He has that condition, to have buyers vow they will not allow US customers, to protect the users of this future exchange, which will have to some degree his name attached to it.
It makes sense when you think about it. You want your code to be in good hands and survive if possible and for that to happen users and their assets have to be protected.
You can't kill code that is open source. The GPL or MIT license would guarantee it survives forever. You cannot go to prison for writing code.
Say someone buys his code and opens up a new exchange 1 week later and allows US customers. This new exchange gets into same legal troubles and is forced to shut down or block US customers, so US customers get screwed again and also does price of all securities listed there.
The only reason his exchange is shut down is because it's hosted in the USA. Why doesn't he just refuse to sell to any company in the USA? It's an unlicensed exchange which means it's just as illegal to run as before so nothing changes at all really. I don't see how a region block provides any protection. Of course whoever runs the exchange shouldn't solicit US customers but if they adopt KYC but are still unlicensed then what is the point?
Bitfunder shares still aren't considered real but they are trying to do this KYC type stuff?
It will mess up with IPOs, mess up badly with stock prices, destroy market confidence and so on. Last but not least you don't want to be associated such a mess when you could have prevented it.
Ultimately only a decentralized exchange will be immune to being shut down. Any governments police can raid any of these exchanges if they even have the hint that people used it for money laundering. Silk Road arrests could trigger a global crack down on all of these exchanges in an attempt to track tainted coins and it wouldn't have to be done under the regulatory laws but could be done under the criminal laws or even under the three letter agency anti-terror finance laws. In any case if they want to shut down unlicensed exchanges they will and no amount of blocking US customers will prevent it.
My guess? Because Silk Road was run by an American and Dread Pirate Roberts was an American the following investigations will probably be run by the FBI and DEA. But this doesn't mean that there aren't mutual legal assistance treaties and other mechanisms to allow local three letter agencies in every country to get involved. In that case the governments would be able to send national security letters, conduct anti-terrorist investigations, and then it does make sense to block US customers in order to avoid impeding on an ongoing investigation.
The problem is if that is all the result of the Silk Road investigation then something must be done technologically to allow law enforcement to do their investigations without disrupting the entire Bitcoin economy and having multiple sites shut down. There might be a very important investigation going on or several and the feds might not even care about btct or Bitfunder. It could have been that some
bad guys happened to set up scams or use those exchanges to invest their drug money. That is a legitimate and real possibility which would explain all of this and fit in with the timing. If that is the case then moving to Havelock probably will not be a long term solution for US investors which is why I never recommended moving to Havelock for any other reason than to buy time until Havelock shuts down as well.
The conclusion to all this is we will need to make a choice as a community about what we want. Do we want anonymity in which case Bitcoin will probably never be able to have much growth, and in which case the price of coins will never be $20,000 a coin, but people will be able to use Bitcoins to buy drugs. Or do we want to have a Bitcoin which actually goes legitimate and which can be used as a currency, which can someday be $20,000 a coin or more, and which we can all build legitimate businesses around?
Due to money laundering laws and the real threat of terrorist financing we will not be able to have both. Developers are ultimately going to be made to pick one side or the other and there will either be a fork at some point or Bitcoin developers will choose one path or the other. At this point it seems gmaxwell and some other Bitcoin developers are choosing the path of anonymity. For that reason and as a result of that choice, the economic effects will be felt as the feds do everything in their power to discourage that.
I had a discussion with gmaxwell on the coinjoin thread. I made the case that the community is going to have to become more responsible and technologically regulate itself to avoid mass arrests. I'd rather deal with technological features like tainted coins with blacklists or KYC than mass arrests, shut downs, etc. Don't get me wrong there probably will be a coin which has anonymity, I just don't think that cryptocurrency will be the one to become the mainstream cryptocurrency. I don't think anonymity is necessary for privacy. I do think records should be kept either by the users themselves or on the blockchain. But I also don't think that corporations should know what books we buy or what we do with our money.
The issue of stolen coins, money laundering, coin taint, record keeping, these are all technological issues which can be solved in a way which could provide more privacy than Paypal and credit cards but not be completely anonymous. I have no clue how to strike the balance, and I know that currently the blockchain isn't anywhere near private enough, but I also know that it shouldn't be a complete black box of a blockchain where no one can determine what goes on because if some really bad event happens or if governments were to exploit this technology against us then we would want some way to be able to follow the money even if its not easy or cheap to do. Ultimately we are either all going to end up keeping records on our transactions in exchange for having true privacy and anonymity, or we will let the blockchain keep a public record of every transaction. If you see any other way let me know but I think we are at a fork in the road.
