United States v. Freeman, 147 F.4th 1

Background

Ian Freeman, a radio host and church founder, ran a bitcoin business (kiosks, LocalBitcoins, Telegram) from 2014–2021, using limited KYC and a stated policy of not asking customers why they bought bitcoin.
FinCEN told an email associated with one of Freeman's businesses in 2018 that it must register as a money transmitting business; Freeman never registered and did not file tax returns for 2016–2019.
Indictment charged Freeman with operating/conspiring to operate an unlicensed money transmitting business (18 U.S.C. §1960), money laundering and conspiracy, and tax evasion; jury convicted on all counts.
District court granted acquittal on the substantive money‑laundering count for insufficiency but denied acquittal on other counts; denied Freeman's post‑trial motions; sentenced to 96 months (variance below Guidelines).
On appeal Freeman argued (1) the major‑questions doctrine bars treating bitcoin as "funds" under 31 U.S.C. §5330/18 U.S.C. §1960, (2) insufficient evidence on tax evasion, (3) prejudicial evidentiary spillover requiring a new trial, and (4) substantive unreasonableness of sentence. The First Circuit affirmed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether §5330/§1960 cover virtual currency and FinCEN regulation is authorized (major‑questions challenge)	Freeman: the major‑questions doctrine prevents reading "funds" to include bitcoin; Congress did not clearly authorize agency regulation of virtual currencies.	Government: plain meaning of "funds" includes bitcoin; FinCEN's regulation is consistent with statute and congressional practice, and Congress later codified the approach.	Court: rejected major‑questions invocation; applied ordinary statutory construction, held "funds" covers bitcoin and FinCEN's scheme is not an extraordinary delegation. Motion to dismiss denied.
Sufficiency of evidence for tax‑evasion convictions	Freeman: government failed to prove a tax deficiency and willfulness.	Government: IRS agent identified unreported income and computed tax liability; evidence of concealment, cash dealings, instructions to mischaracterize transactions, persistent failure to file shows willfulness/willful blindness.	Court: evidence sufficient on tax deficiency and willfulness; convictions affirmed.
Whether acquitted money‑laundering evidence caused prejudicial spillover requiring new trial	Freeman: evidence used to prove money laundering was inflammatory and prejudiced jury on other counts.	Government: much of that evidence was admissible for the surviving conspiracy and other counts and would have been admitted regardless.	Court: no pervasive prejudice shown; district court did not abuse discretion in denying new trial.
Substantive reasonableness of 96‑month sentence	Freeman: sentence excessive and disparate from other virtual‑currency defendants.	Government: district court gave a plausible, well‑reasoned variance; comparators were not similarly situated (different charges, pleas, guidelines).	Court: sentence was substantively reasonable and affirmable.

Key Cases Cited

West Virginia v. EPA, 597 U.S. 697 (U.S. 2022) (framework for major‑questions doctrine and when courts should require clear congressional authorization)
Biden v. Nebraska, 600 U.S. 477 (U.S. 2023) (major‑questions context)
Util. Air Regul. Grp. v. EPA, 573 U.S. 302 (U.S. 2014) (agency overreach and limits of delegated authority)
FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (U.S. 2000) (agency cannot claim expansive authority contrary to congressional intent)
Ala. Ass'n of Realtors v. HHS, 594 U.S. 758 (U.S. 2021) (consideration of political/economic significance in major‑questions analysis)
United States v. E‑Gold, Ltd., 550 F. Supp. 2d 82 (D.D.C. 2008) (digital/e‑currency treated as within money‑transmission regimes)
United States v. Murgio, 209 F. Supp. 3d 698 (S.D.N.Y. 2016) ("funds" includes bitcoin under §1960/§5330)
United States v. Iossifov, 45 F.4th 899 (6th Cir. 2022) (bitcoin is a medium of exchange for money‑laundering statutes)
Cheek v. United States, 498 U.S. 192 (U.S. 1991) (good‑faith belief about tax law as defense to willfulness)
United States v. Stierhoff, 549 F.3d 19 (1st Cir. 2008) (willfulness and indicia of concealment in tax evasion cases)