Entrapment and Bitcoin

[kcirazy]

I'm wondering how entrapment works with Bitcoin.
For example where law-enforcement offers to buy illegal goods or services from somebody.

What you usually see in the media is that once somebody names a price or accept payment, you get arrested. How does that work for transactions where the payment doesn't go to you directly? For example, a person makes the exchange once the police-officer donates money to a charity or a Bitcoin address that you don't control.

Wouldn't it also make entrapment much more expensive if criminals request bitcions to be put into escrow transactions before they make the exchange or even bring out the goods. If the suspects are somehow forced to hand over the private keys they will be incriminating themselves.

How could this be solved by U.S. law?

[Foxpup]

In any case, I'm pretty sure the police don't need to prove that you received the money, just that you handed over the illegal goods after they made the payment. There's nothing to stop dealers from using middlemen in cash transactions, after all. I'm also pretty sure no jury is going to buy your "I wasn't selling drugs, I was giving them away to raise money for charity" defence.

[Clobered09]

So, I think first it's important to get out what entrapment is.  Entrapment is an affirmative defense available in most US jurisdictions that allows a defendant to argue they had no predisposition to commit an illegal act prior to the government's involvement actions towards them.  In order to get it, you have to demonstrate that an agent of the government convinced you to do something you wouldn't otherwise do.  For that reason, it's almost universally unavailable to someone who has been convicted of committing the act before, and it is generally unavailable of the prosecution can provide 'more likely than not' evidence that the defendant has committed the act before.  Some scenarios might help draw out just what entrapment is:

Undercover: hey guy, you want to buy a gram of blow?
Bar patron: Are you a cop?  You know you have to tell me if your a cop.
Undercover: Naw man, I'm not a cop, its $60, you want one?
Bar patron: Sure!
No entrapment

Undercover: hey guy, you want to buy a gram of blow?
Bar patron: Naw, I don't really do that.
Undercover: Come on, It's a good time for only $60
Bar patron: Alright, I guess I'll take one
No entrapment

Undercover: hey guy, you want to buy a gram of blow?
Bar patron: Naw, I don't really do that.
Undercover: Come on, It's a good time for only $60
Bar patron: Not tonight man
Undercover: Ok ok, for you, I'll knock of $5
Bar patron: Alright, I guess I'll take one
No entrapment

Undercover: Hey guy, you want to buy a gram of blow?
Bar patron: Naw, I don't really do that.
Undercover: Come on, it's a good time for only $60
Bar patron: I'm just not interested, sorry
Undercover: I'll give you a special, only $30
Bar patron: I appreciate that, but no, I don't do drugs
Undercover: How about this, I'll give it to you for free, just try it with me, I think you'll like it
Bar patron: Alright, I guess I'll try it.
Entrapment may be available.

As you can see, entrapment's a pretty rare defense for people, the police really have to have convinced you to do something you wouldn't have otherwise done.  Your bitcoin scenario doesn't seem to involve this at all, it looks like just an undercover buy, which happen all the time and are certainly not entrapment.

As for whether you could get out of a charge of trafficking because you directed payment to a third party, as the above poster addressed, that will absolutely not help you.  You traded "something of value" in exchange for the drugs, it's a but-for scenario, you wouldn't have delivered the drugs if you didn't think they would donate, getting them to give something up in exchange for the drugs is a sale. 

[Bitware]

UNDERCOVER FBI AGENT: hey I noticed that you have radical and extreme opinions. What to be friends?

RADICAL EXTREMIST: Yea, sure.

UNDERCOVER FBI AGENT: Man, those guys in that federal building are assholes.

RADICAL EXTREMIST: Yea!

UNDERCOVER FBI AGENT:  Sure wish someone who show em what for.

RADICAL EXTREMIST: Yea!, me too. I would do it if I knew how.

UNDERCOVER FBI AGENT: Want me to teach you?

RADICAL EXTREMIST: Yea!

UNDERCOVER FBI AGENT: (teaches bomb stuff) Here's a bomb. Have at it.

RADICAL EXTREMIST: OK thanks. Going to get this done sometime next month/year.

UNDERCOVER FBI AGENT: FREEZE!! FBI!! You're under arrest for terrorism stuff!

and the newspapers headline reads, "FBI Uncovers Terrorist Cell and Foils Bombing Plot!"

Terrorism: 0
USA: 1

[Clobered09]

UNDERCOVER FBI AGENT: hey I noticed that you have radical and extreme opinions. What to be friends?

RADICAL EXTREMIST: Yea, sure.

UNDERCOVER FBI AGENT: Man, those guys in that federal building are assholes.

RADICAL EXTREMIST: Yea!

UNDERCOVER FBI AGENT:  Sure wish someone who show em what for.

RADICAL EXTREMIST: Yea!, me too. I would do it if I knew how.

UNDERCOVER FBI AGENT: Want me to teach you?

RADICAL EXTREMIST: Yea!

UNDERCOVER FBI AGENT: (teaches bomb stuff) Here's a bomb. Have at it.

RADICAL EXTREMIST: OK thanks. Going to get this done sometime next month/year.

UNDERCOVER FBI AGENT: FREEZE!! FBI!! You're under arrest for terrorism stuff!

and the newspapers headline reads, "FBI Uncovers Terrorist Cell and Foils Bombing Plot!"

Terrorism: 0
USA: 1

Exactly, while probably a waste of resources, this is a perfect example of something that doesn't count as entrapment that most people mistakenly think would.  The agent didn't change anything about the extremists disposition, the government didn't convince the extremist to do something he otherwise would have been opposed to.

[repentance]

Wouldn't it also make entrapment much more expensive if criminals request bitcions to be put into escrow transactions before they make the exchange or even bring out the goods. If the suspects are somehow forced to hand over the private keys they will be incriminating themselves.

How could this be solved by U.S. law?

Silk Road operated an escrow system (they're now looking at multi-sig transactions to replace escrow because they keep losing escrow funds).  It didn't hinder the prosecution of SR dealers in any way.  Escrow just adds another step and another layer of evidence.

For the most part "is this a possible loophole" type discussions tend to focus on things which either aren't loopholes at all or things which are already in the process of being shut down.  If you find an actual loophole and it gets discussed publicly, it's going to get closed relatively quickly because the authorities can read too.

[kcirazy]

So, I think first it's important to get out what entrapment is. 

Ok, right... I got two questions mixed up.

1) Is it entrapment when the undercover agent makes a transaction to another person (somebody unrelated to the exchange) or Bitcoin-address which can not be identified?
Because there is no clear benefit how the person benefits. Would that be considered the same as if the undercover agent would give it for free or is it still a transaction because you requested that address.

2) Do you think undercover agents are willing to transfer money to (escrow) Bitcoin addresses in advance in order to catch the dealers? Wouldn't that greatly increase the cost of catching these guys?

[tinus42]

UNDERCOVER FBI AGENT: hey I noticed that you have radical and extreme opinions. What to be friends?

RADICAL EXTREMIST: Yea, sure.

UNDERCOVER FBI AGENT: Man, those guys in that federal building are assholes.

RADICAL EXTREMIST: Yea!

UNDERCOVER FBI AGENT:  Sure wish someone who show em what for.

RADICAL EXTREMIST: Yea!, me too. I would do it if I knew how.

UNDERCOVER FBI AGENT: Want me to teach you?

RADICAL EXTREMIST: Yea!

UNDERCOVER FBI AGENT: (teaches bomb stuff) Here's a bomb. Have at it.

RADICAL EXTREMIST: OK thanks. Going to get this done sometime next month/year.

UNDERCOVER FBI AGENT: FREEZE!! FBI!! You're under arrest for terrorism stuff!

and the newspapers headline reads, "FBI Uncovers Terrorist Cell and Foils Bombing Plot!"

Terrorism: 0
USA: 1

This is how they got Irv Rubin of the Jewish Defense League back in 2001. He wanted to blow up a mosque and kill an Arab-American congressman. FBI agent supplied the explosives. Rubin got arrested after taking delivery.

[GeneralDukeNukem]

So, I think first it's important to get out what entrapment is.  Entrapment is an affirmative defense available in most US jurisdictions that allows a defendant to argue they had no predisposition to commit an illegal act prior to the government's involvement actions towards them.  In order to get it, you have to demonstrate that an agent of the government convinced you to do something you wouldn't otherwise do.  For that reason, it's almost universally unavailable to someone who has been convicted of committing the act before, and it is generally unavailable of the prosecution can provide 'more likely than not' evidence that the defendant has committed the act before.  Some scenarios might help draw out just what entrapment is:

Undercover: hey guy, you want to buy a gram of blow?
Bar patron: Are you a cop?  You know you have to tell me if your a cop.
Undercover: Naw man, I'm not a cop, its $60, you want one?
Bar patron: Sure!
No entrapment

Undercover: hey guy, you want to buy a gram of blow?
Bar patron: Naw, I don't really do that.
Undercover: Come on, It's a good time for only $60
Bar patron: Alright, I guess I'll take one
No entrapment

Undercover: hey guy, you want to buy a gram of blow?
Bar patron: Naw, I don't really do that.
Undercover: Come on, It's a good time for only $60
Bar patron: Not tonight man
Undercover: Ok ok, for you, I'll knock of $5
Bar patron: Alright, I guess I'll take one
No entrapment

Undercover: Hey guy, you want to buy a gram of blow?
Bar patron: Naw, I don't really do that.
Undercover: Come on, it's a good time for only $60
Bar patron: I'm just not interested, sorry
Undercover: I'll give you a special, only $30
Bar patron: I appreciate that, but no, I don't do drugs
Undercover: How about this, I'll give it to you for free, just try it with me, I think you'll like it
Bar patron: Alright, I guess I'll try it.
Entrapment may be available.

As you can see, entrapment's a pretty rare defense for people, the police really have to have convinced you to do something you wouldn't have otherwise done.  Your bitcoin scenario doesn't seem to involve this at all, it looks like just an undercover buy, which happen all the time and are certainly not entrapment.

As for whether you could get out of a charge of trafficking because you directed payment to a third party, as the above poster addressed, that will absolutely not help you.  You traded "something of value" in exchange for the drugs, it's a but-for scenario, you wouldn't have delivered the drugs if you didn't think they would donate, getting them to give something up in exchange for the drugs is a sale. 

Yeah I don't know what he meant by entrapment, I think he meant how expensive it would be to the DEA and drug enforcement agencies if they had to deal with bitcoin; they can't just take it right back and recycle it for another deal lol.