Topic: CEO OF BITCOIN EXCHANGE ARRESTED (Read 23786 times)

If you have a thing for visiting Mtgox in Japan this is who you should look for

Lost your life savings? Lost everything??? visit the Office in japan Mtgox. this is who you should look for Founder/Ceo of MtGox

yeah the guy responsible for mtgox and shutting down the website and permanently shutting down your account.  "Means" you can't get it back unless government steps in and requires Mtgox to Reopen the website to return the money to everyone which i highly doubt the government will do. lol

http://www.youtube.com/watch?v=ZddzSC7AuAw

You've got that backwards.

First this incident (a month ago), and then MtGox gone.

Damn.  I forgot this thread existed for a minute and was hoping it was about Karpeles.

ok so first mtgox gone then this incident   
 
bitcoin is going to get down and down now   

I agree and the response wasn't only directed to you, it just happened I had the time to comment now.

I have indicated in other posts the failure to file a SAR is (at least based on the limited info we know) going to be nearly impossible to beat.  You likely know this but others might not, a SAR is for suspicious activity.  The theshold for reporting isn't "beyond a reasonable doubt", it isn't even a reasonable certainty that a crime has occurred, it is just suspicion.  The emails between Charlie and the conspirator as well as between Charlie and the rest of the company certainly paint a picture that Charlie was or should have been suspicious of the client.  I don't think a jury is going to believe that "a reasonable person" wouldn't see that the transactions (multiple per day, many times up to 10x over the limit, involving a middle man, using aliases, using multiple accounts, etc) wouldn't require filing a SAR. 

The bad news it the "lesser" charge is up to 5 years in prison and up to $25,000 fine per transaction (~1,000 txs made).  The prosecutor might let him take a reduce jail time but they are going to use the fines to financially destroy both Charlie and the company.  It will make a "great" headline ("Bitcoin company fined $25 million in money laundering charge") for a prosecutor looking to prove a point.


I agree.  The ML (with up to 20 year prison sentence) will likely be used as a "are you sure you want to take a risk with a jury?" card.  Fighting it would only make sense if you also thought you have a reasonable chance of winning on the lesser change as well.  If you don't then fighting in court over taking a deal means all risk and no "reward".

I think the operating an unlicensed money money transmission business is just garbage though.  In the NY hearing they even indicated that the exchanging of money for virtual currency may not even be covered under existing statutes and that the committee will likely need to use its emergency powers to expand the scope of its regulatory structure to bring Bitcoin exchanges in to it.  So it say "you weren't licensed in NY = bad" when NY isn't even sure you need to be licensed is just nonsense.  That being said our company doesn't do business with residents of NY (and CA and VA) for this exact reason.  The regulatory unknown just makes it too much of a risk.

Yes, I'm not agreeing in whole with those who think this count is entirely bogus, or that they can't possibly convict.  I do, however, think it's considerably weaker than the unambiguous failure to meet the statutory duty to file an SAR.  If they can prove the facts alleged (and just the emails quoted seem to do that), they have him dead to rights on that.

However, as to the money laundering count, not only does the government have more to prove, essentially a level of specific intent, but while some activity might arguably fall under some of the language of the statute, it falls mostly under the catch-all type language, sometimes ambiguously worded.  I think it would be a lot easier on that count to create a reasonable doubt about one or more of the elements of the offense, or for that matter to convince the court that the facts proven do not prove conduct sufficient to establish a violation of the statute.

It also might be worth a look at the standard jury instructions for this statute.  That, after all, is what a jury would consider, and depending on what they say, a jury might just say there's not enough here to convict this guy on this charge.

My SWAG is that this case pleads out to the lesser count.  Alternately, you might see a plea to some lesser included offense of money laundering, like these from the IRS:


Aiding and abetting, false statements, illegal money transmitting business and structuring seem pretty apt.

He should ahve bought some politicians.
you cant get rich and not share with congress.

sorry dont buy the money laundering.

the worlds major banks were just "busted" for KNOWINGLY laundering major drug cartels money.. can anyone remember what happen to those CEOS?

People need to stop using the "TV definition" of money laundering.  I have seen "black money into white money" and other similar nonsensical statements several times in this thread.

The statute is the statute and it is right here:


http://www.law.cornell.edu/uscode/text/18/1956

Bolded for emphasis by me.  Money laundering is a very very broad statute.  It has many different elements.   The prosecutor isn't charging Shrem with Money Laundering but rather being part of a conspiracy to commit money laundering.  That means he doesn't even need to have commited all the elements of the crime himself, rather that his actions combined with the actions of his co-conspirator meet this definition "with the intent to avoid a transaction reporting requirement under State or Federal law ... conducted financial transactions involving property used to conduct or facilitate a specific unlawful activity".  

Is he guilty?  Well that is up for a jury but can we drop the quaint TV land money laundering = "making dirty money into clean money only" definitions.  They serve no purpose.  If the law says Money laundering is eating a cheeseburger on Tuesday then that is what it is.  To try and proactively avoid the flames, this isn't a statement on the merit, or morality of the statute, merely the statute as it exists.

This is why I think the money laundering count is fairly weak.  I think it is there to coerce a plea to the less serious, but better established failure to file an Suspicious Activity Report count.  It is pretty clear Shrem had a legal obligation to make such a report.  He didn't.  That's pretty open and shut, I think.

Replies in bold.

Yes, true.  But I think Bitcoin will need more developers because the current team is entrenched within the current system and they control many things such as bitcoin.org.  of course things can move rather quickly if people are motivated to do so.  Hopefully they will arrest a few more people (like Theymos) and maybe that will start to bring some of the other people to their senses.

I don't see any reason why legitimate companies would have to wait for TBF to dissolve before forming a reasonable organization.

If only that were true.

Individuals are conducting illegal activity with bitcoin. 

The lesson being that Bitcoin is not magical anonymous internet money.  If you use it to conduct illegal activity you may get caught and prosecuted.

pretty simple.

Not really in the case of bitcoin.

I don't want to read about any more arrests or illicit uses.

We need a virtual currency project that provides financial inclusion to inner cities.  

We need a virtual currency solution that reduces costs and friction of the hundreds of millions of individuals remitting billions of dollars to their home countries.

We need a virtual currency project that provided transparency and accountability to non-profits that allows them to more fully realize their missions.

Everyone sees bitcoin as a great big money grap but the impact to greatly benefit society is profoundly significant.  That is just not sexy enough to get repeated in the press every day.

Tell that to the victims of slander haha. I'd say it's awareness or at least getting the Bitcoin brand out there, but not necessarily good publicity. It's essentially a smear campaign, but hopefully more and more people will be able to see past this and to the benefits.

True,

That Peter Vesness, Mark Kapreles and Charlie Shrem are all involved in civil and/or criminal cases involving their virtual currency activities does not inspire me with confidence.  (Though Patrick Murck has been doing great work.)

All publicity is good publicity, lets see what happens surrounding this.

I doubt the Silk Road connection is their only argument. They'll just get him on some money laundering or tax-evasion.

This shows the problem with many people involved in the Foundation.  Some of them think everyone else needs to be educated when they don't know much themselves outside of the world of Bitcoin. 

I have heard this reported on more then a few occasions.  Just goes to show you how much education we have left to do.  Unfortunately anyone born before 1964 is not going to GET it unless they want to understand.  They have the capability, most just don't have these desire.  And that is who we find in power currently.  

It will take another generation to come into power before we will be able to fully realize the full potential of this technology.

I'd say 10 years at the soonest and more likely 20 year for full integration.