, however, the government agreed to release from seizure 237.53575
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`BTC and $23,192.14 USD. Powers gave up $100,000 and got his Bitcoin back. [Filing No. 77-8
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`at 2.] Powers later consented to an assessment with FinCEN in 2019. [See Filing No. 77-7 at 1.]
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`The assessment specifically states that Powers’ Bitcoin exchange should have been registered
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`after the March 2013 FinCEN guidance and that his failure to do so constitutes the violation.
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`[Filing No. 77-7 at 2-3 nn. 5, 7.] Moreover, in a press release in 2019 at the time of the
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`assessment, then-FinCEN Director Kenneth A. Blanco stated: “we will take enforcement action
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`based on what we have publicly stated since our March 2013 Guidance - that exchangers of
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`convertible virtual currency…are money transmitters and must register as MSBs.” [Filing No.
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`77-9 at 1 (emphasis added).] Powers was ultimately assessed a fine of $35,350, and FinCEN
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`forbade him from providing any money transmission services or participating in the affairs of
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`any financial institution in the future. [See Filing No. 77-7 at 9.] In total, Powers faced no
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`criminal charges and paid only $135,350 in fines, penalties and forfeitures. Id. at 8-9.
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`Here, Pilipis faces vastly more aggressive consequences, including incarceration and
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`forfeiture of Bitcoin and Bitcoin Cash, for actions taken prior to registration requirements, years
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`after the statute of limitations have run. The government has no explanation for why it has
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`proceeded this way.
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`The government’s case against Pilipis based on § 1960(b)(1)(B) fails for the additional
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`reason that, when in doubt, “ambiguity concerning the ambit of criminal statutes should be
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`resolved in favor of lenity.” Yates v. United States, 574 U.S. 528, 547–48 (2015) (quoting
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`Cleveland v. United States, 531 U.S. 12, 25 (2000) and Rewis v. United States, 401 U.S. 808, 812
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`(1971)). “Application of the rule of lenity ensures that criminal statutes will provide fair warning
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`concerning conduct rendered illegal and strikes the appropriate balance between the legislature,
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`the prosecutor, and the court in defining criminal liability.” Id. (quoting Liparota v. United
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`States, 471 U.S. 419, 427 (1985)). In Yates, the Supreme Court considered whether the term
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`“tangible object” in 18 U.S.C. § 1519 included undersized red grouper that was evidence of the
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`defendants’ alleged violation of federal conservation regulations, after defendants disposed of the
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`fish. Yates, 574 U.S. at 532. The Court found that while technically, fish may fall within the
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`dictionary definition of ‘tangible object,’ there were no reliable indicators that Congress intended
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`such an interpretation. Id. at 546-47. The Court refused to expose the defendant to a 20-year
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`prison sentence and other penalties where there was ambiguity as to whether the provision
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`applied to the defendant. Id. at 547-48.
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`The same is true here. The government’s actions are explainable only by a motivation to
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`forfeit Pilpis’s Bitcoin, which is worth over 250 times more than it was in 2013. If that was not
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`enough, Pilipis also faces a prison term of 10 years or more. But in its fervor to restrain and
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`ultimately forfeit this amount of Bitcoin, the government glosses over a fatal flaw: if the Court
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`finds that it was even unclear whether a “virtual currency exchanger” was required to register
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`with FinCEN prior to 2013, there can be no violation of 18 U.S.C. § 1960(b)(1)(B)), no SUA, no
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`money laundering charge, and seizure or restraint of property derived from Aurum’s operations.
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`Counts 1-5 of the Superseding Indictment should be dismissed.
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`II.
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`The government cannot restrain the Disputed Property in the forfeiture
`allegations of the Superseding Indictment.
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`The government has already initiated a civil forfeiture action with respect to the funds
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`
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`involved in the alleged money laundering, freezing over $9,000,000. See United States v. All
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`Funds Seized from and/or on Deposit from Morgan Stanley Accts. 658-091821-245 & 658-
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`095221-24, No. 1:23-cv-2081-JMS-MJD (S.D. Ind. Nov. 17, 2023). Nevertheless, the
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`government seeks to restrain the Disputed Property despite making no argument whatsoever as
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`to how the Disputed Property – separate Bitcoin held in separate wallets that had nothing to do
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`with the allegedly laundered money – was involved in or used to facilitate the five counts of
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`money laundering in the Superseding Indictment. [Filing No. 41 at 7–9.] The government claims
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`that the property at issue in its application is forfeitable because it is “involved in” the money
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`laundering offense and there is no exception for legal fees. Id. at 7-10. Both claims are wrong.
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`A. The Disputed Property is not involved in or traceable to any of the charged §
`1957 offenses.
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`However broad the government believes the money laundering statute to be, it cannot
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`reach property that is plainly not “involved in” the money laundering offenses. 18 U.S.C. §
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`982(a)(1) provides that anyone convicted of money laundering under § 1957 will “forfeit to the
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`United States any property, real or personal, involved in such offense, or any property traceable
`
`
`
`12
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`Case 1:24-cr-00009-JMS-MKK Document 80 Filed 10/25/24 Page 14 of 23 PageID #:
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`to such property” (emphasis added). Despite the government’s assertions that the money
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`laundering forfeiture statute has broad reach, it is not absolute. See e.g., United States v. Arthur,
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`No. 04-CR-122, 2006 WL 2992865, at *5 (E.D. Wis. Oct. 18, 2006) (real property is not
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`“involved in” a money laundering offense just because mortgage payments were money
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`laundering offenses).
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`The government makes no attempt to show how separate and distinct Bitcoin held in
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`separate and distinct wallets were used to facilitate or were otherwise involved in the money
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`laundering offenses – offenses which involved the cashing of entirely separate and
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`distinguishable Bitcoin held in separate wallets. Put differently, the Superseding Indictment
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`charges money laundering offenses with respect to certain Bitcoins already cashed, but it
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`attempts to restrain Bitcoin that is still uncashed as “involved in” money laundering. Instead of
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`providing analysis on this point, the government attempts to muddy the waters by citing two
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`cases, United States v. Sterlingov, No. 1:21-cr-00399-RDM, 2023 WL 2387759 (D.D.C. Mar. 6,
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`2023) and United States v. Harmon, 474 F. Supp. 3d 76 (D.D.C. 2020), stating that the cases
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`show that “these concepts have been applied in cryptocurrency cases involving money
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`laundering and unlicensed money transmitting business offenses.” [Filing No. 41 at 9.] But the
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`government entirely misses the most important point: that in both Sterlingov and Harmon, the
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`defendants were charged with and ultimately convicted of or plead guilty to substantive counts of
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`18 U.S.C. § 1960. Sterlingov, No. 1:21-cr-00399-RDM, ECF No. 271; Harmon, No. 1:19-cr-
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`00395-BAH, ECF No. 122. They were not, as Pilipis is, charged solely with money laundering
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`related to proceeds that could not themselves be forfeited absent the allegations of money
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`laundering. Critically, unlike in Sterlingov and Harmon, who engaged in post-2013 Guidance
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`activity, the government cannot charge Pilipis with a violation of 18 U.S.C. § 1960 (and
`
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`13
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`Case 1:24-cr-00009-JMS-MKK Document 80 Filed 10/25/24 Page 15 of 23 PageID #:
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`criminally or civilly forfeit the proceeds of that alleged offense) because (1) Aurum’s alleged
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`activity predates the 2013 Guidance; and (2) the statutes of limitation in Pilpis’s case has long
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`run. Here, the only way the government can restrain the Disputed Property is to connect it to the
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`charged money laundering counts – which it cannot do.
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`Moreover, in those cases, the operation of an unlicensed money transmitting business and
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`the money laundering were conducted in tandem and could not be disentangled. For example, in
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`Harmon, the defendant operated a cryptocurrency mixing business from June 2014 through
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`December 2017. Harmon, 474 F. Supp. 3d at 83. FinCEN, in its summary of the Harmon
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`enforcement matter, noted that “Mr. Harmon operated Helix as a bitcoin mixer, or tumbler, and
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`advertised its services in the darkest spaces of the internet as a way for customers to
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`anonymously pay for things like drugs, guns, and child pornography.”4 Harmon’s mixer “was
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`designed to be a ‘bitcoin tumbler’ that ‘cleans’ bitcoins by providing customers with new
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`bitcoins ‘which have never been to the darknet before.’” Harmon, 474 F. Supp. 3d at 83.
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`FinCEN also points out that Harmon’s actions took place after 2013, confirming again that the
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`registration obligations arose out of the 2013 Guidance: “[a]s FinCEN clarified in its 2013
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`Guidance, exchangers and administrators of convertible virtual currency are money transmitters
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`under the BSA. As such, they have an obligation to register with FinCEN; to develop,
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`implement, and maintain an anti-money laundering compliance program; and to meet all
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`applicable reporting and recordkeeping requirements.”5
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`Similarly, defendant Sterlingov operated an unregistered cryptocurrency mixing business
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`and did so through 2021, long after implementation of the registration requirement. Sterlingov,
`
`
`4 First Bitcoin “Mixer” Penalized by FinCEN for Violating Anti-Money Laundering Laws, Dep’t Treasury Fin. Crimes
`Enf’t Network (Oct. 19, 2020), https://www.fincen.gov/news/news-releases/first-bitcoin-mixer-penalized-fincen-
`violating-anti-money-laundering-laws.
`5 Id.
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`14
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`Case 1:24-cr-00009-JMS-MKK Document 80 Filed 10/25/24 Page 16 of 23 PageID #:
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`2023 WL 2387759 at *2. In that case, one of the “selling points” of the business (which was the
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`unlicensed business under § 1960) was “t