Topic: BitInstant CEO arrested by FBI - page 2. (Read 6700 times)

Oy Vey. What if, what if... whaat iiiif?

I think de gubmint must first establish that 'it' (presumably BTCKing selling XBT for FRN) is illegal. I think this is already a stretch goal. Ever sell bitcoins for cash, Goat? (Don't answer that, just think about whether you might have once found yourself in an instance where you might) Sketchy website or not, I don't think this is, in and of itself, illegal.

Not sure. If the money is not known to be used for an illegal purpose, can any of the activity constitute laundering?

I would hope there is room here for a good lawyer to beat this.

AFAIK, it is not illegal in and of itself to sell XBT for FRN. Agreed?

The fact that this sale happens on a site that also facilitates the illegal sale of drugs would seem irrelevant to me. Well, not _irrelevant_, but defensible. The FRN <> XBT transaction itself is not rendered necessarily illegal by association (at least I would think).

If there was such a thing as an 'illegal website', it would simplify the government's position. It might conceivably make such FRN <> XBT transactions happening upon such a site to be necessarily illegal. But I don't think there is any such thing as an 'illegal website'.

And if the FRN <> XBT transactions are not illegal, how could facilitation of any such transactions be money laundering?

Yes, I understand that statutory definitions require reporting of any 'suspicious activity'. However, if the activity (by BTCKing) is known (by Shrem) to not be illegal in and of itself, how could it be suspicious?

cue(wrath);

ETA: I would not be surprised if the wording "illegal website" was included to puposefully inflate the possible reaction in the mind of the reader. I expect this trope to be repeated throughout whatever proceedings will follow.

There are several oddities in the complaint. As just one example, the assertion is made therein that SR was an 'illegal website'. WTF is an illegal website? Sure, it was a website that allowed some of its users to engage in illegal activity. But the distinction between that and 'illegal website' is significant.

HSBC's "deal" involved paying $5B, accepting a $20B plus prison time suspended sentence with 5 year probation, and the not so subtle threat that if HSBC went down it would take down the US financial system, and plunge the country back into recession.

Not sure that is going to work here.

if his counsel advised him to stop and the did not, then he deserves the Darwin award  

When did Shrem's lawyer tell Shrem that what he was doing was illegal?  If Shrem's lawyer did say that, then did Shrem have to report himself to the feds under 31 USC 5318(g)?  Or is he protected from being a witness against himself under the Fifth Amendment?

While I agree that the case might not go well for Shrem, it isn't quite as open-and-shut as you imply.  If Shrem has a good lawyer, maybe they'll try to negotiate a settlement similar to the HSBC case.

Assuming what is alleged in the complaint is true, it's not clear whether what Faiella did was illegal.  Selling bitcoins is not illegal per se. Does it become illegal when done in a venue known for illegal drugs?

The case against Shrem is a bit more complicated.  He's charged with willfully failing to report Faiella to the feds.  Was that illegal?  That depends on whether Shrem thought what Faiella was doing was illegal.

How a judge and jury would view this conduct is uncertain, but history suggests it would not be looked upon favorably.  Two decades ago, Gary Tucker went to prison for selling grow lights.  Maybe a present-day jury would be more sympathetic to Shrem, and maybe not.

It's a reference to this:

http://nymag.com/news/features/tide-detergent-drugs-2013-1/

lol. yeah, IIRC is right. I missed the soap category.

IIRC, they did sell a good bit of gardening equipment, from grow-lights to shovels. Maybe someone sold some Lava soap or something there.

(or the shovels were moved to their weapons site... I think they were sold in gardening, though, which was an actual category, at least a couple years ago or whenever it was I last visited.)

That's roughly what happened with me. I didn't take Bitcoin seriously or bother reading much on it until I learned about Silk Road (I think it was actually Chuck Schumer, just recently at the NY conference, who made the video of himself browsing in disgust). It was a pretty significant proof-of-concept. That's when I said "wow, people are actually doing something NEW with this." Before that, it was just some goofy online currency weirdos used. I'd guess it's similar with all the people being introduced to Bitcoin and hearing that it has marginally lower fees... if you either trust someone with your money or spend weeks downloading a blockchain after more weeks researching it.

If that was proof-of-concept, I'd call this proof-of-failure... or at least an alert that there's still a good ways to go -- not with BTC (there've been some pretty awesome developments lately... don't think anyone can complain about a lack of innovation in the privacy dep't), but communications. They're a good bit dependant on each other. If your communications aren't secure, it doesn't really matter how obfuscatable Bitcoin transactions are. I used PGP in the early days of BTC, but it's too much of a hassle unless you're only talking to a small handful of people each week. Frankly, stuff like selling someone coins he claims to resell on a "black market" wouldn't even cross my mind to encrypt, though I don't run a $multi-million MSB. The Windows GPA software is terrible and crashes pretty frequently. Very user-unfriendly.... built-in email tools are pretty decent if you're willing to spend a few minutes reading up on it and downloading the software. GPG's not totally secure by itself, though, even if the user-friendliness problem were solved... but now that I think about it, I can't really recall a story where government put in much effort trying to break cryptography (well, trying to break INTO encrypted documents, anyway). I'm not sure I've ever seen the words "government brute-forced" together. I guess they generally still use crusty old tactics, which is still quite effective.

How much soap was sold at SR? Please be serious here ...... it was a place to sell illegal drugs, not soap.

It's an analogy.  Of course he was selling bitcoins and not TVs.

What if he was selling laundry detergent?  There have been cases where laundry detergent was traded for drugs.  Is it illegal to sell soap?  What if they customer wants 10 boxes of soap?

Try actually reading the complaint.

And you know what the FBI found in his inbox do you? Nothing to do with selling TV's is my best guess.

How exactly did he launder money?  Shrem is accused of having customers who were probably junkies.  It was dumb, yes, but it doesn't seem to meet the legal definition of money laundering.

What if I want a TV and my neighbor offers to sell me his?  Nothing wrong with that, right?  What if I think that my neighbor is a pothead?  Does my paying for the TV suddenly become money laundering?  What if my neighbor spends that money on drugs?

The case against BTCKing is even more of a stretch.  What he is accused of doing is taking orders and passing them along to BitInstant.  The customers paid BitInstant without him touching the money.  Merely arranging a deal between buyer and seller is money laundering?  Wow.

May need to send out a remote-controlled robot in our place around courthouses... 1 person arrested is 1 too many.

This forum search capabilities are the worst.

Heard these news, rushed to find more info on the forums, and what do I get? 2012 threads? Had to use advanced search, which is not perfect. In the end I just stumbled on this topic in "unread" section.

I guess most of early adopters have used SR in one way or another, and some % of those early adopter became big. Me, myself, first heard about bitcoin in some thread about SR on 4chan, not the other way around.

Continue to lose the cold civil war by default, until .gov decides it's democide time and takes it hot.

Hey, that's the US government for you. Is it fair? No. Is it what they do? Yes. I don't think water-boarding people at secret locations was fair either but as they say in the States, "what are you gonna do"?