United States v. Freeman, No. 23-1839
Document text
Research, not advice. Part of the Bitcoin research archive (October 2026). Claims labelled unverified, contested or fringe are reported, not endorsed; statuses of bills and rules are as of the date checked. Government, court and patent records are public domain; the research notes are CC BY 4.0.
United States Court of Appeals
For the First Circuit
No. 23-1839
UNITED STATES,
Appellee,
v.
IAN FREEMAN,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Joseph N. Laplante, U.S. District Judge]
Before
Gelpí, Lipez, and Thompson, Circuit Judges.
Richard Guerriero, with whom Oliver Bloom, Lothstein
Guerriero, PLLC, Mark L. Sisti, and Sisti Law Offices were on
brief, for appellant.
David M. Lieberman, Attorney, Appellate Section, Criminal
Division, U.S. Department of Justice, with whom Jane E. Young,
United States Attorney, Georgina L. MacDonald, Assistant United
States Attorney, John J. Kennedy, Assistant United States
Attorney, Nicole M. Argentieri, Principal Deputy Assistant
Attorney General, Lisa H. Miller, Deputy Assistant Attorney
General, were on brief, for appellee.
July 29, 2025
THOMPSON, Circuit Judge. Ian Freeman ("Freeman") is, by
his own description, a radio talk show host and church founder
promoting peace, liberty, individual freedom, and morality.
Freeman began selling bitcoin in 2014 as part of his mission to
promote peace. The government, which launched an investigation
into his bitcoin sales, took a different view of Freeman's conduct
and convinced a jury to convict Freeman on counts of conspiracy to
operate an unlicensed money transmitting business, operation of an
unlicensed money transmitting business, conspiracy to commit money
laundering, money laundering, and tax evasion. Post-verdict, the
district court acquitted Freeman on the substantive money
laundering count based on the insufficiency of the evidence. On
appeal, Freeman argues that the district court should never have
allowed the money-transmitting-business charges to reach trial,
because something called the "major questions doctrine" —— which
governs how we read statutes that convey regulatory authority to
administrative agencies —— requires us to interpret the relevant
statutes as not permitting agency regulation of virtual currencies
like bitcoin. He also claims that the district court should have
acquitted him based on the insufficiency of the evidence on his
tax evasion charge and granted him a new trial on the remaining
money laundering conspiracy count due to prejudicial evidentiary
spillover. Finally, he claims that even if his convictions stand,
the district court's imposition of a 96-month sentence is
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substantively unreasonable. Having carefully considered all
Freeman's arguments, we affirm.
BACKGROUND
Freeman's trial was an 11-day affair at which more than
thirty witnesses testified. This appeal does not require us to
recount every in-and-out of the evidence presented at trial, but
to better orient the reader, we start with a brief overview of the
events leading to Freeman's arrest. From there, we'll dive into
the merits of each of Freeman's arguments on appeal, filling in
the necessary factual details and announcing our standard of review
as we go.1
Freeman's Bitcoin Business
Courts throughout the country have offered thorough
descriptions of what bitcoin is and how it works. All that a
reader need understand for today's opinion is that bitcoin is a
virtual currency, with no physical coinage or government backing.2
1 Because Freeman raises a sufficiency of the evidence
challenge to his tax evasion count, we'll present the facts
relevant to that count in the light most favorable to the jury's
verdict once we get there. See United States v. Paz-Alvarez, 799
F.3d 12, 18 (1st Cir. 2015). For the overview of Freeman's bitcoin
sales that follows, however, we summarize the trial record in a
"balanced" fashion, because the manner in which we relate these
background facts does not impact our analysis of Freeman's
remaining claims of error. See United States v. Burgos-Montes,
786 F.3d 92, 99 (1st Cir. 2015).
2 In everyday speech, the phrase virtual currency would
seemingly capture any currency that exists on a computer in a
non-physical form (for instance, currency used in video games to
- 3 -
Instead bitcoin is stored in a software program referred to as a
"wallet." When bitcoin is moved from one wallet to another, the
transfer is accounted for on a public, cryptographic ledger called
the blockchain. Perkins, supra, at 1, 7. But although the ledger
is public and each wallet uniquely identifiable from other wallets,
bitcoin offers relative anonymity compared to traditional bank
transactions, because there is no information associated with a
wallet that can identify who owns the wallet. (By contrast, a
bank customer must provide personal information to a bank to open
an account and conduct transactions.) And unlike electronic
payments sent through banks, which can sometimes be cancelled or
reversed, there is no way for a sender to claw back bitcoin once
it has been sent.3
buy items in that game). See David W. Perkins, Cong. Rsch. Serv.,
R45427, Cryptocurrency: The Economics of Money and Selected Policy
Issues 1 n.2 (2020) (distinguishing between cryptocurrencies and
other "digital representations of value"). For the purposes of
today's opinion, unless we note otherwise, we use the phrase
virtual currency to refer to cryptocurrencies like bitcoin, which
can act as an alternative to traditional government-issued
currency (we'll refer to this as "fiat currency") and which use
cryptographic protocols (i.e., methods of sending information
through codes) to ensure that transactions are accurately
recorded. Id. at 1 n.2, 3-4, 7-8.
3 This opinion is not meant to be a comprehensive or
authoritative account of bitcoin or cryptocurrencies, or of any
advancements made in this arena since this case was appealed. Our
recitation of the history, function, and value of bitcoin is drawn
from the parties' presentation to the district court and jury below
and in their briefs to us.
- 4 -
To run his bitcoin business, Freeman acquired bitcoin
from large virtual currency exchanges for relatively small
commissions (0.16% in one example) and then resold it to his
customers while charging higher commissions (upwards of 10% in
many cases). Freeman conducted sales through three platforms.
First, he used bitcoin "kiosks" or "ATMs," physical machines in
which a customer could deposit "fiat currency," scan a QR code
associated with a bitcoin wallet, and receive a corresponding
amount of bitcoin in their wallet. Second, he posted
advertisements and communicated with customers on a website called
localbitcoins.com, which allowed users to buy and sell bitcoin
from each other, much as other websites allow users to buy and
sell goods. Finally, Freeman engaged in direct negotiations with
buyers on the messaging software Telegram.
Freeman had what he called a Know Your Customer procedure
for buyers who were purchasing through localbitcoins.com or
Telegram. He asked prospective customers to send him a photograph
of their driver's license and a photograph of themselves holding
a handwritten note indicating that they intended to purchase
bitcoin. Sometimes, he would also ask for customers' phone numbers
to confirm that they intended to buy bitcoin. These procedures
did not apply to purchases made at Freeman's bitcoin kiosks, which
did not require any form of personal verification, even though
kiosk operators can and do impose various verification
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requirements.4 Across all three of his platforms, Freeman
instituted another policy —— one which eschewed any inquiries into
why his customers were purchasing bitcoin. But it is questionable,
as we'll explain, that such a no-ask policy truly insulated Freeman
from the knowledge that his services were being used by customers
who were, in fact, scammers and money launderers.
The government sought to show that even when Freeman
implemented his Know Your Customer procedures, he ignored multiple
red flags that would have suggested money laundering or scams.
For instance, Freeman permitted individuals to execute
transactions for hundreds of thousands of dollars within the course
of a week, and worked with individuals seeking to exchange hundreds
of thousands of dollars in cash. He also conducted transactions
in which he accepted payment from one person but delivered bitcoin
to another —— something the government calls a "third-party trade."
In consummating these third-party transactions, Freeman sent
individuals, whom the evidence strongly suggested were scam
artists, bitcoin paid for by individuals over the age of 50,
despite finding out in many cases that the elderly individuals
paying for the bitcoin were geographically distant both from the
For instance, a government investigator testified at trial
4
that other bitcoin kiosks required him to scan a piece of
government-issued identification (like a driver's license), enter
a non-prepaid phone number, provide his name, and communicate with
the owner or operator of the kiosk to verify his purchases.
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recipient of the bitcoin and from others paying to send bitcoin to
the same recipient. And Freeman continued to trade with
individuals after encountering signs that they were not who they
claimed to be.
To establish money laundering, the government called an
undercover agent who had made multiple bitcoin purchases from
Freeman through Telegram and at a kiosk in New Hampshire. After
building a rapport with Freeman through Telegram messages, the
agent joined Freeman at a social gathering in New Hampshire and
explained to Freeman that he was buying bitcoin with money he
earned selling drugs. After this disclosure, Freeman wrote to the
agent that he could not "KNOWINGLY sell bitcoin" to the agent and
refused to conduct business with him over Telegram. He
nevertheless invited the agent to continue socializing with him.
At a gathering in Keene, New Hampshire less than a month later,
the agent asked Freeman if the kiosk he had previously used was
still available. Freeman responded that the kiosk was still there
and said, "I can't tell you that you can use it." The agent went
to the kiosk, located in a bar, and purchased nearly $20,000 in
bitcoin. That same night, the agent also taped Freeman saying in
a conversation with friends (including the agent) over drinks that
"if you fall in love with a guy from Africa, I can't talk you out
of it" and describing his kiosks as a way for smitten victims to
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"take the money that they have and send it to the person they've
fallen in love with."
In the summer of 2018, the Financial Crimes Enforcement
Network ("FinCEN") of the United States Treasury Department sent
correspondence to an email address associated with Freeman stating
that "Shire Cryptocoin," purportedly one of Freeman's businesses,
must register with FinCEN as a money transmitting business and
comply with other anti-money-laundering regulations.5 Ignoring
this directive, Freeman never registered this entity or any of his
businesses with FinCEN. He also did not file tax returns from
2016 through 2019.
Procedural History
The indictment alleged that Freeman (as well as several
co-defendants) exchanged more than $10 million worth of
government-backed currency for bitcoin between May 25, 2016 and
March 15, 2021. In relevant part, the indictment charged Freeman
5 It's not clear whether Freeman himself used the name "Shire
Cryptocoin" in connection with any of his businesses. Also, to be
exact, FinCEN wrote that Shire Cryptocoin was a money services
business. Under FinCEN's regulations, money transmitting
businesses are a subcategory of money services businesses (which
are all required to register). 31 C.F.R. § 1010.100(ff)(5)
(defining money transmitter as type of money services business);
id. § 1022.380(a)(1) (requiring registration of money services
businesses). For the sake of simplicity, this opinion will
primarily use the term "money transmitting business" or "money
transmitter" as resolution of this case does not require us to
make fine distinctions between money transmitting businesses and
other categories of money services businesses.
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with operation of an unlicensed money transmitting business,
conspiracy to operate an unlicensed money transmitting business,
money laundering, and conspiracy to commit money laundering, based
on this conduct. It also charged Freeman with several counts of
tax evasion for not paying taxes on income he received from his
bitcoin sales. Freeman joined a motion to dismiss filed by one of
his co-defendants regarding the counts related to operation of an
unlicensed money transmitting business, 18 U.S.C. § 1960, which
invoked the major questions doctrine and argued that businesses
dealing in virtual currency do not come within the statutory
definition of money transmitting businesses (more on the statutory
scheme and relevant definition to come in our analysis). The
district court denied the motion to dismiss in an oral ruling from
the bench, and Freeman proceeded to trial. At the end of an 11-
day trial, a jury convicted Freeman on all counts.
Freeman had moved for a judgment of acquittal after the
close of the government's evidence, and renewed that motion after
trial, arguing that insufficient evidence supported each count.
The district court partially granted that motion, ruling that there
was insufficient evidence that Freeman knowingly laundered money,
but upheld the remaining convictions (including the conspiracy to
commit money laundering count). In the same written order, the
district court recognized that Freeman had incorporated by
reference his earlier motion to dismiss arguments regarding the
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major questions doctrine and rejected those arguments anew.
Thereafter, Freeman moved for a new trial based on spillover
prejudice from the evidence related to the money laundering count.
He also moved for reconsideration of the court's ruling on the
motion to dismiss. The district court denied both motions, ruling
that they were untimely and unmeritorious.
At sentencing, the district court calculated the
recommended range under the United States Sentencing Guidelines as
210 to 262 months. It then granted Freeman's motion for a variance
and sentenced Freeman to 96 months in prison.6
DISCUSSION
Motion to Dismiss Counts Related to Operation of an Unlicensed
Money Transmitting Business
Freeman's appeal largely centers on the major questions
doctrine, a jurisprudential principle fleshed out in a line of
cases emanating from the Supreme Court. The doctrine's purpose is
to prevent administrative agencies from expanding their regulatory
powers beyond that which Congress has granted. See, e.g., Biden
v. Nebraska, 600 U.S. 477 (2023); West Virginia v. EPA, 597 U.S.
697 (2022); Util. Air Regul. Grp. v. EPA, 573 U.S. 302 (2014). To
understand why cases about the scope of an agency's regulatory
More precisely, the district court sentenced Freeman to 60
6
months of imprisonment on tax evasion and the counts related to
operation of a money transmitting business to be served
concurrently with a 96-month sentence for conspiracy to commit
money laundering.
- 10 -
power are relevant to Freeman's prosecution for operation of an
unlicensed money transmitting business and his defense thereto, we
need to take a closer look at the statute under which Freeman was
prosecuted.
The indictment charged Freeman with violating 18 U.S.C.
§ 1960 ("Section 1960"). In relevant part, that statute punishes
anyone who "knowingly conducts, controls, manages, supervises,
directs, or owns all or part of an unlicensed money transmitting
business." Id. § 1960(a). "[M]oney transmitting," according to
the statute, "includes transferring funds on behalf of the public
by any and all means." Id. § 1960(b)(2). And an "unlicensed money
transmitting business" means one that "fails to comply with the
money transmitting business registration requirements under
section 5330 of title 31, United States Code, or regulations
prescribed under such section." Id. § 1960(b)(1)(B).
Thus, to understand what it means for a money
transmitting business to be unlicensed, we must flip to 31 U.S.C
§ 5330 ("Section 5330"), which requires "[a]ny person who owns or
controls a money transmitting business" to register that business
"with the Secretary of the Treasury." How can someone tell if
they need to register? Section 5330 defines "money transmitting
business" to include one "who engages as a business in the
transmission of currency, funds, or value that substitutes for
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currency, including any person who engages as a business in an
informal money transfer system." Id. § 5330(d)(1).
Because the government has deemed his financial
endeavors to be money transmitting businesses, the Section 1960
crime Freeman is charged with is triggered by his failure to comply
with Section 5330(a)(1)'s requirement that such money transmitting
businesses must register with FinCEN (which is a subdivision of
the Treasury Department).7 However, if, as Freeman contends,
Section 5330 does not cover businesses such as his that trade
bitcoin (i.e., if he does not operate a money transmitting business
with registration requirements), he was not violating Section
5330, and by extension no criminal liability under Section 1960
would attach to him.
Of significance to Freeman's argument is one particular
feature of Section 5330. As Freeman points out, when the
indictment against him was filed, the definition in Section
5330(d)(1) looked a little different: it did not include the word
7 Eagle-eyed readers will have remembered that Section
5330(a)(1) referred to registration with the Secretary of the
Treasury and never mentioned FinCEN. The Secretary of the Treasury
delegated regulatory responsibilities under Section 5330 (which is
part of the Bank Secrecy Act) to FinCEN. See generally U.S. Gov't
Accountability Off., GAO/GGD-98-18, Money Laundering: FinCEN Needs
to Better Communicate Regulatory Priorities and Time Lines 1
(1998). For simplicity's sake, any time Section 5330 gives certain
responsibilities to the Secretary of the Treasury, we will
substitute in FinCEN as the office of the Treasury Department that
carries out that work.
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"currency" or the phrase "value that substitutes for currency."
Instead, the only noun in the list of items being transmitted was
"funds." Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act
("USA PATRIOT Act") of 2001, Pub. L. No. 107-56 § 359(b), 115 Stat.
272, 328 (2001) (codified as amended at 31 U.S.C. § 5330(d)(1)).
In this language difference lies the rub of Freeman's grievance.
For simplicity's sake, we'll refer to the definition of
money transmitting business in effect during the existence of
Freeman's bitcoin business as the "effective definition" and the
new definition, which was enacted in 2021 (more on this legislative
history in a moment), as the "current definition." See William M.
(Mac) Thornberry National Defense Authorization Act for Fiscal
Year 2021 ("NDAA"), Pub. L. No. 116-283 § 6102(d)(2)(A)(i), 134
Stat. 3388, 4552-53 (2021) (codified as amended at 31 U.S.C.
§ 5330(d)).8 Unless we specify otherwise, our analysis (and the
8 For those tracking the dates, it may seem strange that we're
saying the current version of Section 5330 was not effective for
the purposes of this prosecution, even though the indictment
alleges that violations of Section 1960 continued until the date
of Freeman's arrest, March 15, 2021, which was more than three
months after the current definition became law on January 1, 2021.
NDAA § 6102(d)(2)(A)(i), 134 Stat. at 4552-53. Freeman points out
that under Section 5330(a)(1), any person who owns or controls a
money transmitting business has 180 days to register, and so his
time to register under the updated definition had not expired by
the time the government put a stop to his business. 31 U.S.C.
§ 5330(a)(1). The government does not dispute this explanation of
why the current version of Section 5330 is ineffective and has not
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cases we cite) refers to the effective definition of money
transmitting business in Section 5330(d)(1).9
An attentive reader may now be wondering what any of
this has to do with the power of an administrative agency. And,
as we'll see, the government says we shouldn't take up the major
questions doctrine at all because agency authority is not
implicated in these proceedings. This is how Freeman contends the
doctrine factors into this dispute. According to Freeman, Section
5330's effective definition of "money transmitting business"
cannot be properly understood to cover businesses dealing in
virtual currencies like bitcoin, because (and here's where the
link to an administrative agency arises) Section 5330(a)(2)
instructs FinCEN to "prescribe, by regulation, the form and manner
for registering a money transmitting business." 31 U.S.C.
§ 5330(a)(2). Thus, the 2001 effective definition of money
transmitting business, which refers to the transmission of
"funds," seemingly applies to both the statutory registration
requirement in Section 5330(a)(1) and to the scope of FinCEN's
argued that we should analyze the post-amendment conduct any
differently from the pre-amendment conduct. And we thus focus our
attention on the prior, effective definition.
Section 1960 had not been amended since Freeman's offending
9
conduct began, and neither party asserts that any prior amendments
to Section 1960 are relevant to our resolution of this case. See
Violence Against Women and Department of Justice Reauthorization
Act of 2005, Pub. L. No. 109-162 § 1171(a)(2), 119 Stat. 2960,
3123 (2006) (striking surplus words from Section 1960(b)(1)(C)).
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regulatory authority under Section 5330(a)(2). The major
questions doctrine arises, says Freeman, because we should not
conclude that Congress intended to grant FinCEN regulatory
authority over virtual currencies that did not exist in 2001,
solely by virtue of Congress's use of the word "funds" in the
effective definition in Section 5330(d)(1). And how we interpret
the effective definition necessarily circumscribes the scope of
the statutory registration requirement in Section 5330(a)(1). In
other words, the statutory assumption underlying Freeman's
prosecution (i.e., that Congress's use of the word "funds" in
Section 5330(d)(1) covers virtual currencies) fails under the
major questions doctrine, because, according to Freeman, such an
interpretation runs contrary to congressional intent.
Ultimately then, Freeman's appeal poses the following
question for us: does the effective definition of "money
transmitting business" in Section 5330 capture businesses that
transmit virtual currency? In our opinion, the usual principles
of statutory construction say, resoundingly, yes, and we'll take
a step back to briefly explain why. We'll then dive into the heart
of Freeman's appeal and assess whether the major questions doctrine
nonetheless "provide[s] a reason to hesitate" before definitively
saying yes and adopting that construction. West Virginia, 597
U.S. at 721 (citation and quotation marks omitted). Because this
is a matter of statutory construction, our standard of review is
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de novo. See United States v. McGlashan, 78 F.4th 1, 6 (1st Cir.
2023).
Traditional Plain Meaning Analysis
We start by analyzing Sections 1960 and 5330 without
reference to the major questions doctrine. In interpreting a
statute, we strive "to effectuate congressional intent." City of
Providence v. Barr, 954 F.3d 23, 31 (1st Cir. 2020). Our usual
starting place for such an inquiry is the statutory text itself.
Id. "[W]e interpret a statute's words based on their plain and
ordinary meaning at the time of the statute's enactment." United
States v. Abreu, 106 F.4th 1, 12 (1st Cir.) (citing Bostock v.
Clayton County, 590 U.S. 644, 654 (2020)), cert. denied, 145 S.
Ct. 425 (2024); City of Providence, 954 F.3d at 31 ("When Congress
uses a term in a statute and does not define it, we generally
assume that the term carries its plain and ordinary meaning.").
In this case, the parties ask us to define a specific
word, "funds," in Sections 1960 and 5330.10 Other courts have been
asked to respond to this same query and those who have done so
have concluded this: that the plain meaning of "funds" is "money"
or " something generally accepted as a medium of exchange, a measure
of value, or a means of payment." United States v. Murgio, 209 F.
The parties analyze the meaning of the word "funds" under
10
both statutes, and neither suggests that the term "funds" should
be interpreted differently between Sections 1960 and 5330. Thus,
we discuss the meaning of the term "funds" under both statutes.
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Supp. 3d 698, 707 (S.D.N.Y. 2016) (quoting Webster's Third New
International Dictionary 921 (2002)); see also United States v.
Faiella, 39 F. Supp. 3d 544, 545 (S.D.N.Y. 2014) (citing Merriam
Webster Online). Premised on this definition, with which the
government agrees, other courts have found that bitcoin falls
within the plain meaning of "funds" and that Sections 1960 and
5330 therefore capture businesses that sell bitcoin to customers
in exchange for government-issued currency. See, e.g., United
States v. Stetkiw, No. 18-20579, 2019 WL 417404, at *2 (E.D. Mich.
Feb. 1, 2019) (concluding that bitcoin transactions constitute
"money transmitting" within the meaning of Section 1960); United
States v. Mansy, No. 2:15-cr-198-GZS, 2017 WL 9672554, at *1 (D.
Me. May 11, 2017) (same) (collecting cases); Murgio, 209 F. Supp.
3d at 707-11, 714 (concluding that bitcoin are funds within the
plain meaning of Section 1960 and that indictment sufficiently
alleged failure to comply with Section 5330's registration
requirements). We agree with this judicial reasoning because
bitcoin can be and is used as a currency to make sales and purchases
and, therefore, nicely fits the definition of "funds."11 Murgio,
209 F. Supp. 3d at 707; see also United States v. Iossifov, 45
F.4th 899, 913-14 (6th Cir. 2022) (concluding that bitcoin is a
11 For instance, the evidence at trial showed that the bar
where one of Freeman's kiosks was located accepted bitcoin in
exchange for food.
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medium of exchange and qualifies as "funds" within the meaning of
the federal money laundering statute, 18 U.S.C. § 1956); United
States v. Harmon, 474 F. Supp. 3d 76, 88-94, 100-09 (D.D.C. 2020)
(concluding that for similar reasons bitcoin is "money" within the
meaning of the District of Columbia's Money Transmitters Act and
separately concluding that defendant operated an "unlicensed money
transmitting business" within the meaning of Section 1960 where
its "core business was receiving bitcoin and transmitting that
bitcoin to another location or person").
Within our ordinary interpretive framework, our inquiry
into whether the word "funds" covers bitcoin would usually end
here, as there is no reason to look past the statutory text itself
if that text is unambiguous and consistent with a coherent
statutory scheme. Penobscot Nation v. Frey, 3 F.4th 484, 490 (1st
Cir. 2021); City of Providence, 954 F.3d at 31-32 ("Other tools of
statutory interpretation, such as legislative history, customarily
carry significant weight only when the text is ambiguous or its
plain meaning leads to an absurd result."). Indeed Freeman admits
that he has "never argued" that "the ordinary meaning of 'funds'"
does not "encompass[] bitcoin." But as we've already alluded to,
Freeman insists that we cannot stop here because his is "an
exceptional case" wherein ordinary rules of statutory construction
cannot be relied upon to answer the question of whether bitcoin
qualifies as "funds." Rather, only an examination of the major
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questions doctrine (which takes a deeper dive into congressional
intent) can do that, so we turn to it now. A heads-up here to the
gentle reader: Freeman offers us a slew of arguments as to why he
should prevail on this issue, so we beg your patience as we work
our way through his various contentions.
Major Questions Doctrine
Before we delve into the details of the major questions
doctrine, we pause to address the government's threshold assertion
that we "need not indulge" Freeman's invocation of the doctrine at
all because his criminal prosecution involved no "regulatory
assertions" whatsoever by the Department of Treasury. Rather, it
argues "the indictment neither depended on nor referenced the
FinCEN guidance" and as such, the major questions doctrine "is not
triggered" here. However, we think the government's position
oversimplifies Freeman's argument and here's why.
As our preface noted, the "major questions doctrine" can
arise in cases where we are asked to interpret a legislative
enactment that "confers authority upon an administrative agency"
in the executive branch to implement its terms. West Virginia,
597 U.S. at 721. Here, Freeman's argument centers on the effective
definition of money transmitting business in Section 5330(d)(1).
That statutory definition governs the scope of what businesses are
required to register under Section 5330(a)(1), and in consequence,
what businesses might be subject to criminal penalties under
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Section 1960(b)(1)(B) for failure to comply with that registration
requirement.12 See United States v. Budovsky, No. 13-cr-00368,
2015 WL 5602853, at *9 (S.D.N.Y. Sept. 23, 2015) ("[C]riminal
liability under § 1960(b)(1)(B) rests in part on a failure to
comply with registration requirements, including those set forth
in § 5330 or in § 5330's regulations."). Simultaneously, the
effective definition (what constitutes a money transmitting
business) governs the scope of the regulations FinCEN can
promulgate in the next subsection, Section 5330(a)(2). See, e.g.,
Ratzlaf v. United States, 510 U.S. 135, 141-43 (1994) (explaining
that willful violation has same meaning under some provisions of
the Bank Secrecy Act, 31 U.S.C. §§ 5322, 5324, as it does in other
provisions, 31 U.S.C. §§ 5314, 5316); United States v. Abbas, 100
F.4th 267, 284 (1st Cir.) (concluding that "proceeds" has same
12 While summarizing the nature of Freeman's convictions in
its brief, the government claims that Freeman was also convicted
under Section 1960(b)(1)(C). Section 1960(b)(1)(C) defines an
unlicensed money transmitting business seemingly independently
from Section 5330. See 18 U.S.C. § 1960(b)(1)(C) (defining term
to mean a money transmitting business "otherwise involv[ing] the
transportation or transmission of funds that are known to the
defendant to have been derived from a criminal offense or are
intended to be used to promote or support unlawful activity").
The government does not argue, however, that we can ignore Section
5330 because the jury convicted Freeman under Section
1960(b)(1)(C), presumably because the verdict form did not ask the
jury to indicate which of the two subsections Freeman had violated.
Even if the record could support such an argument, we would treat
it as waived given the government's failure to brief the issue.
See Mass. Lobstermen's Ass'n v. Menashes, 127 F.4th 398, 403 n.2
(1st Cir. 2025).
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meaning in different subsections of criminal money laundering
statute, 18 U.S.C. § 1956), cert. denied, 145 S. Ct. 319 (2024).
This statutory scheme makes clear that the legislation's
substantive provisions work hand in hand with those provisions
granting regulatory authority to FinCEN to implement the terms of
the statute itself. Given the necessary interplay between the
statutory and regulatory provisions, we agree with Freeman that
skirting the major questions doctrine would incorrectly treat the
statutory registration requirement as completely divorced from any
of FinCEN's regulatory authority. Indeed, as Freeman pointed out
during oral argument, requiring a business to register by statute
means very little without a corresponding mechanism by which said
business can, in fact, register. For the registration requirement
in Section 5330(a)(1), the regulations FinCEN promulgates under
Section 5330(a)(2) appear to be that mechanism. And although the
government would like us to conclude the major questions doctrine
has no place here, it offers no direct response to this point.
All this to say, Freeman steps over the threshold of identifying
a statute which, at least in part, confers regulatory authority
upon an administrative agency, a power Freeman insists Congress
never intended to delegate.13
We acknowledge that this is a somewhat unusual case for the
13
invocation of the major questions doctrine: FinCEN is not a party
and Freeman is seeking to overturn his conviction, not to enjoin
- 21 -
Having explained the relationship between this case and
FinCEN's regulation of money transmitting businesses, we must now
determine "whether Congress in fact meant to confer the power the
agency has asserted" as the major questions doctrine requires us
to do. West Virginia, 597 U.S. at 721 (quoting FDA v. Brown
& Williamson Tobacco Corp., 529 U.S. 120, 159 (2000)). "In the
ordinary case," this consideration "has no great effect on the
appropriate analysis." Id. But the Supreme Court has recognized
the existence of "extraordinary cases." Id. In such instances,
we cannot conclude that Congress granted an agency authority "to
exercise powers of vast economic and political significance"
unless the statutory text "speaks clearly" of such a grant. Ala.
Ass'n of Realtors v. Dep't of Health & Hum. Servs., 594 U.S. 758,
FinCEN's regulatory act. Nevertheless, the heart of this appeal
is the effective definition of money transmitting business in
Section 5330(d)(1), a definition that applies both to Sections
5330(a)(1) and (a)(2). Blinding ourselves (as the government
requests) to the reality that our interpretation of Section
5330(d)(1) impacts not only Freeman's criminal liability, but also
the scope of FinCEN's regulatory authority, undermines the
coherency and consistency of the statutory scheme. See Ali v.
Fed. Bureau of Prisons, 552 U.S. 214, 222 (2008). Our sister
circuits too have seen fit to consider the application of the major
questions doctrine in cases where the relevant administrative
agency is not a party and is not actively making "regulatory
assertions" in that litigation. See United States v. White, 97
F.4th 532, 540 (7th Cir.) (considering major questions challenge
to Sentencing Commission's authority in a criminal case), cert.
denied, 145 S. Ct. 293 (2024); N.C. Coastal Fisheries Reform Grp.
v. Capt. Gaston LLC, 76 F.4th 291, 296-301 (4th Cir. 2023)
(applying major questions doctrine in suit between environmental
advocacy group and shrimp trawlers).
- 22 -
764 (2021) (quotation marks omitted) (quoting Util. Air Regul.
Grp., 573 U.S. at 324). In basic terms, the major questions
doctrine tells us that when an administrative agency in the
executive branch wants to do something that is an extraordinarily
big deal, it must show that Congress clearly gave it permission to
do so in the statutory text. See Nebraska, 600 U.S. at 514
(Barrett, J., concurring) (analogizing major questions doctrine to
expectation that a parent authorizing a babysitter to take the
children on an overnight trip would provide "much more clarity
than a general instruction to 'make sure the kids have fun'").
What, then, makes for an extraordinary case? The Supreme
Court defines it in broad strokes as one "in which the 'history
and the breadth of the authority that [the agency] has asserted,'
and the 'economic and political significance' of that assertion,
provide a 'reason to hesitate before concluding that Congress'
meant to confer such authority." West Virginia, 597 U.S. at 721
(quoting Brown & Williamson, 529 U.S. at 159-60). Within this
rather wide framework, our sister circuits, in carefully examining
what the Supreme Court has said about the breadth of an agency's
authority to regulate, have zeroed in on certain "hallmarks that
should send us searching for clear authorization from Congress."14
14Our circuit has addressed the major questions doctrine only
in passing since the doctrine was formalized in West Virginia.
See Hornof v. United States, 107 F.4th 46, 59 n.14 (2024) (noting
- 23 -
N.C. Coastal Fisheries, 76 F.4th at 297 (recognizing that doctrine
is more likely to apply where the agency's asserted powers are
inconsistent with congressional intent, conflict with a distinct
and existing statutory scheme, raise federalism concerns, "fall[]
outside the agency's traditional expertise," are rooted in "an
ancillary provision" of a statute, or are drawn from "old statutes
against a backdrop of an agency failing to invoke them
previously"); see also Bradford v. U.S. Dep't of Lab., 101 F.4th
707, 725-28 (10th Cir. 2024) (rejecting application of major
questions doctrine where agency did not "locate expansive
authority in modest words, vague terms or ancillary provisions,"
was not regulating private industry, did not "discover regulatory
authority for the first time in a long-extant statute," and did
not "lack[] expertise in the relevant area of policymaking"
(citation modified)), cert. denied, 145 S. Ct. 1047 (2025). Our
review of the Supreme Court's precedent and of our sister circuits'
helpful interpretation of it convinces us that this case lacks the
hallmarks of a major questions case. We'll explain our thinking
below around the two organizing principles identified by the
Supreme Court, starting with "the history and the breadth" of
FinCEN's assertion of authority and follow that with addressing
that statute enabling Coast Guard to regulate oil tankers "speak[s]
clearly").
- 24 -
its "economic and political significance."15 West Virginia, 597
U.S. at 721; see Nebraska v. Su, 121 F.4th 1, 14 (9th Cir. 2024)
(identifying a "two-prong framework").
History and Breadth of FinCEN's Assertion
History
To understand the "history and breadth" of FinCEN's
regulation as is relevant here, a short history of Section 5330 is
in order.16 As part of a statutory scheme (the Bank Secrecy Act)
designed to combat money laundering, Congress has long required
"money transmitting businesses" to register with the Treasury
Department. Riegle Community Development and Regulatory
Improvement Act of 1994, Pub. L. No. 103-325 § 408, 108 Stat. 2160,
2249-51 (1994) (codified at 31 U.S.C. § 5330). In the wake of the
September 11, 2001 terrorist attacks, Congress that year amended
15 In so doing, we acknowledge that the major questions
doctrine has been an area of dynamic development in the last few
years, and it is not always clear what factors fall under which
prong. For instance, a discussion of the wider statutory scheme
and legislative history might well be introduced as a relevant
piece of the agency's regulatory history or as indicative of the
political significance of the regulatory assertion. In today's
decision, we place less importance on categorizing the relevant
characteristics and focus on whether the facts of this case,
stripped of Freeman's rhetorical flourishes, actually fit into the
major questions precedent.
16 Our focus is on the legislative history of Section 5330
rather than Section 1960, because (1) that is what the parties
briefed and (2) Section 5330, which enables agency regulation, is
more squarely implicated by the major questions doctrine than
Section 1960, which focuses on the circumstances of criminal
liability.
- 25 -
the definition of "money transmitting business" in Section 5330 to
include "any other person who engages as a business in the
transmission of funds, including any person who engages as a
business in an informal money transfer system or any network of
people who engage as a business in facilitating the transfer of
money domestically or internationally outside of the conventional
financial institutions system." USA PATRIOT Act § 359(b), 115
Stat. at 328 (emphases added). According to the report of the
Committee on Financial Services, the amendment did not expand the
definition of money transmitting business, but instead clarified
that the existing definition reached black market, non-bank money
exchangers —— what the Committee referred to as "informal value
transfer banking systems" —— which helped to fund terrorist and
criminal organizations. H.R. Rep. No. 107-250, at 34, 63-64
(2001).
This was the effective version of Section 5330 when
bitcoin came into being in 2008. Perkins, supra, at 2. In
Freeman's telling though, FinCEN's first step towards the
regulation of bitcoin didn't occur until 2011, when FinCEN updated
its regulatory definition of "money transmission services" to
require the "acceptance of currency, funds, or other value that
substitutes for currency from one person." Bank Secrecy Act
Regulations; Definitions and Other Regulations Relating to Money
Services Businesses, 76 Fed. Reg. 43585, 43596 (July 21, 2011)
- 26 -
(codified at 31 C.F.R. § 1010.100(ff)(5)) (emphasis added). Such
a theory, he argues, is consistent with the guidance FinCEN issued
in 2013 which, for the first time, stated that "value that
substitutes for currency" includes virtual currencies.
Specifically, the guidance said, "[t]he definition of a money
transmitter does not differentiate between real currencies and
convertible virtual currencies. Accepting and transmitting
anything of value that substitutes for currency makes a person a
money transmitter under the regulations implementing the [Bank
Secrecy Act]."17 FinCEN, FIN-2013-G001, Application of FinCEN's
Regulations to Persons Administering, Exchanging, or Using Virtual
Currencies, at 3 (2013). Freeman says the fact that FinCEN never
sought to regulate bitcoin before 2013 demonstrates the agency's
understanding of its statutory inability to do so. Needless to
say, the government takes issue with Freeman's historical
FinCEN laid out precise definitions for "real currency,"
17
"convertible currency," and "virtual currency" in its 2013
guidance. FIN-2013-G001, at 3. For the purposes of this opinion,
it suffices to say that "real currency" is equivalent to what we
have been calling "fiat currency" and that bitcoin is a form of
"convertible virtual currency." The guidance clarified that the
fact that a business exchanged bitcoin instead of fiat currency
would not exempt it from registration as a money transmitter. Id.
at 2 (explaining that "a person engaged as a business in the
exchange of virtual currency for real currency, funds, or other
virtual currency" is a money transmitter under FinCEN's
regulation).
- 27 -
interpretation,18 but neither party has pointed to any evidence
that FinCEN engaged in any enforcement activities against
businesses transmitting bitcoin which sought to compel them to
register (or comply with other regulations) prior to issuance of
the 2013 guidance. And for the purposes of this opinion, we'll
operate with the understanding that FinCEN, at least, first began
to regulate businesses that transmit virtual currencies in 2013.
Doing so lets us focus on the parties' key dispute: whether
FinCEN, nonetheless, had statutory authority to regulate virtual
currencies when it issued the 2013 guidance.
Freeman would like us to conclude it "inconceivable" (as
he tells it) that the single word "funds" as contained in the
effective version could refer to virtual currency, but we believe
his focus on that single word is misplaced and here's why. In
full, the effective definition (when bitcoin was created)
specified that businesses engaged in the "transmission of funds"
could include an "informal money transfer system . . . outside of
the conventional financial institutions system." USA PATRIOT Act
§ 359(b), 115 Stat. at 328. Bitcoin and virtual currencies seem
Freeman takes the view that FinCEN did not begin regulating
18
bitcoin until "long after the invention of bitcoin" in 2008, when
it added the phrase "value that substitutes for currency" into its
regulations and then interpreted that phrase to refer to virtual
currencies. The government claims that FinCEN was regulating
virtual currencies all along and that FinCEN's actions in 2011 and
2013 merely "confirmed" its existing regulatory scheme.
- 28 -
to fall within this broad definition of a system that allows users
to transfer money without the participation of banks or other
traditional money movers. Freeman argues that in utilizing this
language in the 2001 amendment, Congress intended to target a
different informal money system -- "the ancient South Asian money
exchange system called hawala" and other "hawala-type systems."19
But we find this to be a strained reading of the Committee Report
accompanying the 2001 legislation. A more natural reading is that
Congress was more generally concerned about "underground black
market banking systems," whatever the form, H.R. Rep. No. 107-250,
at 33, and described hawalas as simply one example of the "informal
value transfer banking systems" on which FinCEN should focus
attention, id. at 63-64. Moreover, Congress highlighted
particular characteristics of "value transfer systems" that are
equally true of today's bitcoin use, including that such systems
frequently operated through "messages relating to receipt or
disbursement of funds" rather than transfer of physical funds
themselves, and that they were preferred by criminals because of
19 According to the findings of the House Committee on
Financial Services, "hawala" is the word for an "ancient South
Asian money exchange system" which "consists of an international
network of non-bank financial agents, often built on trusted family
or cultural relationships." H.R. Rep. NO. 107-250, at 34. These
trusted relationships permit value to be transferred based on
messages rather than the physical movement of funds from one party
to another. Id. Presumably, when Freeman refers to "hawala-type
systems," he refers to value transfer systems that function in a
similar manner.
- 29 -
"the lack of record-keeping and opportunity for anonymity." Id.
at 34. Importantly, Congress believed that these sorts of
alternative transfer systems were "already adequately covered" by
the pre-2001 version of Section 5330. Id. at 63-64. The Committee
Report gives us no reason to think that a non-bank system allowing
people to transfer value using messages between trusted parties
should be treated differently than one which accomplishes the same
purpose using cryptographic protocols between strangers.
And even if we adopted Freeman's approach and looked at
the word "funds" in isolation, we'd be hard-pressed to think it
"inconceivable" that Congress would have intended "funds" to reach
cryptocurrency given that judicial decisions dating back to 2008
had already interpreted "funds" expansively to capture non-
physical currency. See, e.g., United States v. E-Gold, Ltd., 550
F. Supp. 2d 82, 85, 94-97 (D.D.C. 2008) (concluding that Section
5330's definition of money transmitting business included internet
service which allowed users to exchange fiat currency for digital
currency).20
20We are mindful, as Freeman points out, that the virtual
currency at issue in E-Gold is not a "cryptocurrency" like bitcoin.
See 550 F. Supp. 2d at 85; FIN-2013-G001, at 3 & n.13 (describing
e-currencies and e-precious metals as a system where a broker or
dealer electronically distributes digital certificates of
ownership of fiat currency or precious metals); see also supra
note 2. But the fact that e-gold was backed by precious metals
while bitcoin transactions are recorded on a cryptographic ledger
is not a difference-maker in our current analysis because FinCEN
- 30 -
Nor does Freeman, relative to his historical argument,
make a showing that FinCEN has engaged in the sort of about-face
agency behavior typically found in the major questions cases. That
is significant because the Supreme Court, in applying the doctrine,
has particularly scrutinized with suspicion when an agency
reverses course on its long-standing decision not to regulate in
a particular field or in a particular manner. See West Virginia,
597 U.S. at 710-11, 713, 724 (striking regulation requiring
electricity generators to undergo sector-wide switch to sources
that produced less carbon dioxide, where EPA had previously only
exercised power under Section 111 of the Clean Air Act to set
emissions limits for individual plants). FinCEN had no history of
explicitly disclaiming its authority to regulate virtual currency
(or any other type of "informal transfer banking system") prior to
its 2011 and 2013 updates to its regulatory regime. Cf. Brown
& Williamson, 529 U.S. at 143-48 (concluding that the Food and
Drug Administration's ("FDA") decades-long position that it had no
jurisdiction over tobacco products and Congress's implicit
ratification of that position in subsequent tobacco-specific
views and treats both "e-precious metals" and cryptocurrencies as
convertible virtual currencies. 2013 Guidance at 3. Nor do we
understand why Freeman highlights that "the e-Gold indictment
explicitly relied on FinCEN's implementing regulations" as a point
of distinction. After all, Freeman similarly claims his
prosecution relies on FinCEN's implementing regulations (which is
the premise for applying the major questions doctrine).
- 31 -
legislation demonstrated a lack of legislative intent to delegate
authority over tobacco products to the FDA).
And simply because FinCEN declined to exercise such
authority prior to issuance of the 2013 guidance can hardly, by
our lights, be held against it; by Freeman's count, the agency
acted only five years after bitcoin was invented.21 The five-year
delay —— if we can call it such —— is understandable because the
money laundering risk posed by bitcoin and other cryptocurrencies
(and thus the need for targeted regulation) may not have been
instantly apparent upon bitcoin's invention. Cf. Ocean State
Tactical, LLC v. Rhode Island, 95 F.4th 38, 50 (1st Cir. 2024)
("Law advances more slowly than the technology it regulates, but
must nonetheless be able to respond when the ramifications of a
technological development become more apparent over time."). Plus
five years is a far cry from the decades of regulatory inaction
emphasized in the Supreme Court's major questions cases. See,
e.g., West Virginia, 597 U.S. at 734 (noting that "it is pertinent
to our analysis that EPA has acted consistent with such a
limitation [on its regulatory power] for the first four decades of
the statute's existence"); Ala. Ass'n of Realtors, 594 U.S. at 761
21In fact, FinCEN proposed the addition of the phrase "value
that substitutes for currency" as early as 2009, the year following
bitcoin's invention. Amendment to the Bank Secrecy Act
Regulations-Definitions and Other Regulations Relating to Money
Services Businesses, 74 Fed. Reg. 22129, 22137, 22142 (proposed
May 12, 2009) (to be codified at 31 C.F.R. pt. 103).
- 32 -
(explaining that 1944 statutory provision had "rarely been
invoked —— and never before to justify an eviction moratorium";
instead "[r]egulations under this authority have generally been
limited to quarantining infected individuals and prohibiting the
import or sale of animals known to transmit disease"). In 2008,
cryptocurrencies were an emerging technology whose significance
within the money transfer marketplace was less than clear.
Freeman's own brief indicates that the market capitalization of
bitcoin in July 2010, roughly two years after its invention, was
only $200,000, a pittance in the nation's overall financial scheme,
and perhaps one not yet worthy of an expenditure of the limited
resources Congress appropriates to FinCEN.
"Subsequent" History
Unable to find a firm foothold in the history leading up
to FinCEN's exercise of regulatory authority over bitcoin, Freeman
points to events that occurred after FinCEN's issuance of the 2013
guidance. Reliance on this sort of "subsequent" history is rather
unorthodox. As the government notes, we've previously warned
against using the views of a later Congress to interpret "the
meaning of statutes enacted by an earlier Congress" when conducting
traditional statutory interpretation. Parlane Sportswear Co. v.
Weinberger, 513 F.2d 835, 837 n.2 (1st Cir. 1975); see also
Bruesewitz v. Wyeth LLC, 562 U.S. 223, 242 (2011) ("Post-enactment
legislative history (a contradiction in terms) is not a legitimate
- 33 -
tool of statutory interpretation."); Doe v. Chao, 540 U.S. 614,
626–27 (2004) ("[W]e have said repeatedly that subsequent
legislative history will rarely override a reasonable
interpretation of a statute that can be gleaned from its language
and legislative history prior to its enactment." (citation and
quotation marks omitted)). Tellingly, Freeman does not cite to a
single major questions case when arguing that these subsequent
events call for an alternative interpretation of Section 5330.
But as best we can glean, he believes that certain events post-
dating the 2013 guidance amount to noteworthy hallmarks of the
major questions cases.
First, Freeman discusses subsequent legislative activity
related to the regulation of virtual currencies, including failed
legislation and the 2021 amendment that enacted the current
definition of "money transmitting business" in Section 5330, and
concludes that Congress "considered and repeatedly rejected
legislation" that would have expressly empowered FinCEN to
regulate virtual currencies. Second, Freeman identifies
statements that FinCEN made regarding virtual currencies after
issuing the 2013 guidance and claims the statements reveal that
"the agency recognized that the statute did not authorize the
regulation" but nevertheless "expanded" its authority "before the
authorization from Congress." Accepting Freeman's
characterization of these occurrences, we see there may be some
- 34 -
facial resemblance between these facts and a major questions case.
See Util. Air Regul. Grp., 573 U.S. at 321 (explaining that "EPA
itself has repeatedly acknowledged" that proposed regulation
"would overthrow" the "structure and design" of the enabling act);
Brown & Williamson, 529 U.S. at 144 (explaining that "Congress
has acted against the backdrop of the FDA's consistent and repeated
statements that it lacked authority under the FDCA to regulate
tobacco" and "considered and rejected bills that would have granted
the FDA such jurisdiction"). But given the Supreme Court's
eschewal of the importance of post-enactment legislative history
outside the major questions context, we express skepticism of these
events' relevance. See Bruesewitz, 562 U.S. at 242; Chao, 540
U.S. at 626–27. That said, despite our skepticism, in the absence
of a clear statement by the Supreme Court that subsequent history
has no bearing on the major questions determination,22 and given
the presence of thorough briefing from both parties on the point,
we will consider whether what happened after FinCEN issued its
2013 guidance influences our analysis of Freeman's argument.
22 In some instances, the Court's major questions cases have
referenced congressional acts or omissions that post-date the
agency's challenged regulatory assertion, but without relying on
them to resolve the major questions determination. See Ala. Ass'n
of Realtors, 594 U.S. at 760, 766 (recounting Congress's failure
to enact multiple extensions of CDC's challenged eviction
moratorium and noting that "Congress was on notice that a further
extension would almost surely require new legislation, yet it
failed to act in the several weeks leading up to the moratorium's
expiration").
- 35 -
In our view, the subsequent history only confirms that
FinCEN's interpretation of the breadth of its authority to regulate
was consistent with congressional intent. That is because "when
Congress revisits a statute giving rise to a longstanding
administrative interpretation without pertinent change, the
'congressional failure to revise or repeal the agency's
interpretation is persuasive evidence that the interpretation is
the one intended by Congress.'" Commodity Futures Trading Comm'n
v. Schor, 478 U.S. 833, 845-46 (1986) (citation omitted)
(concluding that deference to agency's interpretation was
warranted where Congress had twice amended the statute without
overruling the agency's assertion of jurisdiction); see Am. Forest
Res. Council v. United States, 77 F.4th 787, 801 n.16 (D.C. Cir.
2023), cert. denied, 144 S. Ct. 1110 (2024); Strickland v. Me.
Dep't of Hum. Servs., 96 F.3d 542, 547 (1st Cir. 1996). Typically,
courts invoke this principle of statutory interpretation to infer
legislative approval from Congress's silence and inaction, such as
when Congress re-enacts a statute without amendment to the portion
on which the agency has relied. See Clean Harbors Env't Servs.,
Inc. v. Herman, 146 F.3d 12, 20 (1st Cir. 1998); Strickland, 96
F.3d at 547. We think it applies with even more force when, as
here, an agency informs Congress of its interpretation of its
statutory authority and Congress affirmatively revises the
relevant statute to codify that interpretation. See Altman v.
- 36 -
SEC, 666 F.3d 1322, 1326 (D.C. Cir. 2011) (upholding SEC's
interpretation of enabling statute and explaining that SEC's rules
of practice were codified in 2002); cf. Tex. Dep't of Hous. & Cmty.
Affs. v. Inclusive Communities Project, Inc., 576 U.S. 519, 537-38
(2015) (explaining that Congress "presupposed" the existence of
disparate impact claims under the Fair Housing Act when it
subsequently added exemptions from disparate impact claims into
the statute). And to repeat, that's exactly what happened here.
In the years following FinCEN's issuance of the 2013
guidance, FinCEN informed Congress on multiple occasions that it
had been regulating virtual currency exchangers as businesses that
transmit "value that substitutes for currency." Illicit Use of
Virtual Currency and the Law Enforcement Response: Hearing Before
the Subcomm. on Terrorism and Illicit Fin. of the H. Comm. on Fin.
Servs. 9, 25 (2018) (statement of Thomas Ott, Associate Director,
FinCEN Enf't Division) (testifying that "value that substitutes
for currency" is "sufficient to cover virtual currency")
[hereinafter H. Hrg. 115-102]; The Present and Future Impact of
Virtual Currency: Joint Hearing Before the Subcomm. on Econ. Pol'y
and Subcomm. on Nat'l Sec. and Int'l Trade and Fin. of the S. Comm.
on Banking, Hous., and Urban Affs., 113th Cong. 8, 11 (2013)
(statement of Jennifer Shasky Calvery, Director, FinCEN)
(testifying that FinCEN was "able to cover [virtual currency] under
our pre-existing definitions and regulations, which include the
- 37 -
concept of other value that substitutes for currency")
[hereinafter S. Hrg. 113-210]. Indeed FinCEN wrote to a Senate
committee that FinCEN "would not object to Congress considering
codifying elements of money transmission to involve the
transmission of currency, as well as value that substitutes for
currency." Combatting Money Laundering and Other Forms of Illicit
Finance: Regulator and Law Enforcement Perspective on Reform:
Hearing Before the S. Comm. on Banking, Hous., and Urb. Affs.,
115th Cong. 59, 62 (2018) (written statement of Kenneth A. Blanco,
Director, FinCEN). As we previewed earlier, Congress subsequently
added "currency" and "value that substitutes for currency" into
the definition of "money transmitting business" in Section
5330(d)(1). NDAA § 6102(d)(1)(2), 134 Stat. at 4553. In our view,
that Congress not only declined to criticize or correct FinCEN's
approach (despite having been informed of it on more than one
occasion), but instead chose to codify it, strongly suggests that
FinCEN's interpretation was consistent with Congress's intent.
Freeman takes an alternative view of the same sequence
of events, arguing that we should treat the 2021 amendment instead
as evidence that the effective definition could not have supported
FinCEN's earlier reading. This view relies on a principle of
statutory interpretation that tells us to give meaning to the words
of a statute in a manner that avoids redundancies. See City of
Providence, 954 F.3d at 43. (We usually call this principle the
- 38 -
canon against superfluities or canon against surplusage.) To
follow Freeman's logic, if "funds" pre-2021 already captured
virtual currencies, it would be unnecessary to add language to the
statute that also refers to virtual currencies. Because it is
undisputed that Congress intended the addition of the phrase "value
that substitutes for currency" to refer to virtual currencies, see
NDAA § 6102(a) 134 Stat. at 4552, we should presume that the
previous formulation of the statute did not capture this meaning.
But we have previously warned that the canon against
superfluities "is not a straitjacket" and "should not, therefore,
be employed inflexibly to rule out every interpretation of a
statute that treats certain language as illustrative or
clarifying." City of Providence, 954 F.3d at 43 (concluding that
amendment "appears calculated to remove any doubt" that executive
officer could exercise particular power consistent with
pre-existing statutory authority). The prefatory language to the
2021 amendment, NDAA § 6102(a), 134 Stat. at 4552, supports reading
the addition of "value that substitutes for currency" as stressing
that regulation of virtual currencies should be a FinCEN priority,
rather than as giving FinCEN permission to regulate virtual
currencies for the first time. NDAA § 6102(a)(4), 134 Stat. at
4552 (explaining that FinCEN should "mak[e] sure that steps to
address emerging methods of such illicit financing [like virtual
currencies] are high priorities"); see Jerman v. Carlisle,
- 39 -
McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 592 (2010)
(explaining that "Congress may simply have intended to codify
existing judicial interpretations to remove any potential for
doubt in jurisdictions where courts had not yet addressed the
issue").
And it's worth noting that Congress also has a history
of revising the Section 5330 definition of "money transmitting
businesses" for the purpose of clarification, rather than
substantive expansion. H.R. Rep. No. 107-250, at 63-64 ("Although
the Committee believes that informal value transfer banking
systems like hawalas are already adequately covered by references
to money transmitting businesses in certain provisions of existing
law, this section makes that understanding explicit."). Under
these circumstances, we need not blindly apply the canon against
surplusage to invalidate an agency regulation that Congress deemed
worthy of codification. See Bufkin v. Collins, 145 S. Ct. 728,
742 (2025) ("[S]ometimes the better overall reading of the statute
contains some redundancy." (citation omitted)); City of
Providence, 954 F.3d at 43.
Freeman nevertheless insists that "Congress struggled
with deciding how to classify and regulate virtual currencies" and
"considered and repeatedly rejected legislation to assign
regulatory authority to agencies like FinCEN." See West Virginia,
597 U.S. at 731. But his position does not hold up to scrutiny.
- 40 -
To begin with, the legislative record simply doesn't show the sort
of "struggle" that Freeman claims exists. In support of his
contention, Freeman first points to the FinCEN Improvement Acts of
2018 and 2019, two bills that passed in the House of
Representatives but failed in the Senate. H.R. 6411, 115th Cong.
(2018); H.R. 1414, 116th Cong. (2019). In relevant portion, these
bills would have revised FinCEN's duty and power to "[c]oordinate
with financial intelligence units in other countries on anti-
terrorism and anti-money laundering initiatives," 31 U.S.C.
§ 310(b)(2)(H), to specifically "includ[e] matters involving
emerging technologies or value that substitutes for currency."
H.R. 6411, § 3; H.R. 1414, § 3. But those bills did not address
the definition of money transmitting business. Freeman also points
us to the Improving Laundering Laws and Increasing Comprehensive
Information Tracking of Criminal Activity in Shell Holdings Act
("ILLICIT Cash Act"), S. 2563 § 308, 116th Cong. (2019), which
would have revised the definition of "money transmitting business"
in Section 5330 to include "value that substitutes for currency."
Freeman emphasizes that this bill "failed to even make it out of
committee." Yet he concedes that the text of this bill eventually
"formed the basis for the [anti-money laundering] provisions of
the 2021 NDAA." In other words, while Congress did fail to pass
the ILLICIT Cash Act, it adopted the relevant language from this
- 41 -
bill two terms later as part of the 2021 amendment. NDAA § 6102,
134 Stat. at 4552-53. Let us further explain.
In a major questions case, an agency's assertion that it
can regulate in a manner in which Congress has refused to legislate
might give us reason to question whether the agency is contravening
congressional intent. See West Virginia, 597 U.S. at 731 (applying
major questions doctrine where EPA enacted program to reduce
greenhouse gas emissions despite Congress's rejection of similar
proposals); Ala. Ass'n of Realtors, 594 U.S. at 760 (explaining
that Centers for Disease Control ("CDC") "decided to do what
Congress had not" by imposing administrative eviction moratorium
after Congress declined to extend its own statutory moratorium).
But what we've chronicled as per Freeman's argument is hardly the
sort of history that calls for application of the major questions
doctrine. FinCEN did not watch Congress reject a proposal to
regulate virtual currency exchanges as money transmitting
businesses, only to sua sponte take up the same proposal itself.
Instead, the bills that Freeman identifies were all introduced
after FinCEN started regulating virtual currencies in 2013, and
each bill would have codified FinCEN's "value that substitutes for
currency" formulation, rather than curtailing any perceived
administrative overreach. The bill containing the broadest
amendment ultimately was incorporated into legislation that
passed, codifying FinCEN's interpretation. See NDAA § 6102, 134
- 42 -
Stat. at 4552-53; ILLICIT Cash Act S. 2563 § 308. None of the
Supreme Court's major questions cases have overturned agency
action when a Congress takes the agency interpretation being
challenged and chooses to enact it into law.23
Finally, Freeman claims that "FinCEN admitted that it
had to expand its authority beyond the statutory language to
capture virtual currency." He seemingly raises this argument
because at times, the Supreme Court has emphasized that the
agency's express disclaimer of its authority to regulate a
particular industry or in a particular manner shows that a later
attempt to assert the same authority exceeds the bounds of the
23 The Supreme Court came closest to doing so in Alabama
Association of Realtors, 594 U.S. 758. That case involved a
challenge to an eviction moratorium issued by the CDC after
Congress had allowed a legislative eviction moratorium to expire.
Id. at 760. When the CDC's administrative moratorium was set to
expire for the first time, Congress passed legislation extending
the CDC's moratorium for one month, but subsequently declined to
extend the moratorium any further. Id. The CDC nevertheless
renewed the moratorium several times. Id. The Court's analysis
in its per curiam opinion focused on the political and economic
significance of the eviction moratorium rather than on whether
Congress's subsequent legislative activity (and inactivity)
amounted to tacit approval (or disapproval) of the moratorium.
Id. at 764-65. In any event, Congress's one-month extension of
the eviction moratorium did not amount to a word-for-word
codification of the agency's interpretation of its statutory
authority into the enabling statute, as occurred in this case.
See Consolidated Appropriations Act, 2021, Pub. L. No. 116–260,
§ 502, 134 Stat. 1182, 2078–2079 (2020) (stating simply that CDC's
order "is extended through January 31, 2021" without amending
enabling statute). And, moreover, Freeman does not attempt to
argue that Alabama Association of Realtors stands for the
proposition that the major questions doctrine applies even when
Congress expressly approves of the agency's decision.
- 43 -
governing statute. See Util. Air Regul. Grp., 573 U.S. at 321
("EPA itself has repeatedly acknowledged that applying the PSD and
Title V permitting requirements to greenhouse gases would be
inconsistent with —— in fact, would overthrow —— the Act's
structure and design."); Brown & Williamson, 529 U.S. at 146
(noting FDA's "disavowal of jurisdiction" over tobacco products).
But we see no such history of disclaimer here. The supposed agency
admissions Freeman refers to in support of his argument are various
statements made by FinCEN officials in testimony before Congress
and in a bar association speech. See, e.g., Crypto Crime in
Context: Breaking Down the Illicit Activity in Digital Assets:
Hearing Before the Subcomm. on Digit. Assets, Fin. Tech. and
Inclusion of the H. Comm. on Fin. Servs., 118th Cong. (2023)
(witness statement of Jane Khodarkovsky, Former Trial Att'y and
Hum. Trafficking Fin. Specialist, Dep't of Justice) (no official
transcript of hearing available) (quoted material appears on page
11 of written witness statement), https://perma.cc/7RBZ-CPWX
[hereinafter Khodarkovsky Statement]; H. Hrg. 115-102, supra, at
9, 25 (statement of Thomas Ott, Associate Director, FinCEN Enf't
Division); S. Hrg. 113-210, supra, at 5, 36 (statement of Jennifer
Shasky Calvery, Director, FinCEN); FinCEN, Prepared Remarks of
FinCEN Acting Dir. Him Das Delivered Virtually at the American
Bankers Association/ American Bar Association Financial Crimes
Enforcement Conference (Jan. 13, 2022), https://perma.cc/JXQ9-
- 44 -
BLNR. In Freeman's telling, these statements acknowledge that
FinCEN lacked statutory authorization to regulate virtual
currency.
As an initial matter, we note that Freeman's argument
appears to be an odd fit with the major questions cases, where a
later assertion of authority contradicts an earlier disclaimer.
That is so because each of the statements Freeman references
post-date FinCEN's assertion in 2013, that virtual currency
exchangers were subject to its regulations. And when we take a
closer look at the statements Freeman has identified, we do not
see FinCEN acknowledging any discrepancy between its statutory
authority and its regulatory assertion (as Freeman claims it has).
Most of these statements express FinCEN's concerns that virtual
currencies might not be adequately addressed by the pre-existing
regulatory framework (rather than concerns about any gap in the
statutory scheme) and inform Congress of how FinCEN had updated
its definitions to be in sync with Congress's statutory intent.
See, e.g., S. Hrg. 113-210, supra, at 5, 36 (warning that virtual
currencies are preferred by "[i]llicit actors" in part because
they "provide[] a loophole from the [anti-money laundering and
combatting the financing of terrorism] regulatory safeguards in
most countries around the world" and explaining that FinCEN's
regulatory guidance, rulings, and updates "have been able to
accommodate the development of new payment systems, including
- 45 -
virtual currency"); H. Hrg. 115-102, supra, at 9, 25 (statement of
Thomas Ott, Associate Director, FinCEN Enf't Division) (recounting
regulatory acts intended to address virtual currencies and
testifying that the "regulatory regime right now, that we have in
place, is sufficient to cover virtual currency . . . whether or
not . . . a money transmitter is located within the continental
United States"); Das, supra ("[W]e need a regulatory regime to
match, one that accounts for crypto and other digital assets,
evolution in the payments space, and other innovations that are
driving the creation of new products, services, and delivery
channels.").24 Another simply acknowledges the codification of
FinCEN's existing interpretation in 2021. Khodarkovsky Statement,
supra, at 11. None of these statements amounts to an admission
that FinCEN lacked statutory authority to regulate virtual
currency exchangers as money transmitting businesses.
Freeman also latches onto the following sentence from a
2019 guidance document issued by FinCEN stating, "The term 'other
Freeman also claims that "[a] former acting director of
24
FinCEN, Himamauli Das, stated that the 2021 updates to the Patriot
Act, including the amendment to § 5330, were necessary because the
2001 law 'never anticipated the challenges of the 2020s: digital
assets . . . ." Appellant's Br. 49 (alterations in original)
(quoting Das, supra). But of course, Congress did not need to
"anticipate" the application of Section 5330 to virtual currencies
in order for FinCEN to apply the statute's plain terms. See
Bostock, 590 U.S. at 683. Nor does a high-level remark on the
need to modernize the anti-money laundering legal framework amount
to an admission that FinCEN had no statutory authority over virtual
currencies until passage of the 2021 law.
- 46 -
value that substitutes for currency' encompasses situations in
which the transmission does not involve currency, or funds, but
instead involves something that the parties to a transaction
recognize has value that is equivalent to or can substitute for
currency." FinCEN, Application of FinCEN's Regulations to Certain
Business Models Involving Convertible Virtual Currencies, FIN-
2019-G001, at 4 (2019).25 According to Freeman, this sentence
shows that FinCEN recognized that "funds" are different from "value
that substitutes for currency" and "that the word 'funds' in the
2001 version of § 5330 did not capture virtual currency." We note,
however, that the 2019 guidance does not mention Section 5330 at
all and does not attempt to define the meaning of "funds," even
within the limited universe of the guidance document. Elsewhere
in the same document, the word "funds" is used when referring to
convertible virtual currencies. FIN-2019-G001, at 15, 19
(referring to "funds" held in virtual currency wallets and "funds"
accepted and retransmitted by service providers that anonymize
virtual currency transactions). To read FinCEN's use of "funds"
in this guidance document as a disclaimer of its statutory
authority to regulate virtual currency under Section 5330 would
simply blink reality.
Freeman's brief incorrectly identifies the source of this
25
sentence as the 2013 guidance. The language Freeman quotes
actually appears in a separate document. FIN-2019-G001, at 4.
- 47 -
Breadth
With the relevant history in mind, we examine the breadth
of the power FinCEN has asserted, another factor the Supreme Court
has directed us to consider as we decide if "hesitation" is called
for before we affirm an agency's claim of regulatory authority.
See West Virginia, 597 U.S. at 721. To begin, we do not buy
Freeman's argument that FinCEN "claim[ed] to discover in a long-
extant statute an unheralded power." Util. Air Regul. Grp., 573
U.S. at 324. In requiring virtual currency transmitters to
register, FinCEN was not regulating in an "unheralded" or
"unprecedented" manner, West Virginia, 597 U.S. at 724-25, 728
(citations omitted) (explaining that EPA had never before
attempted to systemically reduce emissions by "'shifting'
polluting activity 'from dirtier to cleaner sources'" (citations
omitted)), nor was FinCEN relying on an obscure, "ancillary" or
"gap filler" statutory provision, id. at 724. To the contrary,
that agency has continuously relied on Section 5330 as authority
to regulate money transmitters since 1994. See Riegle Community
Development and Regulatory Improvement Act of 1994, Pub. L. No.
103-325 § 408, 108 Stat. 2160, 2249-51 (1994) (codified at 31
U.S.C. § 5330). All it did in 2013 was explicitly specify that
businesses transmitting virtual currency would be treated the same
as those transmitting physical currency. In short, this
"unheralded power" argument is doomed because FinCEN's regulation
- 48 -
of bitcoin is not the kind of "unprecedented" program, one so
unlike FinCEN's historical approach to regulation, that would call
for application of the major questions doctrine. See Biden v.
Missouri, 595 U.S. 87, 90-91, 94 (2022) (holding that Secretary of
Health and Human Services did not exceed statutory authority in
promulgating rule conditioning receipt of Medicaid and Medicare
funds on vaccination of healthcare providers where "the Secretary
routinely imposes conditions of participation that relate to the
qualifications and duties of healthcare workers"); cf. Nebraska,
600 U.S. at 501 (reversing program by Secretary of Education to
cancel loan obligations where "Secretary has never previously
claimed powers of this magnitude under the HEROES Act" and "past
waivers and modifications issued under the Act have been extremely
modest and narrow in scope"); Ala. Ass'n of Realtors, 594 U.S. at
765 (concluding that CDC could not impose eviction moratorium in
counties experiencing substantial or high levels of COVID-19
transmission where since the enactment of the claimed statutory
authority in 1944, "no regulation premised on it has even begun to
approach the size or scope of the eviction moratorium").
Nor in challenging FinCEN's breadth of reach does
Freeman attempt to argue that FinCEN's exercise of regulatory
authority over virtual currency transmitters somehow falls outside
its "sphere of expertise." See Nat'l Fed'n of Indep. Bus. v. OSHA,
595 U.S. 109, 117-18 (2022) (explaining that a "broad public health
- 49 -
measure[]," like a vaccine mandate, was "outside of OSHA's sphere
of expertise" and was not authorized by 29 U.S.C. § 655(b)).
FinCEN's enumerated statutory duties and powers specifically
include analysis of "emerging trends and methods in money
laundering and other financial crimes" and the identification of
"emerging threats" and "emerging technology" to assist in federal
investigations and in countering money laundering and terrorism.
See 31 U.S.C. 310(b)(2)(C)(v), (b)(2)(M)-(N); cf. Missouri, 595
U.S. at 93 (affirming vaccine mandate for healthcare workers
promulgated under the Secretary of Health and Human Services'
authority to pass regulation "necessary in the interest of the
health and safety of individuals who are furnished services").
Ultimately, and in the absence of facts suggesting
FinCEN tried to wield unheralded power, or regulate in an area
beyond its expertise, what Freeman's case seems to boil down to is
this: Congress, in amending Section 5330 in 2001, simply could
not have intended to regulate something that did not yet exist.
But there is nothing compelling about this timing-of-events
argument. Taken to its logical conclusion, Freeman's argument
more or less advocates for a principle of statutory construction
that exempts new technologies from existing statutory schemes
unless Congress had somehow foreseen the course of technological
innovation and had expressly accounted for it ahead of time. But
no such legal principle exists that we are aware of. Cf. Steele
- 50 -
v. Comm'r of Soc. Sec., 51 F.4th 1059, 1060-61 (11th Cir. 2022)
(certifying questions related to whether a child conceived via in
vitro fertilization with cryo-preserved sperm after father's death
was entitled to benefits as father's child under the Social
Security Act and Florida law), certified question answered, 385
So. 3d 587 (Fla. 2024); Application of Sarkar, 588 F.2d 1330, 1333
(C.C.P.A. 1978) ("Congress cannot be expected to foresee, or to
annually amend [the Patent Act] to incorporate, every future
breakthrough onto entirely new technological terrain."). Courts
routinely enforce "plain statutory commands" even where Congress
may not have expected the statute to apply to certain factual
situations at the time of passage. See Bostock, 590 U.S. at 683.
The only case Freeman cites in support of his timing
theory is National Federation of Independent Business v. OSHA.
595 U.S. at 114-19. According to Freeman, the Supreme Court
rightly rejected the Occupational Health and Safety
Administration's ("OSHA") "attempt to impose a COVID vaccine
mandate based on a statutory provision adopted 50 years before the
pandemic," and, says Freeman, "[t]he same principles [should]
apply here." Yet nothing in the decision suggests that the Court
based its opinion on the fact that COVID-19 was a "new" virus that
did not exist when Congress enacted the Occupational Safety and
Health Act in 1970. See id. at 114. Instead, the Court's focus
was the unprecedented nature of OSHA's action in mandating
- 51 -
universal vaccination and the apparent disconnect between such a
vaccine mandate and OSHA's actual sphere of expertise. Id. at 119
("OSHA, in its half century of existence, has never before adopted
a broad public health regulation of this kind —— addressing a
threat that is untethered, in any causal sense, from the
workplace."). Giving some credence to Freeman's assertion, the
reasoning in National Federation might resonate with us if, say,
FinCEN decided to regulate materials used to manufacture illegal
drugs on the basis that fewer illegal drug sales would reduce money
laundering. Freeman's view of National Federation's holding
appears to be an alternate reality in which OSHA had long exercised
statutory authority to issue vaccine mandates to address viral
spread, only for the Supreme Court to strike down its COVID-19
vaccine mandate on the basis that COVID-19 was a new type of virus
with an extraordinary and unforeseen impact on the United States.
That simply is not what National Federation is about, and there is
no coherent analogy between the unprecedented nature of OSHA's
regulatory assertion in that case and what happened here.
Put differently, under Freeman's characterization of
National Federation, the major questions doctrine would apply any
time an agency relied on a long extant statute to regulate an
impactful new technology. This would transform a legal doctrine
meant for extraordinary cases into a commonplace principle of
statutory interpretation. Because nothing in the history or
- 52 -
breadth of FinCEN's regulation of money transmitting businesses
calls for application of the major questions doctrine, we turn now
to the political and economic significance of the regulation to
see if those considerations are difference-makers.
Political and Economic Significance
Political Significance
Freeman asserts that virtual currencies have "provoked
much political debate" (though he identifies no specific example
of it), and by this assertion seems to suggest that political
debate equates to political significance. As best we can tell, he
relies on his account of the legislative history of Section 5330
(which we've just explained only shows Congress's approval of
FinCEN's regulation of virtual currencies) rather than on any
meaningful or controversial legislative flashpoint that might call
into question Congress's intent to regulate virtual currencies.
To his nebulous "provoked much political debate" political
significance contention, Freeman, in his reply brief, adds a
federalism concern —— that FinCEN's regulation of virtual
currencies "intrudes into an area that is the particular domain of
state law." See Ala. Ass'n of Realtors, 594 U.S. at 764. We think
this after-thought argument is likely waived, given that he had
- 53 -
every reason to make it in his opening brief.26 United States v.
Tosi, 897 F.3d 12, 15 (1st Cir. 2018) ("[A]rguments available at
the outset but raised for the first time in a reply brief need not
be considered."). Even if we were to give him the courtesy of the
doubt, his only support for this federalism proposition is a single
sentence from a Congressional Research Service report indicating
that "[m]oney transmitters are regulated and licensed at the state
level." See Andrew P. Scott, Cong. Rsch. Serv., R46486,
Telegraphs, Steamships, and Virtual Currency: An Analysis of Money
Transmitter Regulation 1 n.1 (2020). That federal and state anti-
money laundering regulatory regimes might co-exist hardly
demonstrates that the registration requirement is "significantly
alter[ing] the balance between federal and state power and the
power of the Government over private property" in the same manner
as an eviction moratorium. See Ala. Ass'n of Realtors, 594 U.S.
at 764 (reasoning that "the landlord-tenant relationship" is a
"particular domain of state law" upon which eviction moratorium
Freeman claims that this argument properly responds to the
26
government's assertion that he had not made any showing of an
intrusion into the particular domain of state law and is thus a
proper subject for a reply brief. See Wills v. Brown Univ., 184
F.3d 20, 27 (1st Cir. 1999) ("Reply briefs are to counter the
appellee's arguments, not to offer new theories of error for the
first time."). In our view, Freeman is not responding to a
counterargument. He is belatedly raising an argument which the
government pointed out he had neglected to include in his opening
brief. See United States v. Mojica-Ramos, 103 F.4th 844, 849 n.3
(1st Cir. 2024).
- 54 -
intrudes). Accordingly, we see no indication that when FinCEN
began regulating virtual currencies in 2013, it was acting on a
question of vast political significance.
Economic Significance
Freeman puts some more elbow grease into his argument
regarding economic significance, citing statistics to show the
growth in the bitcoin market in the last decade and a half.
According to Freemans's sources, the overall market capitalization
of bitcoin grew from less than $200,000 to approximately $1.2
trillion between July 2010 and May 2024, and virtual currencies
combined had a total market capitalization of approximately $2.22
trillion in July 2024. But Freeman's citation to the value of
bitcoin and other virtual currencies misunderstands the nature of
our inquiry in at least two ways. First, the major questions cases
direct our attention to, inter alia, the economic significance of
the agency's assertion of regulatory power, not just the size of
the industry being regulated. West Virginia, 597 U.S. at 721.
For instance, in applying the major questions doctrine to a
Department of Education attempt to cancel student debt, the Supreme
Court did not cite to the total amount of outstanding student loan
debt nationwide; instead it calculated the economic impact based
on an estimated total amount of debt to be cancelled by the agency.
Nebraska, 600 U.S. at 496, 502 (emphasizing cancellation of $430
billion in federal debt for 43 million Americans, presumably based
- 55 -
on planned cancellation of $10,000 for each qualifying borrower).
Similarly, in cases holding that the Environmental Protection
Agency had exceeded its statutory authority, the Court's focus was
on the cost of compliance, not merely on the size of energy sector.
West Virginia, 597 U.S. at 714 (emphasizing that "EPA's own
modeling concluded that the rule would entail billions of dollars
in compliance costs"); Util. Air Regul. Grp., 573 U.S. at 321-22
(describing growth in administrative and permitting costs that
would result from the proposed rule).
As the district court recognized below (and the
government repeats on appeal), FinCEN has not banned all
transactions in virtual currency or attempted to regulate all users
of virtual currency (such as those who use virtual currency to
purchase other goods or services). See FIN-2013-G001, at 2
(explaining that a "user who obtains convertible virtual currency
and uses it to purchase real or virtual goods or services
is . . . not subject to FinCEN's registration, reporting, and
recordkeeping regulations."). Instead, it is simply requiring
businesses that transmit virtual currencies to register.27 Thus,
This opinion focuses on the registration requirement under
27
Section 5330 and does not address other aspects of compliance for
money transmitting businesses, such as reporting. See
FIN-2013-G001, at 2. This is because neither party has developed
any argument about the other regulatory requirements, and so we
have no information to go on. See Borrás-Borrero v. Corporación
del Fondo del Seguro del Estado, 958 F.3d 26, 34 (1st Cir. 2020)
- 56 -
the relevant question, in our view, is whether the cost of
complying with FinCEN's regulation is so high that we should
hesitate before assuming that FinCEN was permitted to enact such
a regulation. Freeman has made no attempt to demonstrate the cost
of compliance. By contrast, the government cites trial testimony
suggesting that registration is free and that other small
businesses that exchanged virtual currencies complied or planned
to comply with the registration requirement. Indeed Freeman's
breathless account of the rise of virtual currencies suggests that
FinCEN's regulation placed no meaningful economic burden on the
industry.
Second, it seems rather puzzling for Freeman to argue to
us that FinCEN undertook an extraordinary expansion of its
regulatory authority in 2013, by citing to the market
capitalization of bitcoin and other virtual currencies eleven
years later in May and July of 2024. To illustrate the problem
with Freeman's approach, we look to the motion to dismiss papers
(joined by Freeman), which asserted that the relevant data point
was the overall market capitalization of "non-state issued digital
assets" in November 2021, estimated to be $3 trillion. Apparently,
in less than three years, the market capitalization of virtual
(explaining that "we are generally reluctant to venture beyond the
ambit of the parties' arguments to decide an issue without full
briefing").
- 57 -
currencies fell by roughly $800 billion (which would be more than
a quarter of the 2021 value). By relying on this data, does
Freeman intend to assert that a legal defense positing that
regulation of virtual currencies is a major question would have
been more likely to succeed in November 2021 than in July 2024?
Clearly it would be absurd to hold that FinCEN's regulatory
authority waxes and wanes with the price of volatile assets like
bitcoin. In our view, the relevant inquiry is whether regulation
of virtual currencies was a matter of vast political and economic
significance at or around the time FinCEN purportedly decided to
exercise its authority (back in 2011 and 2013). See West Virginia,
597 U.S. at 714 (noting an estimate of compliance costs that would
total billions of dollars from a 2015 regulatory impact analysis
as support for the economic significance of a 2015 rule); Ala.
Ass'n of Realtors, 594 U.S. at 764 (treating "nearly $50 billion
in emergency rental assistance" passed in January 2021 as "a
reasonable proxy" of the economic impact of eviction moratorium
imposed in 2020 and extended into 2021 (citing Temporary Halt in
Residential Evictions in Communities With Substantial or High
Transmission of COVID-19 To Prevent the Further Spread of COVID-19,
86 Fed. Reg. 43244, 43247 (Aug. 6, 2021))). According to the
motion to dismiss papers, the market capitalization of bitcoin was
only $1.17 billion in May 2013, as opposed to the $1.2 trillion
figure from May 2024 that Freeman would like us to focus on. The
- 58 -
fact that the relevant industry grows substantially while subject
to a regulatory scheme does not heighten the economic significance
of the regulatory assertion. If anything, greater growth would
seem to suggest a financial marketplace unhampered by FinCEN's
regulatory scheme.
* * *
Summing up, Freeman's appeal is chock-full of major-
questions rhetoric, but under scrutiny, it bears little
resemblance to the line of extraordinary cases the Supreme Court
has held triggers the major questions doctrine. Requiring money
transmitting businesses that deal in virtual currency to register
is not a matter of such vast political and economic significance,
nor so broad as to be inconsistent with FinCEN's history, that we
should "hesitate" to interpret Section 5330 consistent with the
existence of such regulation. West Virginia, 597 U.S. at 721
(citation omitted). Because there is no major question, we need
not reach the question of whether Congress spoke with sufficient
clarity to permit FinCEN's to registration requirement for money
transmitters dealing in virtual currencies.28 We thus affirm the
district court's ruling on the motion to dismiss the indictment.
28That said, we have difficulty imagining how Congress could
have spoken more clearly under these circumstances, where (1) the
plain meaning of "funds" includes virtual currency; (2) the
effective statute also explicitly refers to "an informal money
transfer system" and "the transfer of money . . . outside of the
- 59 -
Sufficiency of Tax Evasion Evidence
We turn now to Freeman's claim that the government
presented insufficient evidence of tax evasion to support his
conviction. Because Freeman preserved this argument below, we
conduct de novo review of the district court's denial of his motion
for judgment of acquittal. See United States v. Soler-Montalvo,
44 F.4th 1, 7 (1st Cir. 2022). To resolve a sufficiency challenge,
we examine "the evidence, both direct and circumstantial, in the
light most favorable to the prosecution," and will uphold the
conviction if "in this light, any reasonable jury could find all
the elements of the crime beyond a reasonable doubt." United
States v. Azubike, 564 F.3d 59, 64 (1st Cir. 2009) (citations
omitted). In other words, we do not need to conclude that "the
government succeeded in eliminating every possible theory
consistent with the defendant's innocence," only that "the guilty
verdict finds support in a plausible rendition of the record."
Soler-Montalvo, 44 F.4th at 7 (quoting United States v. Seary-
Colón, 997 F.3d 1, 11, 14 (1st Cir. 2021)). To sustain a tax
evasion conviction, the government had to prove three elements:
conventional financial institutions system," USA PATRIOT Act
§ 359(b), 115 Stat. at 328; (3) the legislative history of the
effective definition supports application of the statute to
emerging technologies for the transfer of value outside of
traditional banks; and (4) Congress was aware of and subsequently
codified the agency's interpretation. See Hornof, 107 F.4th at 59
n.28 (dismissing major questions argument in a footnote on the
basis that "the statute speaks clearly").
- 60 -
"(1) the existence of a tax deficiency, (2) an affirmative act
constituting an evasion or attempted evasion of the tax, and (3)
willfulness." United States v. Lavoie, 433 F.3d 95, 97 (1st Cir.
2005). Freeman claims that the government failed to carry its
burden on the first and third elements.
The government can prove a tax deficiency exists by
showing that the defendant did not file a tax return and had a tax
liability pursuant to the tax code. See United States v. Hogan,
861 F.2d 312, 315 (1st Cir. 1988) (citing United States v. Dack,
747 F.2d 1172, 1174 (7th Cir. 1984)). To make its case here, the
government called a revenue agent of the Internal Revenue Service
("IRS"), Colleen Ranahan, to testify. Ranahan testified that
Freeman had not filed tax returns for the years 2016, 2017, 2018,
and 2019. Ranahan also testified that Freeman owed taxes on income
he received from localbitcoins.com from those four years. To
determine tax liability, she calculated his total annual profit
from trades made on localbitcoins.com, using information gleaned
from Freeman's advertisements and trade history. She also
identified certain deductions that would have reduced Freeman's
tax liability, including a self-employment tax adjustment, a
qualified business income deduction, and the standard deduction
and personal exemptions applicable to every taxpayer. Based on
those deductions and the total profit, Ranahan calculated the
amount that Freeman would have owed in taxes for that income:
- 61 -
$19,182.65 in 2016, $66,033.55 in 2017, $56,174.21 in 2018, and
$140,198.28 in 2019. This was sufficient evidence to show that
Freeman had a tax deficiency from 2016-2019. See Hogan, 861 F.2d
at 315-16; United States v. Russell, 998 F.2d 1001 (1st Cir. 1993)
(unpublished table decision) (affirming conviction based on
failure to file tax return and rejecting argument that no liability
existed because IRS could not make a valid assessment without a
tax return).
Freeman does not dispute Ranahan's method for
determining his profits from localbitcoins.com or the accuracy of
her calculations. Freeman primarily argues that Ranahan did not
have a complete view of his finances from 2016 through 2019 and
admitted on the witness stand that he might well have no
liability.29 To get our bearings, we start with one aspect of
Ranahan's testimony. On cross-examination, Ranahan admitted that
her calculation of Freeman's tax liability was based on a standard
deduction instead of itemized deductions for "things like
overhead," "property tax," and "charitable giving." She further
agreed that "if [Freeman] went through an itemization . . . he may
29 Freeman also emphasizes that the IRS never sent him an
audit letter explaining that he owed taxes, but whether the IRS
conducted a formal assessment of Freeman's liability and
forewarned him is irrelevant to whether he actually owed those
taxes. See Hogan, 861 F.2d at 315-16 (rejecting insufficiency
challenge based on lack of "proper assessment of the tax due and
owing").
- 62 -
owe nothing." Read in context, Ranahan agreed to the hypothetical
possibility that if Freeman had submitted a tax return with
itemized deductions, those deductions could have reduced his tax
liability to zero.
But the government was not required to disprove every
hypothetical version of events in which Freeman was innocent. See
Soler-Montalvo, 44 F.4th at 7. Although the government bore the
ultimate burden of persuasion to show that a tax was due and owing,
the rule "uniformly applied in tax evasion cases" is "that evidence
of unexplained receipts," that is, a tax liability, "shifts to the
taxpayer" (here, Freeman) "the burden of coming forward with
evidence as to the amount of offsetting expenses." Siravo v.
United States, 377 F.2d 469, 473 (1st Cir. 1967); see also United
States v. Stayback, 212 F.2d 313, 317 (3d Cir. 1954); United States
v. Hiett, 581 F.2d 1199, 1202 (5th Cir. 1978); Elwert v. United
States, 231 F.2d 928, 933 (9th Cir. 1956). Here, the government
identified unreported income from localbitcoins.com and applied
deductions based on the available information, which shifted to
Freeman the burden of producing evidence rebutting Ranahan's tax
calculation. Siravo, 377 F.2d at 472. Freeman never did. He is
not entitled to attack the government's case on appeal with
hypothetical facts which might have exonerated him. See United
States v. Davenport, 824 F.2d 1511, 1516–17 (7th Cir. 1987) ("It
is neither necessary nor reasonably practicable to require the
- 63 -
government to prove that there are no other conceivable deductions
of any sort to which the defendant might be entitled in the absence
of some indication that they may in fact exist."); Clark v. United
States, 211 F.2d 100, 103 (8th Cir. 1954) (explaining that
government need not "prove the non-existence of any other
deductions than those which the taxpayer has claimed in his return"
to establish prima facie tax evasion case).
Another problem for Freeman is that taxpayers are not
automatically entitled to itemized deductions. Instead, under the
tax code, "no itemized deduction shall be allowed" unless the
taxpayer "makes an election" on his or her tax return. 26 U.S.C.
§ 63(e)(1)-(2). Thus, even if Freeman had presented evidence of
a factual basis for claiming itemized deductions, he was not
entitled to those deductions under the tax code, because he never
filed a tax return, much less elected to itemize deductions. See
George v. Comm'r of Internal Revenue, 821 F. App'x 76, 77 (3d Cir.
2020) (concluding that taxpayer's "arguments regarding itemized
deductions are meritless" because "the Internal Revenue Code's
statutory language makes clear that, absent a filed return that
makes the appropriate election, a taxpayer is not entitled to
itemize"). Thus, the fact that Ranahan could not eliminate the
possibility that Freeman would have been entitled to an itemized
deduction is not a thing which renders the evidence insufficient.
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As to willfulness, the government must prove that
Freeman voluntarily and intentionally violated a known legal duty
to pay taxes on his income. United States v. Stierhoff, 549 F.3d
19, 26 (1st Cir. 2008) (quoting Cheek v. United States, 498 U.S.
192, 201 (1991)). Willfulness "may be inferred from 'any conduct,
the likely effect of which would be to mislead or to conceal.'"
Id. (quoting Spies v. United States, 317 U.S. 492, 499 (1943))
(identifying defendant's "employment of aliases and nominee
entities when conducting business," "pervasive use of non-
interest-bearing accounts (which do not trigger mechanical
reporting of income earned)," and regular use of cash or
"untraceable money orders" even though "checks normally would be
used" as facts supporting inference of willfulness (citations
omitted)); see United States v. Zanghi, 189 F.3d 71, 81 (1st Cir.
1999) (holding that "[c]onsistent patterns of understatement
coupled with conduct tending to conceal" was sufficient to sustain
willful tax evasion conviction). Such conduct includes a
defendant's "persistent failure to file income tax returns over
several years," especially where the defendant "earn[ed]
substantial income" during those years. Stierhoff, 549 F.3d at
26-27 (first citing United States v. Greenlee, 517 F.2d 899, 903
(3d Cir. 1975); and then citing United States v. Bohrer, 807 F.2d
159, 162 (10th Cir. 1986)). Freeman is correct, of course, that
"ignorance of the law is a defense in tax evasion cases" and a
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defendant who "possessed a good-faith, subjective belief that he
did not owe taxes on the income in question" is innocent. United
States v. McGill, 953 F.2d 10, 12 (1st Cir. 1992). Even so, the
government may prove its case by showing willful blindness, that
is a showing that the defendant "recogniz[ed] the likelihood of
wrongdoing," but "nonetheless consciously refuse[d] to take basic
investigatory steps." United States v. Anthony, 545 F.3d 60, 64,
65 (1st Cir. 2008) (citation omitted). This is because "deliberate
ignorance of a duty to pay taxes is contrary to a good-faith
belief." Id. at 65 (emphasis added).30
We think the government presented sufficient evidence of
concealment to permit a jury to infer that Freeman acted willfully.
For a period of four years, Freeman earned a substantial amount of
income and never reported that income or filed a tax return on it.
He accepted large cash transactions by mail. And when customers
sent him money through bank wires, he instructed them to lie to
their banks about the purpose of their purchase, often telling
30Our analysis that follows does not draw a fine line between
evidence relevant to "willfulness" and evidence relevant to
"willful blindness," as some of the government's evidence supports
both theories. See Azubike, 564 F.3d at 67 (explaining that
evidence need not "be placed in either an actual knowledge or a
deliberate ignorance category" (quoting United States v. Griffin,
524 F.3d 71, 79 (1st Cir. 2008))). Freeman does not challenge the
appropriateness of the willful blindness instruction, only the
sufficiency of the evidence, so whether there was "separate and
distinct" evidence of willful blindness is not an issue in this
case. Id.
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them to call it a "church donation." During trial, the jury also
heard that Freeman was conducting business through multiple
churches: Shire Free Church, the Church of the Invisible Hand, the
New Hampshire Peace Church, and the Crypto Church of New Hampshire.
And there was evidence that at least some of these churches were
organized simply as nominal entities for Freeman to invoke at his
convenience.31
The government also offered evidence suggesting that
Freeman had a political or philosophical objection to paying taxes.
Such an objection, however sincerely held, does not negate
willfulness. United States v. Bonneau, 970 F.2d 929, 932 (1st
Cir. 1992) (citing Cheek, 498 U.S. at 205). Freeman displayed a
sign on his front porch that read "Stop paying taxes." In a text
message to an acquaintance, Freeman wrote "[o]nly suckers pay tax
on crypto" and complained that he never "opted in" to the
For instance, one of Freeman's friends signed the formation
31
documents of the Crypto Church of New Hampshire as a director or
trustee. At trial, the friend testified that apart from signing
the formation documents, he had no other participation in the
activities of the church and did not know what its religious
principles were. Another acquaintance testified that Freeman
would discuss his church "[w]hen he needed it as a legal entity
for some legal reason." Freeman reportedly asked that same
acquaintance to prepare an accountant certification letter to send
to a cryptocurrency exchange because he was "in the unusual
position of not legally owning things but having the ability to
control well over 2.5M in various assets." The acquaintance, who
was not a certified accountant, prepared a letter stating that
Freeman held "$2.4 million in various liquid assets" without
reference to a church.
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"obligation to pay taxes." A rational reading of this statement
is that Freeman was aware that there might be a general obligation
to pay taxes on the sale of virtual currencies, but deliberately
blinded himself as to whether that obligation applied to him.
Combined with the evidence of concealment, the jury had sufficient
evidence of both willfulness and willful blindness to convict
Freeman of tax evasion.
Of course, that is not to say that the government's
evidence left him no room to argue his innocence. As Freeman
points out, there is no evidence that he received any letter or
notification from the IRS regarding taxes owed. But the absence
of certain types of evidence (such as notification letters) does
not make the evidence insufficient. While the jury may infer
willfulness from the presence of such evidence, "it is by no means
a necessary part of the needed mosaic of proof." Stierhoff, 549
F.3d at 26. Freeman also cites to his own testimony that he held
a sincere belief he had no tax liability because, according to his
own research, "churches under the IRS rules don't pay taxes."
Certainly, if the jury credited Freeman's testimony and determined
that he sincerely believed that he had no tax liability, it would
have been "duty bound to acquit." McGill, 953 F.2d at 12. But
the jury was also free to disbelieve this testimony, especially in
light of the evidence we've just described tending to show willful
opposition to the tax laws. See United States v. Nishnianidze,
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342 F.3d 6, 14 (1st Cir. 2003) ("We are mindful that the jury's
duty is to assess credibility, and it may accept or reject, in
whole or in part, any testimony."). As an appellate court, our
role is simply to verify that the evidence, viewed in a light most
favorable to the guilty verdict, was sufficient to sustain all
elements of the offense. See Seary-Colón, 997 F.3d at 12. With
that in mind, we presume the jury discredited the testimony
supporting Freeman's good faith belief as it was permitted to do.
See United States v. Tierney, 266 F.3d 37, 40 (1st Cir. 2001)
(explaining that appellate court does not "second-guess" the
jury's credibility calls and "make[s] all credibility choices in
favor of the verdict"); see also Bonneau, 970 F.2d at 933
(acknowledging that defendant could believe both that wages were
not income under the tax code and that tax laws were
unconstitutional "at the same time," but affirming guilty verdict
where "the force and persistence of the defendant's views on the
constitutional issue certainly were evidence for the jury to
consider in deciding what he actually believed"); United States v.
Street, 370 F. App'x 343, 345 (3d Cir. 2010) ("The jury was free
to reject [defendant's] testimony that he was acting with a good
faith belief he was not required to file tax returns."). As laid
out above, the evidence of a tax deficiency and Freeman's
willfulness were sufficient to sustain a verdict. We thus affirm
Freeman's convictions for tax evasion.
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Spillover Prejudice
In a final attack on his convictions, Freeman asserts
that we should order a new trial because he was acquitted of the
money laundering charge by the district court after the trial.
His theory is that "the evidence admitted to prove [the money
laundering] charge as to which [he] was acquitted was so extensive,
inflammatory, and prejudicial that it necessarily spilled over
into the jury's consideration of his guilt on other charges."32
See United States v. Correia, 55 F.4th 12, 36 (1st Cir. 2022)
(citation and quotation marks omitted). In previous cases, we've
sometimes described this type of claim as "spillover prejudice" or
"evidentiary spillover." United States v. Abdelaziz, 68 F.4th 1,
60-61 (1st Cir. 2023). As the defendant, Freeman bears the burden
to "show 'prejudice so pervasive that a miscarriage of justice
looms'" if we do not remand for a new trial. Correia, 55 F.4th at
36-37 (quoting United States v. Simon, 12 F.4th 1, 43-44 (1st Cir.
2021)). We review the district court's denial of a new trial on
this basis for abuse of discretion. Id. at 36.
Freeman argues, as he did below in his motion for a new
trial, that "[t]he government relied heavily on the money
32 Freeman's brief asserts that his spillover prejudice
argument would be "even stronger" if we vacated his other
convictions for operation of an unlicensed money transmitting
business and tax evasion. Because we do not vacate those
convictions, we do not need to consider whether any evidence
spilled over from those charges.
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laundering charge to paint Freeman as a person connected to the
sale of illegal drugs and to enhance his culpability for otherwise
regulatory offenses." In his appellate brief and his motion,
Freeman points to portions of the government's opening statement
and closing argument which referred to Freeman's interactions with
the undercover agent, and especially his awareness that the agent
purportedly was exchanging his drug proceeds for bitcoin. The
district court rejected his argument on the basis that any evidence
regarding Freeman's interactions with the undercover agent would
have been admissible to prove the allegation that Freeman conspired
to commit money laundering (a conviction which Freeman was not
acquitted of post-trial).33 Even though this was the basis for the
district court's decision and emphasized in the government's
appellate brief, Freeman has offered us no explanation as to what
evidence regarding the undercover agent would have been excluded
if the direct money laundering charge had been left out of the
trial. We agree with the district court that the undercover
agent's discussion of purported drug proceeds with Freeman was
relevant to establishing whether Freeman conspired with the
33 The district court granted Freeman's motion for judgment
of acquittal only as to the direct money laundering conviction, on
the basis that there was not sufficient evidence presented that
Freeman knew that the undercover agent went to the bitcoin kiosk
after Freeman told the agent that the kiosk was still there. The
district court did not acquit Freeman of conspiracy to commit money
laundering, a decision that Freeman has not challenged.
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undercover agent to perpetrate money laundering and thus could
have been admitted even if the underlying money laundering charge
had never been brought. See United States v. George, 761 F.3d 42,
48-49 (1st Cir. 2014) (concluding that sufficient evidence
supported conviction for conspiracy to commit money laundering in
part where that appellant had a conversation with his
co-conspirator regarding the "caper" in which co-conspirator
obtained ill-gotten gains); see also United States v. Tum, 707
F.3d 68, 74 (1st Cir. 2013) (explaining that to be liable for
conspiracy, a defendant must be a "willing participant" and know
the "essential nature" of the "collective endeavor"). Thus, we
affirm the district court's refusal to grant Freeman a new trial
for evidentiary spillover.34 See Correia, 55 F.4th at 37 (affirming
denial of motion for new trial where any retrial on the "still-
The cases in which we have granted a new trial for
34
evidentiary spillover tend to involve multiple defendants or
multiple conspiracies. See, e.g., United States v. Weadick, 15
F.4th 1, 16 (1st Cir. 2021) ("Some amount of spillover is inherent
in trying multiple defendants together."). In such cases, "one
defendant allegedly may not be involved at all in one of the
conspiracies, but may suffer from the evidence in support of the
other defendants in those other conspiracies." United States v.
Chan, 981 F.3d 39, 54-55 (1st Cir. 2020). Here, Freeman was tried
alone and he makes no argument that confusion arose from the fact
that he was charged with two conspiracies. Thus, this case lacks
many of the factors that create a high risk of prejudicial
spillover. Cf. United States v. Martínez, 994 F.3d 1, 15 (2021)
(referring to risk that direct evidence of a co-defendant's corrupt
intent and involvement in multiple schemes may have unfairly
prejudiced appellant).
- 72 -
standing convictions . . . would have involved much of the same
evidence" as the evidence in support of the dismissed counts).
Substantive Reasonableness of the Sentence
We turn now to Freeman's challenge to the substantive
reasonableness of his 96-month sentence, which represented a
substantial downward variance from the 210- to 262-month sentence
recommended by the United States Sentencing Guidelines. Freeman
is in for an "uphill" battle. See United States v. Dávila-Bonilla,
968 F.3d 1, 12 (1st Cir. 2020). We analyze Freeman's preserved
sentencing arguments "under the deferential abuse of discretion
standard, reviewing findings of fact for clear error and issues of
law de novo." United States v. Pupo, 995 F.3d 23, 29 (1st Cir.
2021) (citations omitted). And we must affirm the sentence so
long as the district court articulated a "plausible sentencing
rationale" and "reached a defensible result." Id. (quotation marks
omitted) (quoting United States v. Flores-Quiñones, 985 F.3d 128,
133 (1st Cir. 2021)). Under these standards, sentences falling
significantly below the guidelines range, as here, are "rarely"
disturbed for substantive unreasonableness. See, e.g., United
States v. Rivera-Gerena, 112 F.4th 67, 73 (1st Cir. 2024); United
States v. Millán-Machuca, 991 F.3d 7, 32 (1st Cir. 2021)).
None of Freeman's arguments convince us that this is one
of those rare cases. Freeman begins by listing several mitigating
factors, including his "minimal" criminal history, the lack of any
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evidence that he engaged in violent conduct, and his strong
community support. To the extent that Freeman is arguing that the
district court overlooked these factors, the record compels the
opposite conclusion. In imposing the sentence, the district court
explicitly referenced Freeman's "peace advocacy," "his lack of a
violent history, his many supporters, many of whom submitted
letters to the Court vouching for him and his character," and "his
lack of prior significant incarceration." The court believed that
these were among the factors that "make a variance below the
guideline sentencing range appropriate in this case." Against
this, the district court noted aggravating factors, some of which
were reflected in the guidelines range, including the enhancement
Freeman received as a "manager or leader" and the impact of the
crimes on his victims. It also noted that Freeman had a criminal
history but characterized it as "not substantial." Considering
all these circumstances, the court decided on "a very serious
sentence" of 96 months, which it emphasized was "less than half of
the low end of the guideline sentencing range" —— though more than
the 38 months Freeman asked for. Given the district court's
express attention to the factors identified by Freeman in his brief
to us, we readily conclude that the district court articulated a
plausible sentencing rationale. See United States v. Fuentes-
Moreno, 954 F.3d 383, 396-97 (1st Cir. 2020) (concluding that the
district court's consideration of the seriousness of the offenses
- 74 -
and "recitation of [the defendant's] personal characteristics"
show that the sentence was "plausibly reasoned" (citation
omitted)). And we further conclude that this below-the-
guidelines-sentence was defensible, even if Freeman may wish that
the district court had given the mitigating factors more weight or
disregarded some of the aggravating factors. See Pupo, 995 F.3d
at 32 ("[W]e cannot assign error to a well-reasoned decision simply
because the district judge chose not to attach more weight to
certain mitigating factors."); Dávila-Bonilla, 968 F.3d at 12
(explaining that the district judge's failure to attach more weight
to mitigating factors does not render challenged sentence
implausible or indefensible); United States v. Montijo-Maysonet,
974 F.3d 34, 54-55 (1st Cir. 2020) (concluding that a 37-month
downward variance was substantively reasonable, despite
appellant's argument that the sentence was still too harsh); United
States v. Floyd, 740 F.3d 22, 39 (1st Cir. 2014) (describing
substantive reasonableness challenge to 84-month sentence which
varied from a 121- to 151- month guidelines range as "a pipe
dream").
Freeman also points to six other "virtual currency
related money laundering crimes" from around the country, in which
the defendants were sentenced to between four and 36 months. As
an initial matter, the government asserts that this sentencing
disparity argument was not preserved because Freeman only objected
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generally to the substantive reasonableness of this sentence
below. As a result, the government says Freeman forfeited the
argument and we must review this claim for plain error, a standard
that is even tougher on appellants than the abuse of discretion
standard advocated for by Freeman and which we've been relying on
thus far. United States v. Cruz-Ramos, 987 F.3d 27, 44 (1st Cir.
2021) ("[T]he hard-to-satisfy plain-error standard requires a
defendant to show error; plainness; an adverse effect on his
substantial rights; and a serious compromise of the fairness,
integrity, or reputation of the trial."). We need not expend ink
on this preservation dispute, however, because Freeman's disparity
argument fails even if we apply the more lenient, but still
deferential, abuse of discretion standard. See United States v.
Jiménez, 946 F.3d 8, 15 (1st Cir. 2019) (applying abuse of
discretion standard to avoid "somewhat blurred" issue regarding
standard of review for unpreserved substantive reasonableness
challenge (citation omitted)).
Freeman is right that 18 U.S.C. § 3553(a)(6) reflects a
goal of avoiding unwarranted "sentencing disparities among like
criminals who commit like crimes" across the nation. United States
v. Romero, 906 F.3d 196, 211 (1st Cir. 2018). However, a
sentencing disparity is not unwarranted "if material differences
between the defendant and the proposed comparator[s] suffice to
explain the divergence." Id. (alteration in original) (quoting
- 76 -
United States v. Demers, 842 F.3d 8, 15 (1st Cir. 2016)); United
States v. Gonzalez, 981 F.3d 11, 23 (1st Cir. 2020) ("[W]hen a
defendant makes a claim of sentencing disparity, he 'must compare
apples to apples.'" (citation omitted)). Such differences can
include whether the defendant pled guilty or went to trial, details
from the defendant's personal or criminal histories, and
differences in the sentencing guidelines' advisory range. See,
e.g., United States v. De La Cruz, 91 F.4th 550, 552-53, 555 (1st
Cir. 2024) (rejecting claim of 45-month sentencing disparity
between co-defendants where co-defendant had "a much lower
advisory sentencing guideline range" and played a different role
in the offense); Gonzalez, 981 F.3d at 23 (rejecting disparity
claim where comparator committed one murder and pled guilty, but
appellant committed two murders and elected to stand trial).
Here, Freeman asks us to compare him to other defendants
sentenced for processing millions of dollars in virtual currency
and cherry picks the aspects of those cases most similar to his
own. Cf. United States v. Rosario, __ F.4th __, 2025 WL 1831040,
at *5 (1st Cir. July 3, 2025) (rejecting disparity claim where the
defendant did not provide "the necessary information to determine
whether" his proposed comparators were "identically situated,"
such as their criminal histories, "the specific circumstances of
their plea agreements," or "the particularities of their crime-
spree conduct"). But even with our limited insight into the
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details of these cases, we see several obvious differences. The
guidelines ranges calculated for each of these defendants were
apparently far lower than Freeman's 210-262 months.35 See De La
Cruz, 91 F.4th at 552-53. Half of these defendants were not
sentenced for any of the same charges faced by Freeman.36 See
United States v. Bishoff, 58 F.4th 18, 26 (1st Cir. 2023)
(rejecting sentencing disparity claim between co-defendants in
part because co-defendants were charged with different gun-related
offenses). None of the cited cases include tax evasion charges.
Setting that aside, five of the six defendants pled guilty rather
35 Transcript of Sentencing Hearing at 17:2-3, United States
v. Randol, 23-cr-00440 (C.D. Cal. Jan. 17, 2024), ECF No. 56 (six
to 12 months); Government Sentencing Memorandum at 2, United States
v. Farace, No. 21-cr-00294 (D. Md. Dec. 15, 2023), ECF No. 92
(parties agreed to seek a sentence between 19 and 30 months based
on consensus that guidelines range was 30 to 37 months);
Government's Sentencing Memorandum at 3, United States v. Zhao,
23-cr-00179 (W.D. Wash. Nov. 21, 2023), ECF No. 78 (arguing for
range of 12 to 18 months); Transcript of Sentencing Hearing at
5:8, United States v. Mejia, No. 21-cr-00008 (C.D. Cal. Nov. 18,
2021), ECF No. 44 (57 to 71 months); Defendant's Sentencing
Memorandum at 2, United States v. Tetley, No. 17-cr-00738 (C.D.
Cal. June 4, 2018), ECF No. 32 (uncontested range of 46 to 57
months); Defendant's Sentencing Memorandum at 27, United States v.
Lebedev, No. 15-cr-00769 (S.D.N.Y. Aug. 29, 2017), ECF No. 585
(108 to 135 months as calculated by probation, 10 to 16 months as
argued by defendant).
36Judgment at 1, Unites States v. Zhao, 23-cr-00179, ECF No.
90 (one count of failure to maintain an effective anti-money
laundering program); Transcript of Sentencing Hearing at 26:2-5,
Randol, 23-cr-00440, ECF No. 56 (same); Amended Judgment at 1-2,
Lebedev, 15-cr-00769, ECF No. 748 (various bribery and fraud
charges).
- 78 -
than taking their case to trial.37 Most also had no prior
convictions, unlike Freeman.38 Finally, the district court in
Freeman's case noted that Freeman was receiving an upward
adjustment to his sentencing guidelines range based on his role as
a manager or leader. Freeman has cited nothing to suggest that
any of the defendants had a similarly culpable leadership role in
their own offenses. See United States v. Coplin-Benjamin, 79 F.4th
36, 44 (1st Cir. 2023) (holding that sentencing disparity was
warranted where appellant was found to be leader of conspiracy,
but co-defendants were "mere participant[s]"). Freeman has thus
not established that these comparators were similarly situated to
him such that a valid sentencing disparity claim exists. See,
e.g., United States v. Candelario, 105 F.4th 20, 24 (1st Cir. 2024)
(concluding that no unwarranted discrepancy between co-defendants
existed where difference in guidelines range was "critical datum
in a disparity analysis"); Jiménez, 946 F.3d at 15-16 (rejecting
appellant's claim that sentence "well below the guidelines range"
Plea Agreement, Zhao, 23-cr-00179, ECF No. 31; Transcript
37
of Sentencing Hearing at 26:22-23, Randol, 23-cr-00440, ECF No. 56
(noting acceptance of responsibility deduction from offense
level); Plea Agreement, Farace, 21-cr-00294, ECF No. 79; Plea
Agreement, Mejia, No. 21-cr-00008, ECF No. 5; Judgment at 1,
Tetley, 17-cr-00738, ECF No. 45.
Defendant's Sentencing Memorandum at 8, Zhao, 23-cr-00179,
38
ECF No. 82; Government's Sentencing Memorandum at 3, Farace, 21-
cr-00294, ECF No. 92; Government's Sentencing Memorandum at 16,
Tetley, 17-cr-00738, ECF No. 31; Defendant's Sentencing Memorandum
at 32, Lebedev, 15-cr-0069, ECF No. 585.
- 79 -
was unreasonable based on disparity with national average fraud
sentence where appellant "has not offered evidence that would show
that her circumstances are sufficiently similar to the national
median fraud defendant to create a meaningful point of
comparison").
In sum, Freeman has failed to show that his sentence was
substantively unreasonable, either based on the district court's
assessment of the Section 3553(a) sentencing factors or based on
any disparity with similarly situated defendants. Accordingly, we
affirm his sentence.
CONCLUSION
For the reasons stated, we affirm.
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