Posts Tagged ‘Money.Laundering’

On Exchanging Cryptocurrency for Casino Chips (or Cash)

Monday, August 22nd, 2022

The high stakes poker world works a little differently than you might think.  Most of the players frequenting these games know each other, and borrowing money from one another is common.  Another common occurrence is the exchanging of cryptocurrency for casino chips.  Let’s look at an example.

Russ, a professional poker player, is playing high stakes, and he’s not having a good day.  He needs another $100,000 to stay in the game.  He asks Alice (another professional poker player), can I send you $100,000 of Bitcoin for $100,000 of casino chips?  (Alice knows that Russ will send her the cryptocurrency.)  Russ logs into his online wallet, transfers the Bitcoin to Alice’s address (her Bitcoin wallet), and Alice hands Russ $100,000 of casino chips.  All is well, right?

Not exactly.  Sure, Alice received $100,000 worth of Bitcoin for $100,000 of casino chips but she now might be guilty of money laundering.  At minimum, a currency transaction report (CTR) might be required.

The anti-money laundering laws are complex, and I’m not an attorney.  But the basic idea is that exchanging one kind of cash-valued item for something considered to be cash requires knowing your customer and following the rules and regulations set by FINCEN (the Financial Crimes Enforcement Network) under the Bank Secrecy Act and the Patriot Act (and there are others, including state laws).  If you regularly take in cash (or a cash equivalent) and are exchanging it for something else (or vice versa), you may fall under the definition of non-bank financial institution.  And a single transaction (like the one above) may make someone guilty of money laundering.

So let’s say you’re playing high stakes poker, and someone wants to exchange some Bitcoin for casino chips.  Should you do this exchange (knowing you will get the cryptocurrency)?  My advice is that because of the anti-money laundering laws you should not.