Bitcoin is property, not money, a Florida judge ruled Monday in a criminal case against a man accused of money laundering and unlicensed money transmission.

The decision throws out the anti-money-laundering charges against Michell Espinoza, who was arrested after agreeing to sell $30,000 to an undercover detective who declared he would use it in an illegal credit card scheme.

"The Florida legislature may choose to adopt statutes regulating virtual currency in the future," Miami-Dade Circuit Judge Teresa Mary Pooler said, in a ruling that has vindicated virtual currency groups nationwide. "At this time, however, attempting to fit the sale of bitcoin into a statutory scheme regulating money services businesses is like fitting a square peg in a round hole."

The case was brought in February 2014 after detective Ricardo Arias found Espinoza through a posting on the peer-to-peer bitcoin transaction website Localbitcoins.com. Arias was inspired to pursue the sting operation after attending a U.S. Secret Service meeting on virtual currencies, which "intrigued" him, he said in a deposition.

After purchasing bitcoin from Espinoza on three occasions, the detective asked to purchase $30,000 worth of virtual currency. Though the transaction was never concluded, Espinoza was arrested and charged of money laundering and operating an unlicensed money-services business.

But in her ruling, Pooler dismissed all charges, arguing that Florida's statutes on money laundering and money transmission could not apply to bitcoin without further clarifications. The state did not have a compelling-enough case based on current statutes, the judge said.

She ruled that Espinoza had not engaged in money transmission because there was no third party involved.

"The defendant did not receive currency for the purpose of transmitting same to a third party," Pooler said. As a result, she added, Espinoza did not engage in the same type of transaction as a company like Western Union, which "takes money from person A, and at the direction of person A, transmits it to person B or entity B."

Espinoza, moreover, did not charge a fee for the transaction, instead making money on a 15% spread between his buying and selling price for bitcoin.

"The defendant solely made a profit," she said, by "selling his personal property."

Moreover, Pooler struck down the state's contention that Espinoza could have acted as an unregulated "payment instrument seller" by citing the IRS's own categorization of bitcoin as property.

As a result, she said, bitcoin could not be defined as a "payment instrument," such as a check, warrant and money order.

Pooler also struck down money laundering charges, concluding that the sale of bitcoin could not be categorized as a "financial transaction."

Moreover, she added, Espinoza had not participated in laundering funds that had been obtained illegally, because in the detective's representation the purchase of credit card information had not taken place yet.

"This court is unwilling to punish a man for selling his property to another, when his actions fall under a statute that is so vaguely written that even legal professionals have difficulty finding a singular meaning," Pooler said.

The ruling has been viewed as a victory for virtual currency groups who have condemned the murkiness of state rules as an obstacle in the fledgling industry.

"She's telling the state of Florida, 'Hey, listen, your laws are way too vague,' " said Andrew Ittleman, the founder and partner of Fuerst Ittleman David & Joseph. "Clarify them and come back to me with a better case and we'll see what this does."

Espinoza's attorney Rene Palomino, agreed, saying the ruling posed a challenge to state lawmakers. "You can't use currency statutes that we have and apply [them] to bitcoin. That's the bottom line," he said. "It's up to the legislature in Florida to take the bull by the horn and start drafting legislation" to regulate bitcoin.

It is likely, however, that Pooler's decision will be analyzed in courtrooms outside of Florida, too.

"I think this decision will be used in other cases in both civil and criminal proceedings," said Lewis Cohen, a Florida lawyer. "There [are] not a lot of judicial pronouncements right now regarding the use and nature of virtual currencies."

A spokesman for the state's attorney general in Miami, Katherine Fernandez Rundle, said it was unclear if the case would be brought up for appeal.

"We are presently reviewing the court order to determine whether we will be appealing this decision," he said.

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