Really? What about all the services like Bitstamp? I am fairly sure that bitcoin is more liquid than used iPhones.
The actual problem is that the entire concept of trying to separate currency from commodities is defective. Forget about used iPhones. You can walk into any pawn shop and exchange a bar of silver for goods or cash. Does that mean silver is a currency? What about copper? Or gasoline? Try to buy something on Craigslist and offer to pay with a gas card. More likely to succeed than offering bitcoin.
Stocks, which most people don't understand and can't be sold without contacting a broker are considered liquid.
Jewelry & stamp collections are not considered liquid assets, yet everyone understands what these are and where to purchase them.
Bitcoin has been referred to as a 'cryptocurrency' since its inception, and much as I treasure my own copy of Black's Law Dictionary, its definitions are not legally binding. You might as well say 'my clients large collection of unfinished diamonds and gold nuggets don't amount to a hoard of wealth - have you ever tried to buy groceries with an unfinished diamond? I rest my case!'
Well ok, the ruling was really "no, there is no way you are snidely gettin off Scott free because the law forgot to think of crypto-currency"
I quote:
(5) the term “monetary instruments” means
(i) coin or currency of the United States or of any other country, travelers’ checks, personal checks, bank checks, and money orders, or
(ii) investment securities or negotiable instruments, in bearer form or otherwise in such form that title thereto passes upon delivery;
"Funds" typically denotes cash or an asset that is highly liquid, not just anything which can be purchased or sold. Black's Law Dictionary defines "fund" as a "sum of money or other liquid assets established for a specific purpose."
Bitcoins, at this stage, are accepted almost nowhere, recognized by few people as currency, and represent a tiny, highly volatile and risky niche compared to other markets. It's much easier to convert a used iPhone (the top search on eBay) into cash, sell concert tickets on craigslist, or trade collectibles, than it is to convert bitcoins into legal tender, but no one would mistake those goods for "funds." The law isn't intended to cover anything which can be exchanged for cash. In fact, it specifically enumerates the following types of property separately when defining the scope of "financial transaction": "real property, vehicle, vessel, or aircraft." [1]
Because currency is accepted nearly everywhere as payment, the government considers it difficult to police and subject to special penalties when used for criminal ends. Goods like collectibles or bitcoins don't operate at that scale, since they're accepted by relatively few businesses and specialized experts as payment. If a tiny (in comparison to the economy at large) experiment like bitcoin is "funds", then almost any object bought or sold in a zillion stores and marketplaces can be construed as "funds". Any quid-pro-quo could be considered laundering, which broadens the law beyond its intended scope.
The ruling says:
"Ulbricht's alleged conduct is more akin to a builder who designs a house complete with secret entrances and exits and specially designed traps to stash drugs and money; this is not an ordinary dwelling, but a drug dealer's 'dream house.'" [2]
It's not illegal to build a house with secret entrances and compartments. Such a house could be used by anyone who wanted to hide their own possessions on their own property. The fact that someone might use it for illicit purposes doesn't implicate the owner or builder. It must be proved separately that the owner or builder knowingly entered into some kind of agreement with another conspirator to facilitate a crime [3]. Merely hosting a chat room isn't a conspiracy.
Unfortunately, this is just a perpetuation of the same pointless drug war. The prosecution's position is wildly overblown. The alleged activities are akin to operating a motel where a victimless offense might have been committed by a third party.
Drug prohibition is ineffective and is on the way out in favor of treatment and social programs that are more effective.
[1] http://www.law.cornell.edu/uscode/text/18/1956
(4) the term “financial transaction” means
(A) a transaction which in any way or degree affects interstate or foreign commerce
(i) involving the movement of funds by wire or other means or
(ii) involving one or more monetary instruments, or
(iii) involving the transfer of title to any real property, vehicle, vessel, or aircraft, or
(B) a transaction involving the use of a financial institution which is engaged in, or the activities of which affect, interstate or foreign commerce in any way or degree;
[...]
[2] http://www.scribd.com/doc/233234104/Forrest-Denial-of-Defens...
[3] http://conspiracy.uslegal.com/elements-of-the-crime/intent/