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In one of the comments to this question Highly Irregular pointed out an interesting legal issue that might arise with Bitcoin. Mainly, if some organisations use Bitcoin (say, Wikileaks) and are deemed illegal by some authority (say, the government of USA), and subsequently sending money to them could be deemed illegal, how would issues with unintentional donations be handled?

Say, someone convinces a person to send "them" Bitcoins, instead of providing them with an address of the illegal organisation. The victim performs the donation, and their support of the organisation is later revealed.

How would such a case be handled in court at the current date? Do you know of any relevant laws in say, USA, that would apply to such a situation?

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  • You are not sending money to them. You are sending them bitcoins, which aren't money.
    – flaab
    Oct 25, 2012 at 12:35

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I am no lawyer, but as far as I know there is no specific precedent for this, or none that I could find anyway. Due to this, if you could reasonably prove that you had no intent in supporting that illegal organisation or group I don't see a strong case for any prosecution. Obviously there is a huge amount of grey area here, so what is "reasonable" would be up to interpretation. Also each country would have its own individual laws, which makes this even harder to give a specific answer.

If you are worried, I would recommend that you do two things. 1) Cover your ass by keeping all emails or any correspondence relating to your BTC transactions in a secure place. 2) You can also use tools like PGP, Hushmail, Cryptocat, Zfone, TrueCrypt and Tor to help protect your online anonymity.

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In the United States, most criminal laws explicitly include one or more words which describe a guilty person's mental state at the time the crime was (allegedly) committed. Generally speaking, to commit a crime, the defendant must have intended to perform an/the act that constituted the crime.

So a prosecution for giving funds to Entity A would involve factual questions about whether or not the defendant knew that he was sending funds to A. The prosecution would probably introduce evidence that a wallet under the control of the defendant was used to send funds to A. This might be parts of the blockchain, or contemporaneous records like a "Thanks for your donation!" email, or pages saved in the defendant's browser's cache.

The defense would want to introduce evidence showing explaining what really happened (consistent with your "I was tricked!" hypothetical) - perhaps a copy of the webpage soliciting donations to Bitcoin address X, with pictures of cute puppies and kittens exhorting the viewer to donate to address X to buy food for the cute animals. Or maybe there's a solicitation for donations to a UN relief mission to help the starving children of region Y, but the address is really that of the Evil Turrurists. Or whatever. Since there's likely to be no significant dispute about who sent funds, or where the funds eventually ended up, the fight is going to be over what the defendant thought they were doing at the time the funds were sent.

In the US, the defense is allowed to not present evidence if they choose, and rely on the [in]sufficiency of the prosecution's evidence. So the defense could, if they chose, point out the possibility that the defendant didn't know who he was sending BTC to, or that he believed he was sending it to someone else. (* Also, include the standard dodge about "air guitars" and BTC's are fairy money and whatever.) In the real world, the "computers are mysterious; we don't know what really happened or who did it; the defendant should be free!" defense has been unsuccessful when applied to computer crime and pornography cases, so I don't think it'll be successful in the Bitcoin context, but there are always optimists.

NB - this means that it may be advantageous not to hide/destroy records your BTC transactions, in the event that you want/need to demonstrate that they were innocent.

I am not saying that this is how I think things ought to work - there is not much correlation between the way I wish that things worked and reality.

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