Topic: Liberty Reserve shutdown is a boost for Bitcoin? - page 12. (Read 12722 times)

I used LR a couple of years ago to transfer money between MtGox and another account.  The site always seemed a little dodgy in that no customer information was required.  Glad I pulled everything out years ago.


What kind of warning should be given?  'Guys, we're going to shut you down next week, but we don't expect any criminals and regular customers to clean out their accounts in the meantime.  Shady Operator, you have a few days to flee before we look for you'

It's a blanket statement to seize all of their funds commensurate with the amount allegedly to have been laundered.  LR doesn't have $6 billion in funds stashed in some account (or in aggregate).


http://www.reuters.com/article/2013/05/28/net-us-cybercrime-libertyreserve-charges-idUSBRE94R0KQ20130528

RE:  US companies are banned from accepting bitcoin as payment

I think that would require statutory action - a new law.  I don't know what authority regulators would have otherwise.

BTW, it seems overreaching to shut down a payment system because someone does something illegal with it.  By that logic, the secret service should go after the U.S. treasury for printing paper bills... because, there's a lot of illegal commerce done using U.S. paper dollars.

Hmm, this story just keeps getting bigger

http://www.brisbanetimes.com.au/it-pro/security-it/westpac-caught-up-in-worlds-biggest-money-laundering-sting-20130529-2naa8.html?google_editors_picks=true

The indictment states that "a sum of money of at least $6 billion" will be forfeited (plus amounts in many other accounts)

"Fighting" the "shady" businesses is mostly a cover-up for increased spending, which allows certain people to profit.
Bitcoin is, potentially, a real threat (though some people in government might view it as an investment vehicle - who knows?).
So, no, shady businesses won't change anything in government's attitude.

LR was almost nonexistent on the shady side of the internet. It's a hassle to get, and a hassle to turn into bitcoin. For them to affect crime in any substantial way they have to shut down virtually every currency that has an exchange that lets you withdrawal to Poland. The anonymous polish cards are what makes crime happen, it enables the bitcoins they earn to be worth something while staying anon. Otherwise, they have to mostly use their own bank accounts, and with the gigantic sums of money traded, won't fly.

Shutting down bitcoin would at least slow silk road down immensely while they converted to litecoin or something, but unlike with LR, legitimate people have hundreds of thousands of dollars invested into bitcoin. I wrote an essay that persuaded my teacher to buy some.

Plus, I think we all realize how near impossible it is to shut down. If they wanted to do any damage they would contact the two banks in Poland offering the cards and remove those. I have $50,000 worth of bitcoins that I have no intentions of paying taxes on, somehow I doubt localbitcoin will work for that much. It could take months to move all of that, with 10% fees potentially.

$6 billion didn't get seized, that's the estimated amount of transactions they're being accused of laundering since 2006.

Well get ready because I'm pretty sure that a lot of that shady business is now heading directly towards Bitcoin which will make it a real target.

Why would the US government want to crack down on SR?
I don't think they care too much about who's smoking what. What they do care about is their own power. People leaving the dollar is a threat to their power, so they are going to try and make it hard for people to leave the dollar. Terrorism & drugs are actually good for those in power, since they can profit from fighting them. So, no, the exchanges are gonna be targeted anyway, compliance or no compliance.
The good thing is, they probably can't do too much about the exchanges in Russia / China / Argentina / other areas not quite entirely under their control. Another good thing is, they have other issues apart from fighting Bitcoin, and any new war is going to speed up the incoming collapse.

Right now, Bitcoin is accepted at Amazon through Gyft.  I bought a large gift card today, cashing out a few coins around $129, mostly because I'm bearish on the LR news, and it was time to cash out 10% anyways.  (side note: Bitpay gives a reasonable exchange rate, apparently at the point where enough btc are available on the bid side at MtGox to cover the sale of the card's btc).

The LR news may push the former LR users into bitcoin with whatever money that wasn't seized, but as you correctly pointed out, businesses are less likely to send money to an online currency exchange with front-page NYTimes headlines like "A case against Liberty Reserve, an online currency exchange, is believed to be the largest global money laundering prosecution ever, the authorities said." link

Already, the LR news has had a chilling effect with the voluntary cutting off of OKPay to bitcoin exchanges. Also, because of the recent FinCen action against MtGox, Bitfinex voluntarily stopped using MtGox citing the risk of a MtGox seizure, which is why Bitstamp and MtGox exchange prices have diverged.  The feds are taking action, and are having a measurable effect on bitcoin already.

The feds have shown that they
1) have very long arms that can reach even into Costa Rica and grab a former American that had renounced citizenship, and start extradition proceedings.  Japan isn't too far.
2) are willing endure the collateral damage of hundreds to thousands of legitimate users of LR

The Feds may not be able to shut down bitcoin, but they know the mantra "follow the money", and I think they might start coming down on exchanges. The justification won't be that bitcoin itself is illegal.  What they'll do is say that the exchanges are not stopping money laundering, online drug sales, weapon sales, or child porn.  At least, that's what the headline will read, regardless of factual accuracy.

Best case scenario for Bitcoin is that MtGox is working with US feds to identify SR vendors, and announce a mass bust of them.  This would mean that the feds are working _with_ the exchanges to identify lawbreakers, rather than trying to shut down the whole damn thing like they did with SR.  No one likes the strict MtGox AML rules, but that might be the difference between the exchanges getting shut down LR style, and being allowed to exist by the Feds. 

They are guilty of NOT being Obedient Snitches.
A grave sin in the eyes of the Government and some commenters on this thread...

Well it's important for Exchanges and Bitcoin companies to comply with regulation and we will be fine. it will be a struggle but we will come out on top.

The more of these shady exchange businesses get closed down the better. The government can't shut down bitcoin, and they can't stop some people from doing shady business with it (just like cash) but they can make the legitimate business act in a legal manner and this is a good thing.

Agree with you mate, They closed LR because cyber criminals were using it, they all know that bitcoins are getting used in deepweb and they have a eye on it.

No, I bought most of my coins at about $10 and I have plenty. I'd love for it to go back above $200 and higher, but I am seriously considering selling earlier if I see more bad news on the horizon from the US govt.

Like WackWilly said, yes, it's just concern for the future of bitcion. What bitcoin needs now is acceptance more than it needs fewer competitors.

I wouldn't say so. The remarks mgio makes are genuine concerns for the future of Bitcoin. (Well, i.e. a future in which it might be widely used by the general public, instead of being used by just the geeky early adopters. A very dim future is also a future, you might say, but I think we'd all prefer a really bright future for BTC).

Should recent developments be all part of a bigger scheme, then you'd better not be "stuck" with your bitcoins. [Yeah, start bashing me now ]  Worst case I'm afraid one day we'll wake up, noticing that the Japanese have shut down MtGox's bank accounts alltogether - this being just a "friendly gesture" towards their US counterparts in Government. They simply wouldn't care a bit.

Not seeing the risks that are mounting indeed, is not being wise IMHO.

I wish I could agree with this, but as long as bitcoin stays underground it will be used for silk road and nothing else.

We need to be accepted by the mainstream, by large companies like amazon.com in order to succeed. That is just beginning to happen now but if bitcoin is made "illegal", those companies are going to run, far, far away and bitcoin won't be used by anyone but the techies, the libertarians, and the crazies on this forum .

The more US government is trying to crackdown on bitcoin related services the more bitcoin will flourish. They know that very well.

This is bad for bitcoin. Very bad.

It shows that the US goverment is fed up with virtual currencies that can be used for money laundering. And bitcoin is even MORE anonymous than LR was.

I think this is a bad sign and bitcoin is in trouble.

Look at the trend:

- US govt freezes dwolla account of MtGox
- LR shut down by US govt
- OKPay announces it will stop working with bitcoin (US govt involved??)

That's three less ways you can exchange US dollars for bitcoin.

What comes next?

- US stops international bank wires to bitcoin exchanges
- US shuts down campbx and bitinstant
- US cracks down on local bitcoin sales through localbitcoins
- US companies are banned from accepting bitcoin as payment

Bitcoin crashes and goes away.

Bitcoin used to be funded with a lot of funds from LR

It's a shame how the whole business was seized without any warning from the authorities.