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MtGox took the position, and legal argument that they where not trading a monetary instrument of any kind, and at least early on that was a plausible argument (

by joshuak 13y ago

MtGox took the position, and legal argument that they where not trading a monetary instrument of any kind, and at least early on that was a plausible argument (although probably not a winning one) because they characterized bitcons as a product or commodity. I do not have to qualify as a money transmitter if I buy and sell bags of rice even though one could possibly use that as a mechanism to "send funds based on customers' instructions". In fact other then the merchant services I cannot send money to another Mt Gox user, but the bitcoin client provides that functionality and Mt. Gox does not control the client. They shot themselves in the foot a bit when they started adding merchant services. Nevertheless I think they technically answered the questions correctly given the legal position they where taking that bitcoins are not a monetary device but a commodity. IANAL but I play one on TV, and they may still have some traction on that argument since bitcoin is only recognized as a currency by popular opinion not by legal decision.

wmf 13y ago
Didn't all of those arguments become irrelevant once the FinCEN guidance came out?
- csense 13y ago
  The document was signed in 2011, well before the guidance came out.
  - wmf 13y ago
    I don't think this stuff gets grandfathered. After the FinCEN guidance they probably had a duty to inform their bank.
ig1 13y ago
Google the law around "liquid assets" (assets which are easily convertible to money without loss of value). Money laundering laws have been around a long time and tend to be written to encompass a wide range of work arounds that criminals have used historically. Using near money or liquid assets for money laundering has been commonplace for decades, hence laws tend to be designed to handle it. (that said I'm much more familiar with EU anti-money laundering laws than US ones as I used to work in currency trading in London)
- chasb 13y ago
  Even moreso: After 9/11, the DC Circuit and the 4th Circuit (where Maryland is) broadened the intent requirements for 18 USC 1960 to general intent, meaning a defendant doesn't have to know they're breaking the law, just that they're transferring funds. As a result, the statute is basically a sledgehammer for anything related to value transfer, broadly defined. http://blj.ucdavis.edu/archives/vol-8-no-1/One-hour-Money-Laundering.html http://blj.ucdavis.edu/archives/vol-8-no-1/One-hour-Money-La...
- joshuak 13y ago
  Agreed, but I was discussing their answers on the business description. If one must account for all uses of their products for money laundering, then we might as well simply all say that we are money transmitters in all businesses. Which would make that question on the form somewhat superfluous. But if the form question is not considered superfluous, then indeed it is asking the business owner what the proper intended purpose of the businesses is, not the unintended/illegal purposes.

by joshuak 13y ago

wmf 13y ago

Didn't all of those arguments become irrelevant once the FinCEN guidance came out?

csense 13y ago
The document was signed in 2011, well before the guidance came out.
- wmf 13y ago
  I don't think this stuff gets grandfathered. After the FinCEN guidance they probably had a duty to inform their bank.

ig1 13y ago

Google the law around "liquid assets" (assets which are easily convertible to money without loss of value). Money laundering laws have been around a long time and tend to be written to encompass a wide range of work arounds that criminals have used historically. Using near money or liquid assets for money laundering has been commonplace for decades, hence laws tend to be designed to handle it. (that said I'm much more familiar with EU anti-money laundering laws than US ones as I used to work in currency trading in London)

chasb 13y ago
Even moreso: After 9/11, the DC Circuit and the 4th Circuit (where Maryland is) broadened the intent requirements for 18 USC 1960 to general intent, meaning a defendant doesn't have to know they're breaking the law, just that they're transferring funds. As a result, the statute is basically a sledgehammer for anything related to value transfer, broadly defined. http://blj.ucdavis.edu/archives/vol-8-no-1/One-hour-Money-Laundering.html http://blj.ucdavis.edu/archives/vol-8-no-1/One-hour-Money-La...
joshuak 13y ago
Agreed, but I was discussing their answers on the business description. If one must account for all uses of their products for money laundering, then we might as well simply all say that we are money transmitters in all businesses. Which would make that question on the form somewhat superfluous. But if the form question is not considered superfluous, then indeed it is asking the business owner what the proper intended purpose of the businesses is, not the unintended/illegal purposes.