b) The PokerStars model. ACTIVELY exclude US residents, citizens, and entities from either listing or trading. Simply having a checkbox "I am not a US resident" is likely not sufficient, just ask the foreign online poker sites that the DOJ took down (servers, companies, and bank accounts all in non-US soil and the DOJ got sufficient help from governments where the activity was legal to seize assets in excess of >$500 million).
The implication of what you posted is that Pokerstars DID have a check-box for people to tick saying they weren't in the US. That's totally wrong. At the time the US moved against them Stars (and Fulltilt) both accepted US players and claimed they'd been advised that was fine. The actual action against them didn't hinge on them having US players anyway - but on the means by which funds were being transferred between US players and the sites (and the steps that were being taken to disguise those movements of funds).
Yeah it was an unclear example. I was thinking more Pokerstars today. Today, if you are trying to connect from a US based IP address you can't play real money games, if you sign up for real money games you can't legitimately enter a US based address, they don't accept US based credit cards or bank accounts. When trying to withdraw funds (over a token amount) you will need to provide KYC type docs and if you are US based well you aren't ever getting your money. They actively monitor players and even accidentally connecting from the US (say UK player connecting on business) will get the account instantly frozen. The exact mechanics may vary but that is the level of "dedication" necessary to take that route. Does this mean no US player has ever been able to circumvent their restrictions? Of course not, there is even a thriving EU identity business going. The good news is absolute prohibition is rarely the standard, PokerStar's actions (today) shows a "
good faith effort" to comply and prevent financial transfers from US residents.
Just having a "I promise I am not from the US" checkbox, something proposed upthread, isn't IMHO going to cause the SEC to turn a blind eye. If an SEC agent can create an account from a US based IP address, check the "I am not a US resident" and then is free to invest unlimited funds well that likely isn't going to be seen as any good faith effort and you can believe they will test it, and record the session for future civil action (they did against the poker sites, yes agents deposited taxpayer funds and gambled it as "evidence" while on the clock). Maybe it would have been better to say "PartyPoker model" since they were the ones to shutoff US based players prior to "Black Friday". BTW I still have $5K tied up in Full Tilt's in-reim seizure. Yay me! Since I used the flawed analogy it might be a good idea to add that PokerStars failure to employ these self-policing steps
before legal action cost them about $250,000,000 in fines and seized assets. Luckily the company is immensely profitable and has deep pockets so they were able to ride it out.
If a Bitcoin asset exchange tried to play "fast and loose" with the rules and got hit with a fine two magnitudes smaller, say a mere $1M in fines and asset seizures would they be able to "reform" and ride it out? My guess is no, they would fold like a cheap card table.
The main defence exchanges have had to date is being too small to matter and trying to avoid listing scams.
Agreed. The bad news is I think some took a lack of action to mean "we are immune". In reality it simply means you WERE (as in past tense) too small for anyone to care. Much like someone selling $1,000 in weed to his friends is unlikely to be the target of a federal DEA taskforce. As the
securities I am sorry "asset games" get larger and larger eventually, I don't know or even care to predict when, but eventually it WILL be big enough for the SEC to take action, even if it is just for the headline "SEC busts major illegal securities ring involving Bitcoin".
