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Topic: CEO OF BITCOIN EXCHANGE ARRESTED (Read 23716 times)

newbie
Activity: 26
Merit: 0
February 25, 2014, 01:18:25 PM
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
legendary
Activity: 3416
Merit: 4658
February 25, 2014, 01:10:30 PM
ok so first mtgox gone then this incident   Lips sealed
 
bitcoin is going to get down and down now   Sad

You've got that backwards.

First this incident (a month ago), and then MtGox gone.
legendary
Activity: 1176
Merit: 1005
February 25, 2014, 01:07:38 PM
Damn.  I forgot this thread existed for a minute and was hoping it was about Karpeles.
hero member
Activity: 714
Merit: 500
NEED CRYPTO CODER? COIN DEVELOPER? PM US FOR HELP!
February 25, 2014, 01:04:58 PM
ok so first mtgox gone then this incident   Lips sealed
 
bitcoin is going to get down and down now   Sad
donator
Activity: 1218
Merit: 1079
Gerald Davis
February 09, 2014, 03:38:10 PM
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.

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

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.

Quote
My SWAG is that this case pleads out to the lesser count.

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.
legendary
Activity: 1176
Merit: 1005
February 09, 2014, 03:01:50 PM
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.

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:

Quote
18 USC §2 (aiding and abetting)

18 USC §371 or 18 USC §1956(h) (conspiracy)

18 USC §1001 (false statements)

18 USC §1510(b)(3)(B)(i) (obstruction of 18 USC §1956 or 18 USC §1957 or Title 31 investigations)

18 USC §1621 (perjury)

18 USC §1960 (illegal money transmitting business)

31 USC §5322 (Title 31 criminal penalties)

31 USC §5324 (structuring)

31 USC §5332 (bulk cash smuggling)

18 USC §1028 and 18 USC §1028A (identity theft)

Aiding and abetting, false statements, illegal money transmitting business and structuring seem pretty apt.
sr. member
Activity: 476
Merit: 250
moOo
February 09, 2014, 02:42:12 PM
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?

donator
Activity: 1218
Merit: 1079
Gerald Davis
February 09, 2014, 02:39:57 PM
Money Laundering is when you try to hide the origins of funds though:

Placement - the initial entry of the "dirty" cash or proceeds of crime into the financial system.

Layering - attempt to separate illicit funds from its source.

Integration -  the money is returned to the launderer from what seem to be legitimate sources.

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.

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:

Quote
(3) Whoever, with the intent—
(A) to promote the carrying on of specified unlawful activity;
(B) to conceal or disguise the nature, location, source, ownership, or control of property believed to be the proceeds of specified unlawful activity; or
(C) to avoid a transaction reporting requirement under State or Federal law,

conducts or attempts to conduct a financial transaction involving property represented to be the proceeds of specified unlawful activity, or property used to conduct or facilitate specified unlawful activity, shall be fined under this title or imprisoned for not more than 20 years, or both. For purposes of this paragraph and paragraph (2), the term “represented” means any representation made by a law enforcement officer or by another person at the direction of, or with the approval of, a Federal official authorized to investigate or prosecute violations of this section.

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.

legendary
Activity: 1176
Merit: 1005
February 09, 2014, 01:07:27 PM
Money Laundering is when you try to hide the origins of funds though:

Placement - the initial entry of the "dirty" cash or proceeds of crime into the financial system.

Layering - attempt to separate illicit funds from its source.

Integration -  the money is returned to the launderer from what seem to be legitimate sources.

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.
legendary
Activity: 3010
Merit: 1031
RIP Mommy
February 08, 2014, 09:44:09 PM
All publicity is good publicity, lets see what happens surrounding this.

Not really in the case of bitcoin.

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

A desire that can never be realized. It is not possible to never commit a "crime" (not a crime at all if it has no victim), especially since when a government is criminal, it will brand opposition movements as "criminal". Opposing federal reserve notes, exercising victimless economic liberty, has resulted in countless criminal sanctions at every level, even before bitcoin.

Actions speak louder than hollow words at hearings. We're all on the list, and only those with enough wealth to bribe their way into cronyism will be immune. Same goes for other countries.

Satoshi disappeared (or "was disappeared" and signed-off after handing over the reigns, by an impersonator), out of the highest evolutionary instinct: self-preservation - and he would have, even if his early days-mined BTC was out of his control. Would you want to suffer every inhumanity that government would subject you to under color of authority, until your body shut down?


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

Which will be made a victimless crime if it isn't already. See Oakland, CA, Detroit, MI, and so on.

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.

Which will be made a victimless crime if it isn't already. Regulatory capture works only for the wealthiest.

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

Which will be made a victimless crime if it isn't already. The corrupt industry of "non-profits" (which are run to benefit their administrators more than their supposed beneficiaries) far outnumbers true non-profits. The corrupt do not want transparency or accountability, and the true non-profits do that well enough already.

Replies in bold.
hero member
Activity: 510
Merit: 500
February 08, 2014, 05:18:18 PM
The Foundation needs to be dissolved ASAP so legitimate companies can form a reasonable organization.

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


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.

legendary
Activity: 3024
Merit: 1640
lose: unfind ... loose: untight
February 08, 2014, 01:16:54 PM
The Foundation needs to be dissolved ASAP so legitimate companies can form a reasonable organization.

I don't see any reason why legitimate companies would have to wait for TBF to dissolve before forming a reasonable organization.
BCB
vip
Activity: 1078
Merit: 1002
BCJ
February 08, 2014, 01:00:51 PM
It's essentially a smear campaign....

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.

BCB
vip
Activity: 1078
Merit: 1002
BCJ
February 08, 2014, 12:58:47 PM
All publicity is good publicity, lets see what happens surrounding this.

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.
global moderator
Activity: 3850
Merit: 2643
Join the world-leading crypto sportsbook NOW!
February 08, 2014, 12:54:51 PM
All publicity is good publicity, lets see what happens surrounding this.

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.
BCB
vip
Activity: 1078
Merit: 1002
BCJ
February 08, 2014, 12:53:24 PM
Someone actually came up to me and asked me if I heard about "the CEO of Bitcoin" being arrested  Wink lol

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.


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. 

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.)
newbie
Activity: 42
Merit: 0
February 08, 2014, 12:51:30 PM
All publicity is good publicity, lets see what happens surrounding this.
hero member
Activity: 840
Merit: 509
February 08, 2014, 12:47:01 PM
Moreover, having Shrem himself bought something on SR, he can't say he was not aware of SR main interest...

Not sure if it makes sense, this is just my opinion but I'm looking forward to reading your comments..

That's actually a seemingly strong argument, to the point you've seen it over and over again in news stories, i.e. Shrem bought pot brownies from Silk Road, so he must have known it was nothing but a crime operation.

If this is actually their strongest argument, though, it's really weak.  It's sort of like arguing that because the co-owner of a mall once scored weed at the food court there, this is proof he knew the mall itself was actually just a drug operation in disguise.  It looks good on paper the first time you see it, but not if you actually think about it much.

I doubt the Silk Road connection is their only argument. They'll just get him on some money laundering or tax-evasion.
hero member
Activity: 510
Merit: 500
February 08, 2014, 12:45:23 PM
Someone actually came up to me and asked me if I heard about "the CEO of Bitcoin" being arrested  Wink lol

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.


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. 
BCB
vip
Activity: 1078
Merit: 1002
BCJ
February 08, 2014, 12:13:34 PM
Someone actually came up to me and asked me if I heard about "the CEO of Bitcoin" being arrested  Wink lol

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.
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