7 ms·

A big warning side for Silk Road and MtGox, I would guess. If you let a large proportion of Bitcoin transactions become linked with illegal things like drugs,

by swombat 13y ago

A big warning side for Silk Road and MtGox, I would guess. If you let a large proportion of Bitcoin transactions become linked with illegal things like drugs, credit card fraud, and money laundering, the law will certainly figure out a way to shut it down. So I guess the interesting question is how the Bitcoin community can police itself to ensure that these types of transactions (while ultimately not avoidable altogether) remain a minor part of the whole.

jonknee 13y ago
> If you let a large proportion of Bitcoin transactions become linked with illegal things like drugs, credit card fraud, and money laundering, the law will certainly figure out a way to shut it down. That hasn't happened with cash [yet]. Humorously, if the idea of cash was new today like digital currencies are it would be outlawed for our "safety".
- srdev 13y ago
  > That hasn't happened with cash [yet]. Humorously, if the idea of cash was new today like digital currencies are it would be outlawed for our "safety". The key word here is "proportion." Cash is used in a lot of illegal stuff, but its used legally far more than the illegal. I don't know what the proportion is for Bitcoin, but this answer doesn't that fact. Its a rather poor rebuttal to the issue of Bitcoin being used for illegal activity.
  - dustcoin 13y ago
    What about 100 dollar bills in particular? I would be curious to see what percentage of transactions using these bills involve tax evasion, drugs, or other illegal activity.
    - srdev 13y ago
      That's an interesting thought. Yes, it'd be very nice to see detailed statistics on various US dollar denominations, and Bitcoin as well.
- genwin 13y ago
  If it's US cash it's safe. Non-US currency that can be shut down by the US without major penalty to the US is not safe. Even a small proportion of illicit transactions will suffice for pretext. Bitcoin's best bet is to become widely used as quickly as possible. At this point it could be shut down (indirectly) with the vast majority of the public believing that was needed to stop the bad guys.
- necubi 13y ago
  This is a rather tired argument. Try to get $50,000 of cash from a bank--you won't be able to without going through some anti-laundering rigamarole. Try to transport $50,000 of cash to another country--if you get caught, you're going to be answering a lot of questions about it. This is not a crackdown on virtual currencies--it's a crackdown on unlicensed money transmitters. If they follow the law, they can trade bitcoin without issue. The only problem I can imagine having with this is if you don't believe in anti-money laundering legislation, which is one of the best weapons governments have against organized crime, human traffickers and terrorist groups.
  - genwin 13y ago
    Try transporting $50,000 of cash within the US--if you get caught, the money is confiscated. In the US, no conviction is required to confiscate presumed drug cash. The police dept. gets to spend it.
    - MichaelGG 13y ago
      Doesn't need to be that much, or even have drugs. $3700 is enough for thieving police: http://www.aclu.org/blog/criminal-law-reform/easy-money-civil-asset-forfeiture-abuse-police http://www.aclu.org/blog/criminal-law-reform/easy-money-civi... Police regularly abuse forfeiture. It's a horrible and very un-American thing they have going on. Yet because the money ends up in the police pockets, there's little incentive to fix the law. http://reason.com/archives/2012/08/10/why-asset-forfeiture-abuse-is-on-the-ris http://reason.com/archives/2012/08/10/why-asset-forfeiture-a...
  - waterlesscloud 13y ago
    There are a lot of things that are great weapons against organized crime, human traffickers, and terrorist groups that are unacceptable as law enforcement techniques. The fact that something is a good weapon against crime is not sufficient justification. It also needs to be shown that such weapons are not unduly harmful to law-abiding citizens. Honestly, it's not something I'd thought about much before all the recent government crackdowns on money transmitters. But when I stop to take a look at it, it seems to me that the freedom to exchange money without government interference is close to a fundamental human right. When I look at it carefully, it seems very very strange that we've accepted that governments have the right to minutely examine what we do with the fruits of our labors. I get that it's a good tool to stop crime, but so is listening to every phone call. So is recording every move every person makes in public. We're starting to see resistance to movement in those directions, why should our economic actions be subject to the same level of scrutiny? I'm not ready to throw out the whole shebang, but I've started to think there should be some firm limits.
- bsims 13y ago
  Here is an interesting article talking about the $2 Trillion underground economy of people using cash to avoid paying taxes as part of the economic recovery. http://www.usatoday.com/story/money/business/2013/05/12/2-trillion-dollar-underground-economy-recovery-savior/2144279/ http://www.usatoday.com/story/money/business/2013/05/12/2-tr...
josh2600 13y ago
The key detail here is that Liberty Reserve (Like MtGox) was operating an unlicensed money transmitter. Let's be honest, if you're transmitting money without a license, you're gonna end up in jail once you hit scale. It's inevitable; the only companies that evade capture are the small potatoes. So I think companies like MtGox have a lot to worry about, but companies like Tradehill, which have gone and done the regulatory dance, will be fine. This is not the US versus Bitcoin, this is the US versus dumbasses who try to cheat the money transmitting rules and know damn well what they're doing is illegal. I happen to sympathize with these folks because I don't think the government should have its hands in every monetary transfer, but regulatory concerns are always a part of any business plan and ignoring them is a plan too (albeit not necessarily the best one).
- deleted 13y ago
  [deleted]
- jontas 13y ago
  Are you sure about this? It was my understanding that MtGox meets the legal requirements of its jurisdiction (Japan), and I know they require identity verification depending on how much money you're moving around(1). What I would like to know definitively is whether MtGox is openly flaunting the rules, or is just doing their best to operate in a legally untested area. 1. https://support.mtgox.com/entries/20919111-AML-Account-Statuses https://support.mtgox.com/entries/20919111-AML-Account-Statu...
  - Torgo 13y ago
    Well, AFAIK they didn't seize MtGox LLC's money per se, they seized the accounts of Mutum Sigillum, which appears to be a subsidiary company in the USA set up to facilitate transfers through Dwolla which only offers services to US entities.
  - jonknee 13y ago
    It doesn't matter if they meet Japan's rules as long as they have US customers. Liberty Reserve was not a US company either...
narrator 13y ago
Perhaps Mt. Gox should be worried. Silk Road on the other hand is clearly illegal with or without the bitcoin part.
hristov 13y ago
Well, it is not a difficult question. There already are existing laws and regulations that spell out what you have to do. The thing is that whatever exchange follows MtGox in the us, they should follow those rules and not pretend that because they deal with bitcoins, the regulations do not apply to them.

by swombat 13y ago

jonknee 13y ago

> If you let a large proportion of Bitcoin transactions become linked with illegal things like drugs, credit card fraud, and money laundering, the law will certainly figure out a way to shut it down. That hasn't happened with cash [yet]. Humorously, if the idea of cash was new today like digital currencies are it would be outlawed for our "safety".

srdev 13y ago
> That hasn't happened with cash [yet]. Humorously, if the idea of cash was new today like digital currencies are it would be outlawed for our "safety". The key word here is "proportion." Cash is used in a lot of illegal stuff, but its used legally far more than the illegal. I don't know what the proportion is for Bitcoin, but this answer doesn't that fact. Its a rather poor rebuttal to the issue of Bitcoin being used for illegal activity.
- dustcoin 13y ago
  What about 100 dollar bills in particular? I would be curious to see what percentage of transactions using these bills involve tax evasion, drugs, or other illegal activity.
  - srdev 13y ago
    That's an interesting thought. Yes, it'd be very nice to see detailed statistics on various US dollar denominations, and Bitcoin as well.
genwin 13y ago
If it's US cash it's safe. Non-US currency that can be shut down by the US without major penalty to the US is not safe. Even a small proportion of illicit transactions will suffice for pretext. Bitcoin's best bet is to become widely used as quickly as possible. At this point it could be shut down (indirectly) with the vast majority of the public believing that was needed to stop the bad guys.
necubi 13y ago
This is a rather tired argument. Try to get $50,000 of cash from a bank--you won't be able to without going through some anti-laundering rigamarole. Try to transport $50,000 of cash to another country--if you get caught, you're going to be answering a lot of questions about it. This is not a crackdown on virtual currencies--it's a crackdown on unlicensed money transmitters. If they follow the law, they can trade bitcoin without issue. The only problem I can imagine having with this is if you don't believe in anti-money laundering legislation, which is one of the best weapons governments have against organized crime, human traffickers and terrorist groups.
- genwin 13y ago
  Try transporting $50,000 of cash within the US--if you get caught, the money is confiscated. In the US, no conviction is required to confiscate presumed drug cash. The police dept. gets to spend it.
  - MichaelGG 13y ago
    Doesn't need to be that much, or even have drugs. $3700 is enough for thieving police: http://www.aclu.org/blog/criminal-law-reform/easy-money-civil-asset-forfeiture-abuse-police http://www.aclu.org/blog/criminal-law-reform/easy-money-civi... Police regularly abuse forfeiture. It's a horrible and very un-American thing they have going on. Yet because the money ends up in the police pockets, there's little incentive to fix the law. http://reason.com/archives/2012/08/10/why-asset-forfeiture-abuse-is-on-the-ris http://reason.com/archives/2012/08/10/why-asset-forfeiture-a...
- waterlesscloud 13y ago
  There are a lot of things that are great weapons against organized crime, human traffickers, and terrorist groups that are unacceptable as law enforcement techniques. The fact that something is a good weapon against crime is not sufficient justification. It also needs to be shown that such weapons are not unduly harmful to law-abiding citizens. Honestly, it's not something I'd thought about much before all the recent government crackdowns on money transmitters. But when I stop to take a look at it, it seems to me that the freedom to exchange money without government interference is close to a fundamental human right. When I look at it carefully, it seems very very strange that we've accepted that governments have the right to minutely examine what we do with the fruits of our labors. I get that it's a good tool to stop crime, but so is listening to every phone call. So is recording every move every person makes in public. We're starting to see resistance to movement in those directions, why should our economic actions be subject to the same level of scrutiny? I'm not ready to throw out the whole shebang, but I've started to think there should be some firm limits.
bsims 13y ago
Here is an interesting article talking about the $2 Trillion underground economy of people using cash to avoid paying taxes as part of the economic recovery. http://www.usatoday.com/story/money/business/2013/05/12/2-trillion-dollar-underground-economy-recovery-savior/2144279/ http://www.usatoday.com/story/money/business/2013/05/12/2-tr...

josh2600 13y ago

The key detail here is that Liberty Reserve (Like MtGox) was operating an unlicensed money transmitter. Let's be honest, if you're transmitting money without a license, you're gonna end up in jail once you hit scale. It's inevitable; the only companies that evade capture are the small potatoes. So I think companies like MtGox have a lot to worry about, but companies like Tradehill, which have gone and done the regulatory dance, will be fine. This is not the US versus Bitcoin, this is the US versus dumbasses who try to cheat the money transmitting rules and know damn well what they're doing is illegal. I happen to sympathize with these folks because I don't think the government should have its hands in every monetary transfer, but regulatory concerns are always a part of any business plan and ignoring them is a plan too (albeit not necessarily the best one).

deleted 13y ago
[deleted]
jontas 13y ago
Are you sure about this? It was my understanding that MtGox meets the legal requirements of its jurisdiction (Japan), and I know they require identity verification depending on how much money you're moving around(1). What I would like to know definitively is whether MtGox is openly flaunting the rules, or is just doing their best to operate in a legally untested area. 1. https://support.mtgox.com/entries/20919111-AML-Account-Statuses https://support.mtgox.com/entries/20919111-AML-Account-Statu...
- Torgo 13y ago
  Well, AFAIK they didn't seize MtGox LLC's money per se, they seized the accounts of Mutum Sigillum, which appears to be a subsidiary company in the USA set up to facilitate transfers through Dwolla which only offers services to US entities.
- jonknee 13y ago
  It doesn't matter if they meet Japan's rules as long as they have US customers. Liberty Reserve was not a US company either...

narrator 13y ago

Perhaps Mt. Gox should be worried. Silk Road on the other hand is clearly illegal with or without the bitcoin part.

hristov 13y ago

Well, it is not a difficult question. There already are existing laws and regulations that spell out what you have to do. The thing is that whatever exchange follows MtGox in the us, they should follow those rules and not pretend that because they deal with bitcoins, the regulations do not apply to them.