Topic: Everyone Panic. There's a lawyer among us. [FinCEN Walkthrough on p2] (Read 15227 times)

Thanks for pointing this out.  It is a good idea.  I hope it has good results.

I will point out that Tangible Cryptography (BitSimple) filed a request with FinCEN for an administrative ruling on the issue of whether an exchange between two individuals is money transmission, asserting that it is not.

https://bitcointalksearch.org/topic/filed-a-request-for-an-administrative-ruling-with-fincen-this-morning-224553

Attorneys charge money for talking with you.  Just this prices the cautious casual dealer out of the market, or forces them to charge exorbitant fees themselves.

Yet another example of the actual real-world costs of "regulatory uncertainty."  Such a vague-sounding phrase, but hits you right in the wallet in reality.

FWIW the guidance has, since last March - May, suggested that if you are selling BTC for USD as a business, you must register as an MSB with FinCen. Additionally, you might need the appropriate state licenses depending on the details.

If you're just doing small trades as a trader for yourself, and not as a business, you might not have to, but I would certainly talk to an attorney!

I certainly didn't suggest suing them.  Nobody I can think of would have standing to do it, since they haven't done anything and do not appear to be about to do anything.  I was just pointing out they're the 800 pound gorilla in the room.  May be calmly eating bananas at the moment, but you always worry maybe he'll decide to eat you instead.  So maybe you don't set up a lemonade stand 20 feet from him.

AFAIK, FinCEN has never stated that you have to register to be able to sell BTC.

There have been some cases where people were charged with money laundering or running an unlicensed money transmitting business, and those cases involved selling BTC, but it wasn't alleged that selling BTC is illegal by itself.

There's a lot of nasty things that FinCEN potentially could do, but until they actually try it, there's not much basis to sue them.

Well, I'd say simply having to register to be able to sell BTC would be an issue.  FinCEN, as much as it has a lot of bad things at its disposal that it has not, in fact, done to date, has a fairly lengthy history of creating regulatory uncertainty and then suddenly prosecuting some practice that has been, to date, tolerated.  While I am not a full-bore anti-government loon by any stretch of the imagination, and in fact, FinCEN's public official statements to date have been actually pretty welcome and reasonable, there is still an environment of regulatory uncertainty.

In some senses, this is good.  Sometimes, you really don't want the government all that interested in what you're doing at the moment.  However, it makes it rather difficult for large-scale money and venture capital to make long term decisions when they are considering rolling out physical infrastructure and other things that can't be rolled back and turned back into money should the situation change.  A lot of the kind of tech necessary for large-scale investments in Bitcoin is going to be stuff that is useful for nothing other than Bitcoin.  Therefore, a big investment in this kind of stuff would be rendered worthless by sudden prohibitive actions by the government.  This scares away that kind of big money.

Personally, I don't think FinCEN has yet abused its position, with regard to Bitcoin anyway.  But the possibility of it doing so is always going to be a variable.

I think the probability that Congress would do something insanely stupid if it did anything with regard to Bitcoin is a reason to prefer the current situation.  But that doesn't eliminate the downside of regulatory uncertainty.

What sort of FinCEN abuse?  What specifically have they done that violates someone's rights?

If you want a constitutional challenge, there would need to be something specific that you have a right to do, that FinCEN told you that you can't do.

Welcome with open arms!  There are many among us and I am extremely happy to see folks working to gain a more authoritative stance on the legalities.  Most Bitcoiners (including myself) are tech/geek types (ok that is a sweeping statement but probably accurate)that have been developing hardware, software, ideas, science, math; their entire lives.  We are becoming business men & women; which is good but painful.  As you are probably aware.  I estimate 95% of the community is developing beautiful businesses and careers of some sort or another; all based upon cryptocurrency implementation.  The more wide spread acceptance in the US; the stronger the community will become.  I see legal advise extremely crucial in this time.  And thanks again.

Just to be on  this..

Thanks for raising this.  Yes, little in the Constitution is absolute.  So much nuance and reinterpretations....

Its not so much a misinterpretation if you look at the question asked, though agree that it is very much a stretch.
Poster was looking for some general constitutional support for putting the breaks on this sort of FinCEN abuse, and there isn't much there on this matter.
So closest is Article 1 § 10, (which arguably limits the state part of FinCEN, even though congress authorized the Fed to delegate this to states),
Or 10th amendment, (which takes significantly more political action, rather than legal action)

This particular incident would not be one I'd pick to take to the supremes though, and constitutional matters end up there.

You're misinterpreting Art. I § 10, which is referring to the (currently 50) states.  Only Congress may "impair[] the obligation of contracts."  A legislative action doing such a thing is, for example, bankruptcy.  Even with respect to the states, the prohibition has never been absolute, and certainly is not now.

This section of the Constitution was drafted to prevent practices in which the states would either pass "private bills" relieving (usually) some wealthy person of his contractual obligations, or basically pass laws giving the property of foreigners to colonists, causing a fear by the Framers that this would scare away foreign capital.

Check Federalist No. 10 by Madison for a fuller explanation.

ETA:  Incidentally, not arguing your actual point, at least not here, just your citation.

For US Constitutional support you can start with Article 1 Section 10:


What two people contract amongst each other ought not be impaired by the state.

The state is relying on "guidance" from FinCEN here which is thin and untested in any court, so the thugs picked what they see as an easy mark to roll for the first impression.  Likely will get plead out like most in US federal.

It doesn't matter what regulations you (or anyone else) propose(s), we'll just circumvent it.

Also, there will never be consensus for anything like Coinvalidation.

You need to brace yourselves for the eventual development of actual anonymity in bitcoin transactions, which presently does not exist, thus regulators can feel free to abuse their discretion at will.  It won't make any difference though, we are leveraging P2P, decentralization, and other mechanisms (which will include anonymity options now under development (no, this does not mean TOR)) to ensure that your collapsing house of cards ("legal" system, corporation-state "governmental" violence and coercion, etc., etc.) collapses faster.

Never let it be said that we don't care, though.  We are building structures that will enable people to function fine completely without any of the "government" that you have unfortunately come to know and love.  Word to the wise:  Don't keep knowing it.  Don't keep loving it.  Start learning to live without it.  

That time is coming and sooner than you think.

Cheers

In there you say "A money transmission license is not a right, but a privilege."  Worded that way, it sounds believable.  But, considering they are applying it to person-to-person trading, is this really true?  Does the constitution protect our ability to trade between each other items that are not illegal? 

Do you think that money laundering laws are overstepping their original intent?  When you read about someone being charged with it who has never had a prior connection to drugs, and the only connect is that an undercover officer suggested he might buy drugs with bitcoins, it seems like these laws have gone from targeting drug kingpins to good honest Americans who just want to trade bitcoins. 

Are there potential constitutional issues here?  Are there legal defences for this?  Could the suggestion of intent to purchase drugs be entrapment? 

Are there legal protections for interpersonal trading versus a commercial business? 
 

I think it's mostly reasonable except for the interpretation of 5330(d)(1)(B), as this is so broad as to make it meaningless.  Section 5313 could apply to anyone, in the event that they were to make such a transaction.  If everyone is potentially required to file reports under section 5313, then to whom does the limitation of 5330(d)(1)(B) apply?  It's meaningless if it applies to no one.

I guess I should look into this.  I hope it's not another example of hard cases making bad law.  Considering that the people supposed to obey these laws are held to their strict letter, it's somewhat perverse that prosecutors can get a court to do what seems like bending the law in favor of the government when it's vague.  It seems like they may be ignoring the general rule of lenity that is supposed to interpret ambiguous federal statutes in favor of the defendant.

The fact this is in the D.C. Circuit is also worrisome, because it is one of the more draconian circuits as far as criminal cases go.  At least, the damage would be limited to that circuit to some extent if other circuits disagree.  I'm not sure how seriously D.C. Circuit is taken on specifically financial crimes cases.  I'd imagine the Second (containing New York) or the Ninth (containing California and Silicon Valley) have more expertise in these areas.  There, I'm just speculating, though.

A relevant case regarding the scope of 18 USC § 1960 is the US v. e-gold case in the United States District Court in the District of Columbia.

The court held that "money transmitting business" has a different meaning in section 1960 than in 31 USC § 5330.  That is, it is possible to be an "unlicensed money transmitting business" even if the business is not required to register as a money transmitting business under 31 USC § 5330.

The court also held that 5330(d)(2) applies even if the business never engaged in cash transactions over $10000, so long as the business would be required to file a currency transaction report in the event that it did receive more than $10000 in cash.

The district court did not specify exactly what would be considered a "business" under 18 USC section 1960, but held that hiring multiple employees and transferring over 145 million dollars constituted a "business".

It may eventually hit a jury.