Topic: FinCen preparing to prosectute some Bitcoin users - page 2. (Read 13153 times)

http://www.americanbanker.com/bankthink/fincen-regulations-choking-bitcoin-entrepreneurs-1058606-1.html?pg=1

This is important, so no fear hear? and if anyone feels that retched feeling of fear, recite the litany against fear.  

Remember Fear is the Mind Killer.

these are important issues that our community has to grapple with right now before they begin... They did the same thing to Paypal... I think I know why the president of paypal was happy in that interview, I think he's glad something like Bitcoin is able to challenge them.  There simply is no way to destroy Bitcoin short of a EMP bomb, and I don't think that they are going to justify sending out a Trojan worm onto the internet to erase all copies of Bitcoin... though it wouldn't hurt to be prepared for that eventuality.

We are an Intelligent community of individuals, with the determination to know where we stand and I am sure as soon as one of us finds a solution to our problems they will share that knowledge to the community so like Bitcoin our Human BlockChain can be upgraded with the latest known facts, making it indestructible and irreversible; Knowledge cannot be erased from the human mind.

Nice competent summary.

So the money transmitter part, about exchanging Bitcoin for real currencies happens the moment you deposit real money and buy Bitcoin on an exchange and the moment you hold a balance in a real currency on an exchange, after selling deposited Bitcoins and surely the moment you try to cash out?

Thats not a lot to base a law on, as others stated, especially the part of only being an issuer of a virtual currency if you buy money but not if you buy goods. However it's making a path or framework where just about every use of Bitcoin can be prosecuted under existing current American laws.

I live in Europe and the ECB has to rule too before such an interpretation comes into effect here. However international bank compliance with FinCen might be enough for throwing "liquid Nitrogen" on bank accounts in a number of countries, after which laws can be made without any rush while the possible confiscate-able user funds stay put?

This is surely a bleak future. The "good" news from an European point of view, is that we have the European "supreme" court where any EU decision can be challenged and where the complainant is allowed to present technical evidence. That could be relevant if the definition prevails of "mining" as equivalent to being an issuer of a virtual currency under American law.

But of course, all this would be enough to scare away legitimate business globally in the foreseeable future!

Edit: It just occurred to me: Bitcoin though recognized as a "virtual currency" is not recognized, despite it's name, as a real currency meaning that it's considered as an "in game" token that is allowed under strict regulation to be used for payment in real life trades. These possible future laws would include WOW-gold also for the exact same reasons as Bitcoin.

If that's the case, that Bitcoin is not a currency in the normal sense, the prerequisites about it being minted and sold for $$ before the seller is considered an issuer, is really treading on new ground from a legal perspective, so if FinCen translates their recommendations into law, there will be numerous revisions as such a law would challenge existing financial laws in all other areas. Actually a Bitcoin law could have serious drawbacks regarding prosecuting other types of financial crimes as it would create a giant loop hole!

Don't take it personally.  It is human nature to be a 100% fanboy (or enemy) and feel threatened by anything with does not appear on it's face to represent the same posture toward (or against) any particular issue.  That's just the way most humans are wired.  A small percentage of humans are defectively wired in this respect though.

I started this thread and am a bitcoin holder, user and proponent. i am not interested in scaring the readers of the forum (into listening to the show, or just plain becoming scared). I am not a proponent of cutting off my nose to spite my face. I am interested in bringing something that could be and probably eventually will be dangerous to our community to our attention.

I listened to the podcast and have a bit of a legal and investigative background (college only) I could follow the talk quite well and it was concerning to me. As stated before, it is much much better to prepare for what might happen, rather than to wait comfy like and get smacked when you least expect it.

When one considers that bankers basically run the world, are above prosecution (e.g. - See HSBC money laundering, derivatives crisis tying the EU to American banks, etc. and etc.) you have to take them seriously. These people profit and some might argue make wars. They also have controlling interests in society. If you want to just brush that entity aside, perhaps you should look a bit deeper inside and offer a solution rather than a criticism.

IAS

Well, I've been looking at it carefully. Following along this line of thinking, this is how I interpret it.

1) as stated by another forum member... you are not creating bitcoins; You are a Employee of a Open Source p2p Corporation, You are being paid in transaction fees(as non-existent as they currently are). As a reward for completing your job you are rewarded with stock in the company(bitcoins).

No one is creating anything, the bitcoins are already in circulation they are held in trust by the Bitcoin p2p Corporation.

The first two statements do not apply to you, in fact they do not make any sense as to what Miners themselves are doing, it is absolute gibberish.

2)The last statement is the tricky one.

 In addition, a person is an ex-changer and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency.

    The statement is saying that you can only use this currency once... for purposes of safe transmission over the internet to purchase goods and services.

    The guidelines suggest that you are in deep water if you buy the currency, or accept it for something that is of value,i.e. trade, exchanging the currency for anything of exchangeable value is frowned upon e.g. You cannot buy Gold/Silver with it, you can't even buy another currency under this statement... only goods and services are legal.

If the last statement is dependent on the first two then the last statement is invalid and nonsensical for what Miners actually do... you are not a ex-changer or a Money Transmitter, You are a Employee of the Bitcoin p2p Corporation.

You gotta watch out for those law makers they are sneaky! Please proof read my logic, Is this right? I could be wrong.

Edit: ... I re-read it and I think that last sentence may be valid... if so, it means all transactions with virtual currencies are frowned upon. that includes, anyone who buys virtual currency on EVE Online, WoW, 2nd life etc... it has broad powers, since they are converting real currency into in-game currency, and even paying your EVE Online subscription with in-game currency is frowned upon, same for buying virtual in-game goods that makes you a money transmitter.(notice I did not say illegal, that is in question, but would explain why all banks in the world are shutting down accounts)

Well I guess it's time to spread the mining ethos, buy a rig today for a better tomorrow!

Promise you I will ream Fin CEN in the end

Does anyone know if FinCEN actually contacted BTCBuy and requested their closure or they just chickened out after reading the FinCEN March 18, 2013 announcement? I always wondered if Jeremy from Spendbitcoin was approached about doing business with ‘mericans and bailed out of the U.S. market.

Oh, well, that's a completely different claim than was made on your radio program. Did your guest not do any research before going on the air?

I reached out to Bradley Jansen for a response to your comment, his reply:

Did you have anything else you feel needs correction?  I am running an interview with Paul Hughes in episode 2 which provides counterpoint to Bradleys claim, but even that results in a more nuanced but still not-great outlook for Bitcoin.

FinCEN takes regulatory actions against those it deems in violation, we can argue semantics if you insist.

Is that all?  You take issue with his choice of specific term?

Hahaha, that is a surprisingly accurate statement. I think FinCEN's poor guidance and inclusion of miners as a "money transmitter" comes from their lack of understanding the mining process and that the government doesn't really care as much about Bitcoin as we'd like to believe.

This is a good point.. i list on my taxes 'computer leasing'  not minting money!

I have to think that most people do try to limit the BTC and fiat they have on account at Mt. Gox out of general principle.  I did when I was actively trading (through Tradehill.)  This, a freeze may not damage as many people as badly as bad as you might imagine.  (But I could be wrong.)  It could be disruptive if rather than freezing the BTC the government used them to actively de-stabilize global trade, but I have a hard time imagining that occurring.

I myself have hypothesized that Mt. Gox appears to receive relatively little harassment due to they being a useful monitoring chokepoint and cooperative with the authorities.  While that remains in my mind a viable hypothesis, I currently consider it less likely than the null hypothesis for a variety of reasons.

Your hypothesis about keeping centralized exchanges going to reduce the pressure for de-centralized ones (and presumably private transactions and in-system utilization) to develop is also one which strikes me as entirely valid.

I currently consider the strongest hypothesis as being simply that nobody in corp/gov has really come up with a concrete plan for dealing with things.  I have little doubt that the last run-up was an eye opener however, and I'll be surprised NOT to see some effort put into corralling things a bit and some observations of these efforts popping up.

I continue to believe that you may over-estimate the effect that such things will have on BTC valuations.  You may even have the sign wrong.

FinCEN does not "prosecute." You need to provide proof for your guest's irrational claims or issue a correction.

If you've got an accusation to make, do it.  I don't hide behind fake names and I don't lie either by intention or omission. 

If you've got evidence to the contrary, I encourage you to publicly post it - I live by my reputation.

What you need to do is find ONE example of FinCEN prosecuting anyone -- ever.

Nobody associated with the show started this thread - Put yourself in the perspective of FinCEN and see what actions make sense.

Spoiler: They're not nice for Bitcoin.

And I don't care if you listen, if the content isn't interesting enough to warrant your time, you won't.  If we're talking with people in interesting roles about important topics, chances are pretty good you will even if you don't like what's being said.

Adam B. Levine

This thread is a nice attempt to scare the readers of the forum into listening to the inaugural episode of this radio show. Luckily, nothing he says is grounded in reality.

You're missing the point, he's saying the Japanese Government could shut down Gox in a permanent way and have their assets frozen for years.  I have been wondering this same thing myself...

With all the exchanges being shut down around the world, why has the largest one never been targeted by anything more than unruly hackers?  Gox is the single largest chokepoint and is entirely responsible for determining the price of BTC as most people see it, yet it seems immune to regulatory troubles that increasingly plague exchanges around the world.   Is Japan such an advantageous legal environment to operate in?  Are there other international exchanges taking advantage of this and operating out of Japan?

If Gox was shut down by the Japanese government it would have a MAJOR impact on the price, and while it might recover depending on how other exchanges react and how usable decentralized exchanges are by that point, I think it's obvious the impact would be probably as significant as anything else in Bitcoins lifecycle so far.

It's not about losing BTC to a hack, it's about a sea-change event eliminating the largest player in the currency conversion game