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”A lawyer in those jurisdictions writes an invoice for $50 million and the Chinese firm “pays” it. Bitcoin is irrelevant to Chinese capital controls.” ...all o

by irq11 9y ago

”A lawyer in those jurisdictions writes an invoice for $50 million and the Chinese firm “pays” it. Bitcoin is irrelevant to Chinese capital controls.” ...all of which is easily traceable by the government. Do enough of it, and you’ll eventually be disappeared for a friendly conversation with the police. It’s also expensive, and has a central point of failure (the lawyer). That is why bitcoin is the up-and-coming escape mechanism for yuan. Obviously, not everyone was doing this, but it was becoming a trend, hence the crackdown. It was absolutely not “irrelevant”. (Aside: I love the way that bitcoin people are incredibly imaginative when it comes to visions of borderless, regulation-free financial systems, but can’t see their way past even the most trivial of fraud incentives involving their system.)

JumpCrisscross 9y ago
> all of which is easily traceable by the government This goes back to my original point regarding capital controls: previously discreetly tolerated, their violation is now openly acknowledged. If you stroll through Hong Kong you'll find invoicing services being openly advertised. Why they're tolerated is more murky. My guess is it's a vital tool for China's movers and shakers. In that regard, one could argue that hiding under their bulk is a safer bet than flagging oneself as politically impotent by using outside channels. > It’s also expensive, and has a central point of failure (the lawyer) I haven't heard of any big frauds in the invoicing business, though there's no incentive to publicize it. These lawyers are typically providing other services to the capital providers, so it's--all in--probably less expensive than trying to surreptitiously purchase and dump large numbers of Bitcoins. From what I've heard, they're typically associated with internationally-reputable firms. There's an interesting conversation about the strengths and detriments of invoicing versus Bitcoin for purposes of laundering money. But this isn't that conversation. The reality is most capital flight occurs through the former, to the point of making the latter numerically irrelevant. Capital controls were almost certainly not a significant factor in China's moves against Bitcoin. Disclaimer: I am not a lawyer. This is not legal advice, not advice of any other kind. Do not launder money.
- irq11 9y ago
  ”This goes back to my original point regarding capital controls: previously discreetly tolerated, their violation is now openly acknowledged. If you stroll through Hong Kong you'll find invoicing services being openly advertised.” Like all other forms of rule enforcement, things are tolerated until they aren’t tolerated anymore. You’re trying to extrapolate a story far beyond the evidence — just because “most” laundering happens another way doesn’t mean that bitcoin isn’t significant. It’s obviously significant to the government: they’ve cracked down on it.
  - JumpCrisscross 9y ago
    > It’s obviously significant to the government: they’ve cracked down on it It's significant in that ICOs have lots of fraud. The motive is important because if capital controls were the motive, the greater Bitcoin community has nothing to learn from it. If it's fraud, introspection is required. Barring that, non capital controlled countries should pay attention.
    - ShabbosGoy 9y ago
      I'm a little confused by your comments. Bitcoin does not have a trusted party system, unlike Ethereum. Why does the Bitcoin community have to learn about fraud? I agree that some ICOs are clearly fraudulent in nature. But it's no different than the early days of Kickstarter. Hell, look at Juicero. I think the advent of ICOs as an alternative vehicle for fundraising is making certain entrenched interests very nervous.
      - JumpCrisscross 9y ago
        > Bitcoin does not have a trusted party system, unlike Ethereum. Why does the Bitcoin community have to learn about fraud? It does have a small group of people with disproportionate influence (case in point: the adoption of segwit) and who are incentivized to perpetuate the system. It is in their interest to find a solution to the fraud. The "capital flight" excuse is cute, but it won't convince other countries' regulators. Particularly if nothing is done and a bunch of moms and pops get defrauded on a significant scale by an ICO.

by irq11 9y ago

JumpCrisscross 9y ago

> all of which is easily traceable by the government This goes back to my original point regarding capital controls: previously discreetly tolerated, their violation is now openly acknowledged. If you stroll through Hong Kong you'll find invoicing services being openly advertised. Why they're tolerated is more murky. My guess is it's a vital tool for China's movers and shakers. In that regard, one could argue that hiding under their bulk is a safer bet than flagging oneself as politically impotent by using outside channels. > It’s also expensive, and has a central point of failure (the lawyer) I haven't heard of any big frauds in the invoicing business, though there's no incentive to publicize it. These lawyers are typically providing other services to the capital providers, so it's--all in--probably less expensive than trying to surreptitiously purchase and dump large numbers of Bitcoins. From what I've heard, they're typically associated with internationally-reputable firms. There's an interesting conversation about the strengths and detriments of invoicing versus Bitcoin for purposes of laundering money. But this isn't that conversation. The reality is most capital flight occurs through the former, to the point of making the latter numerically irrelevant. Capital controls were almost certainly not a significant factor in China's moves against Bitcoin. Disclaimer: I am not a lawyer. This is not legal advice, not advice of any other kind. Do not launder money.

irq11 9y ago
”This goes back to my original point regarding capital controls: previously discreetly tolerated, their violation is now openly acknowledged. If you stroll through Hong Kong you'll find invoicing services being openly advertised.” Like all other forms of rule enforcement, things are tolerated until they aren’t tolerated anymore. You’re trying to extrapolate a story far beyond the evidence — just because “most” laundering happens another way doesn’t mean that bitcoin isn’t significant. It’s obviously significant to the government: they’ve cracked down on it.
- JumpCrisscross 9y ago
  > It’s obviously significant to the government: they’ve cracked down on it It's significant in that ICOs have lots of fraud. The motive is important because if capital controls were the motive, the greater Bitcoin community has nothing to learn from it. If it's fraud, introspection is required. Barring that, non capital controlled countries should pay attention.
  - ShabbosGoy 9y ago
    I'm a little confused by your comments. Bitcoin does not have a trusted party system, unlike Ethereum. Why does the Bitcoin community have to learn about fraud? I agree that some ICOs are clearly fraudulent in nature. But it's no different than the early days of Kickstarter. Hell, look at Juicero. I think the advent of ICOs as an alternative vehicle for fundraising is making certain entrenched interests very nervous.
    - JumpCrisscross 9y ago
      > Bitcoin does not have a trusted party system, unlike Ethereum. Why does the Bitcoin community have to learn about fraud? It does have a small group of people with disproportionate influence (case in point: the adoption of segwit) and who are incentivized to perpetuate the system. It is in their interest to find a solution to the fraud. The "capital flight" excuse is cute, but it won't convince other countries' regulators. Particularly if nothing is done and a bunch of moms and pops get defrauded on a significant scale by an ICO.