Topic: The SEC Shows Why Bitcoin is Doomed. - page 5. (Read 9122 times)

Charlie is a great guy and one of the best and earliest proponents of Bitcoin.  Unfortunately his company may not have been operating within the the limits of the law.  Word on the street was his legal counsel suggested he shut the site down. (Bitinstant was one of the 22  Companies that received the Subpoena from the Ben Lawsky, New York State's Commissioner of Financial Institutions).  Every time I run in to Charlie he says the site will be back up "in two weeks."  And that has been going on since it went down.

Bitinstant was also somehow involved with a company called TCash/Trust Cash that received a civil asset forfeiture complaint as an  unlicenced money transmitter" in voilation of 18 USC 1960.
http://www.justice.gov/usao/nj/Press/files/pdffiles/2013/TCash%20Complaint.pdf

Again, in countries where there are laws and regulation you have to be aware of who you are transacting with or you run the risk of implicating yourself regardless of your knowledge of your counterparties illicit or illegal activities.

You also have to look at a companies like Coinbase and/or Campbx.  Two US bitcoin companies that "seem" to be operating with in the law as their companies are still operational.   They must be doing something right.

I understand. I kept the shock title from the story because that seems to be what draws attention to a thread.

I see China and India as predictable outcomes. I was more shocked to see Bitcoiners put their faith in a country that regulates how many children it's citizens can have. India has a thriving black market (even cows are traded as food) and Bitcoin can work its way into that fabric quite nicely. I think Bitcoin will be big in China and in India eventually but it will develop as a black market with likely great success. Futuristic governments would recognize that and openly accept its inevitability but those two are not well known for forward thinking.

That is their stated mission ... as with everything to do with govt. the actual mission is much deeper and more subtle and has been determined by lobbyists and cunning lawyers writing in loopholes and hooks to get the "framework" that state-sanctioned cartels and cronies can operate with impunity under.

I see you are still on the deluded trip that the regulations are there for your benefit. Newsflash, they are not or the financial/monetary system would not be in such a parlous state and bitcoin would not be needed or demanded ... i.e. you wouldn't be here incessantly spouting the establishment line.

Perfect example! Fighting the system when it's wrong and working within it where possible can make Bitcoin a strong contender against the multitude of new financial instruments currently popping up. I knew Bitcoin was something special and a strong contender when I witnessed Amazon Coin, MintChip and a multitude of others spring into existence. Copying is the highest form of flattery.

It's been disappointing to watch good people like Mike Caldwell and Charlie Shrem succumb to attacks from those who wield government regulation against them like the Sword of Damocles. I've met Charlie in person in San Francisco. I think I'm a pretty good judge of character and he strikes me as someone that's just excited by Bitcoin and wants nothing but success for it. The users of Bitcoin are making good people with energy and determination fall under government control faster than it can survive: http://betabeat.com/2013/08/class-action-suit-filed-against-bitinstant-for-misrepresenting-the-speed-of-its-services/

I had not read it but gave it a read and am still not clear on it! These titles are just getting a bit old and I once again was only partly pulled in.

Regarding India and China, first India, I think they are trying to get a grasp on what BTC is. They seem a bit against it.
China on the other hand, and shockingly so, seem to just want to separate it from their money system and categorize it as a commodity. I'm still shocked by it.
It will take time to play out and I think the run continues once things get clear in China (then later, much later, India). Of course, it can get ugly in either case, but at least with regards to China, I'm not so worried.

Your perspective on India and China?

Also, have you read the transcripts or watched the recent Federal Senate Hearings?

http://www.hsgac.senate.gov/hearings/beyond-silk-road-potential-risks-threats-and-promises-of-virtual-currencies
http://www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=955322cc-d648-4a00-a41f-c23be8ff4cad

Law Enforcement and Regulators clearly state that bitcoin is NOT illegal it is only the illegal use that they are concerned about.

Exactly.

Instead of posting rants on bitcointalk.org we have to engage the regulators.  Are you familiar with Millybitcoin/Atlantic Bitcoin?  He recently challenged the March 18th 2013 FinCEN guidence that says ALL miners are "moneytransmitters" (a legal term) and won.

http://www.slashgear.com/bitcoin-miners-do-not-have-to-register-as-money-transfer-services-ruling-28310218/

I also know of another bitcoin business who challenged this guidance and won but the information is not public yet.

That's right and that's my concern. The battery of, to date, unused regulations is extensive. No doubt Bloomberg simply parrots what they believe their readership wants to hear but they made me think to current events and future disaster. Preparedness comes from not hiding your head in the sand and saying everything will be just fine because we have the rest of the world. Develop regulation resistive businesses now instead of when it's too late.

That's actually not my title. It's the title of the story on Bloomberg. Unfortunately, the "America and the Other Like-Minded Backward Repressive States" control most of the worlds land mass. Besides we shouldn't ignore the people of repressive countries. They're the ones that need Bitcoin the most.

Agreed, it's insane.

Bitcoin can only be a "large scale" alternative to the extent that is fits in with the existing regulations and legislation in the jurisdiction in which it is used.

For the record FinCEN's mission is to safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.

The State regulations are concerned with safety and soundness and consumer protection.

Also, legitimate Bitcoin business should be concerned with the Consumer Financial Protection Bureau (CFPB) which was created by the Dodd Frank act and includes a whole host of consumer protection items that will affect the buying and selling of bitcoin.

Also the IRS has not weighed in yet on taxing Bitcoin.  Looking for guidance coming before April 15, 2014.

SEC has little to zero jurisdiction outside the facist USA .... you need to alter your title to "Why Bitcoin is Doomed in USA" ... sub-title "And Other Like-Minded Backward Repressive States"

The current clamping down on an Internet communications protocol will be looked back upon in the future as an equivalent historical transgression equal in insanity to the Spanish Inquisition driven by the Catholic Church or the colonial slavery era.

Good point. All they are doing is their job which can make it difficult for any business to survive. Can Bitcoin then remain a viable alternative for the main stream financial services user or will it always remain fringe because of the costs involved?

FTFY

FinCEN's problem with Casascius has nothing to do with stealing buyer funds. They see his business as a laundering service in that users send him bitcoins and he sends bitcoins back in a new, unconnected address.  In other words, this action has nothing to do with "protecting" buyers and everything to do with tracking money.

As for "regulating everything to death," you could make the same argument to say that they're trying to kill the dollar. Every action FinCEN has taken against Bitcoin-related businesses could and would be taken against someone doing the same thing with dollars.

China forbid money transmitters from dealing in Bitcoin because Bitcoin was so efficient in skirting currency exchange controls. It was a reflection of Bitcoin's utility, not its weakness. China can't shut down Bitcoin, and I expect that if it is not brought into the fold somehow in China there will be a thriving black market in Bitcoin given the huge pressure that existing currency controls have built up - even if it means transmitting private keys by mail rather than working through the blockchain.

Bloomberg and BusinessInsider are sources of FUD.

Most likely they are so invested in the big business/big government marriage that they are merely mouth pieces for those groups.

Those are good points. Maybe I shouldn't have used Mike as an example. Does anyone know what happened to Bitinstant? Governments don't need to make anything illegal to make it unusable or unprofitable.

I was frustrated when I first learned of the letter sent to Mike Caldwell of Casascius Coins.  

Upon reflection, FINTRAC was just doing its job.  Casascius Coins is a money transmitter.  I know the argument: people just sent him 1 BTC plus a fee for packaging it into a nice physical coin, and Mike sent them back their own bitcoins--harmless.  But it's only harmless because we all trust Mike.  Potentially, a less scrupulous person in the same business could keep a log of all the private keys.  Two years down the road, he drops the A-bomb and steals all the unspent coins.  I wanted to make it very clear that I do not necessarily agree with the MSB laws but they are designed so people that are trusted with other people's money can be more easily held accountable if something goes wrong.  

Think about it like this: say Mike "open-sources" his Casacscius Coins so that anyone can easily make them.  You wouldn't trust buying one from someone you met at a bitcoin meetup, would you!  The current coins have value because we know that Mike is honest.  

Using similar logic, I expect eventually all non-open source services/products that could potentially steal a users funds will be regulated in a way similar to MSBs.  Even something like the Trezor (if purchased as a complete device, not as hardware to which you load open-source firmware) I could see regulated in the USA because it's possible that the Trezor has hidden code that eventually steals peoples coins.  

Of course, that's the point of the article. Did you read it?

SEC isn't attempt to stop Bitcoin. Again, that's what they are talking about. Bitcoin isn't about America. It's about India, the UK, China, the EU and everywhere else. What's happening in India and China right now?

Then let's just build bunkers and store food because everything may become illegal. Making alcohol illegal didn't stop people from drinking it, chill.