11 ms·

A Bitcoin service suspended by state of Virginia

45 points by fianchetto 13y ago

pyre 13y ago
It sounds like they are voluntarily suspending service until this is sorted out. Virginia has given them 30 days to explain why they think this doesn't apply to them.
- fianchetto 13y ago
  "The commission has formally stated that unless exempt from licensing we must stop further activity until such time as we apply for and obtain a Money Transmitter license."
- oleganza 13y ago
  "Voluntarily"? They feel the risk of their property being seized and owners brought to court. It would be "voluntarily" if their customers did not like their affairs and they risked losing customers. And customers are never going to put a gun to your head. They just go away.
  - pyre 13y ago
    | They feel the risk of their property being | seized and owners brought to court. It sounds more like they are already at risk of this. Voluntarily suspending operation until things are sorted out, is more of a show of good faith that they are willing to play ball and sort things out.
    - oleganza 13y ago
      This does not make situation any more "voluntary" then.
    - fianchetto 13y ago
      > Voluntarily suspending operation Something is voluntary only if there's no threat of force behind it. Voluntary: acting or done without compulsion or obligation. http://dictionary.reference.com/browse/voluntary http://dictionary.reference.com/browse/voluntary
officialjunk 13y ago
one unlicensed money transmitter is being suspended, not all bitcoin services and not the entire state of VA.
- darkarmani 13y ago
  The state of VA is making the argument that bitcoin services are money transmitters, so it seems like they'll go after everyone in the state.
  - danielweber 13y ago
    Services that change money into bitcoins, or vice versa. If you accept bitcoins for your dog-walking service, there doesn't seem to be any new regulation.
Groxx 13y ago
>Effective the May 31st, 2013 Tangible Cryptography has suspended new purchases of Bitcoins through our service FastCash4Bitcoins. We take this step in response to a notice received, the same day from the Commonwealth of Virginia, that a complaint has been made that our company is operating as an unlicensed money transmitter. Note that they're basically acting as the middle-man, not storing anything - I'm not really sure how the terms work in this situation. They seem to think it doesn't apply, maybe they're right. It sounds like they did this voluntarily, and they go on to explain there have been no freezes, and all transactions have been completed. Probably a good choice (IANAL of course) while they mount a defense, which it sounds like they plan to do.
- fianchetto 13y ago
  > It sounds like they did this voluntarily No, they were forced by the state.
- hypercall 13y ago
  When faced with options that include "shut down" and "go to prison", I don't know if that counts as voluntary anymore.
slg 13y ago
This is a pretty bad headline. First off, there should be a article in there, like "A Bitcoin service". Secondly, the service appears to have been shutdown to protect the owners/operators of the site from further legal action. They are not being forced to close. The state thinks they need a license and they think they don't. Instead of risking jail time on the possibility they don't need a license, they are taking the cautious route and shutting down until the legal issues are resolved.
- oleganza 13y ago
  "They are not being forced to close." "Instead of risking jail time (...)" I see some contradiction in here. If you feel a threat of violence upon you, isn't it very definition of "being forced"?
  - slg 13y ago
    The operators of the site believe that they are in the right. If they were 100% confident of this they could continue to operate. They are not 100% confident so they are shutting down to make sure what they are doing isn't illegal. They are not being threatened with violence by the state anymore than any other law abiding citizen. They have simply been informed that what they are doing may be illegal and are adjusting accordingly.
    - oleganza 13y ago
      The fact that all citizens are afraid of state violence does not mean we can redefine word "voluntarism". You abide the law non-voluntarily. You abide terms of service in McDonalds voluntarily because you can always choose from millions of alternatives + you can have a peaceful dialog in case of a dispute. Neither McDonalds manager, nor you are willing to fight each other on fists or in court. It's in your mutual interests to figure out problems through discussion. You don't discuss with the state. You can have your input, but you are totally dependent on existing powers that allow you some freedom and some voice. That's why you have no problem arguing with private companies and having them listen to you, but everyone avoids state courts as much as possible (in majority of cases courts are used as a threat, not as a real dispute resolution mechanism).
vsviridov 13y ago
Welcome to Canada, where bitcoin exchanges are not subject to FinTrac Money Transmitters regulations. Yet...
MWil 13y ago
I just really liked this quote in the comments because it made me chuckle - "You don't get into positions of power of life and death over proles by being ignorant, only acting as if you are, which is genius-level sociopathy. If you REALLY try it sometime, you may just become the President of the United States, and have the power to slaughter babies in the Rose Garden in front of the world's press, and not suffer any real punishment whatsoever."
downandout 13y ago
Governments are terrified of Bitcoin and are trying to destroy the value by eliminating providers of liquidity. No buyers, no value. As to some of the comments stating that they have not been "suspended by the state" - that is a disingenuous argument that only a lawyer could love. The state sent them a letter accusing them of violating laws that carry the organizational equivalent of the death penalty, and possible jail time for the founders. It was intended to threaten and intimidate them into suspending operations, and it worked.
- mikeash 13y ago
  Alternative interpretation: governments couldn't give a rat's ass about Bitcoin, but care deeply about financial institutions (at least, those too small to purchase legislators) actually following the rules. This company is transmitting money, Virginia requires companies that transmit money to be licensed, this company is not licensed, seems pretty straightforward to me. One can argue about the merits of the regulation in question, but since regulations like this long predate Bitcoin, it's clearly not any sort of reaction to Bitcoin or any other virtual currency.
  - downandout 13y ago
    Wrong. This company does not sell Bitcoins - they buy them (the state's "initial investigation" - which likely consisted of reading a complaint filed anonymously by a competitor - had this entirely wrong). They are only "transmitting money" in the same way that people who buy things from Amazon or eBay are when they buy products. By your definition, I guess I need to become a licensed MSB next time I buy a replacement power supply on eBay.
    - TylerE 13y ago
      How is this really any different from Western Union?
      - downandout 13y ago
        I don't even understand the comparison. They were buying (not selling) Bitcoins directly from sellers. Western Union is specifically engaged in the business of enabling people to send money to others.
meerita 13y ago
How they can ban bitcoin use in an state?
e3pi 13y ago
Say a Craigslist service exclusively for bitcoin. Would the glorious state of Virginia have a problem with this? An eBay auction exclusively for btc? Where service wets beak with $$ only, or also/with btc micro payments? A problem?
- Uchikoma 13y ago
  An eBay auction exclusively for EUR? Yes.
Uchikoma 13y ago
Bitcoin supporters on HN: One thread: Bitcoin is the future of money Other thread: Bitcoin is not money, so why apply money rules? It either is or isn't.
- dragonwriter 13y ago
  You see the same thing a lot with disruptive startups -- where they are hailed as the radical new future of a particular industry and it is argued that they should not be compelled to obey the regulations of the industry they seek to enter and disrupt (and, often, a substantial part of their operations rely on them being allowed to ignore those regulations or having the regulations rewritten to support them.) See, e.g., Airbnb and its issues with many cities regulations of short-term renting.
  - Uchikoma 13y ago
    Exactly. AirBnB and Uber (Stockholm) come to mind too.
smkiv 13y ago
Assuming that OP was simply buying bitcoin (and nothing else...i.e. not automatically selling on an exchange on the backend or something...), then this could be a big shot to Bitcoin. Unlike other recent headlines (around i.e. Mt. Gox, etc.), it seems like the question here is whether or not bitcoin constitutes "stored value" under VA law[1]. If so, this would render anyone who buys and sells bitcoin a Money Transmitter Business. That said, I doubt FinCEN would consider Bitcoin "stored value" based on their definition [2] and recent "guidelines". Stored value laws were created for things like prepaid cards (I believe...[3]), which were cracked down on because of their role in money laundering. [1] http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+6.2-1900 http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+6.2-1900 [2] http://www.fincen.gov/financial_institutions/msb/definitions/stored_value.html http://www.fincen.gov/financial_institutions/msb/definitions... [3] http://www.gpo.gov/fdsys/pkg/FR-2011-07-29/pdf/2011-19116.pdf http://www.gpo.gov/fdsys/pkg/FR-2011-07-29/pdf/2011-19116.pd...

45 points by fianchetto 13y ago

pyre 13y ago

It sounds like they are voluntarily suspending service until this is sorted out. Virginia has given them 30 days to explain why they think this doesn't apply to them.

fianchetto 13y ago
"The commission has formally stated that unless exempt from licensing we must stop further activity until such time as we apply for and obtain a Money Transmitter license."
oleganza 13y ago
"Voluntarily"? They feel the risk of their property being seized and owners brought to court. It would be "voluntarily" if their customers did not like their affairs and they risked losing customers. And customers are never going to put a gun to your head. They just go away.
- pyre 13y ago
  | They feel the risk of their property being | seized and owners brought to court. It sounds more like they are already at risk of this. Voluntarily suspending operation until things are sorted out, is more of a show of good faith that they are willing to play ball and sort things out.
  - oleganza 13y ago
    This does not make situation any more "voluntary" then.
  - fianchetto 13y ago
    > Voluntarily suspending operation Something is voluntary only if there's no threat of force behind it. Voluntary: acting or done without compulsion or obligation. http://dictionary.reference.com/browse/voluntary http://dictionary.reference.com/browse/voluntary

officialjunk 13y ago

one unlicensed money transmitter is being suspended, not all bitcoin services and not the entire state of VA.

darkarmani 13y ago
The state of VA is making the argument that bitcoin services are money transmitters, so it seems like they'll go after everyone in the state.
- danielweber 13y ago
  Services that change money into bitcoins, or vice versa. If you accept bitcoins for your dog-walking service, there doesn't seem to be any new regulation.

Groxx 13y ago

>Effective the May 31st, 2013 Tangible Cryptography has suspended new purchases of Bitcoins through our service FastCash4Bitcoins. We take this step in response to a notice received, the same day from the Commonwealth of Virginia, that a complaint has been made that our company is operating as an unlicensed money transmitter. Note that they're basically acting as the middle-man, not storing anything - I'm not really sure how the terms work in this situation. They seem to think it doesn't apply, maybe they're right. It sounds like they did this voluntarily, and they go on to explain there have been no freezes, and all transactions have been completed. Probably a good choice (IANAL of course) while they mount a defense, which it sounds like they plan to do.

fianchetto 13y ago
> It sounds like they did this voluntarily No, they were forced by the state.
hypercall 13y ago
When faced with options that include "shut down" and "go to prison", I don't know if that counts as voluntary anymore.

slg 13y ago

This is a pretty bad headline. First off, there should be a article in there, like "A Bitcoin service". Secondly, the service appears to have been shutdown to protect the owners/operators of the site from further legal action. They are not being forced to close. The state thinks they need a license and they think they don't. Instead of risking jail time on the possibility they don't need a license, they are taking the cautious route and shutting down until the legal issues are resolved.

oleganza 13y ago
"They are not being forced to close." "Instead of risking jail time (...)" I see some contradiction in here. If you feel a threat of violence upon you, isn't it very definition of "being forced"?
- slg 13y ago
  The operators of the site believe that they are in the right. If they were 100% confident of this they could continue to operate. They are not 100% confident so they are shutting down to make sure what they are doing isn't illegal. They are not being threatened with violence by the state anymore than any other law abiding citizen. They have simply been informed that what they are doing may be illegal and are adjusting accordingly.
  - oleganza 13y ago
    The fact that all citizens are afraid of state violence does not mean we can redefine word "voluntarism". You abide the law non-voluntarily. You abide terms of service in McDonalds voluntarily because you can always choose from millions of alternatives + you can have a peaceful dialog in case of a dispute. Neither McDonalds manager, nor you are willing to fight each other on fists or in court. It's in your mutual interests to figure out problems through discussion. You don't discuss with the state. You can have your input, but you are totally dependent on existing powers that allow you some freedom and some voice. That's why you have no problem arguing with private companies and having them listen to you, but everyone avoids state courts as much as possible (in majority of cases courts are used as a threat, not as a real dispute resolution mechanism).

vsviridov 13y ago

Welcome to Canada, where bitcoin exchanges are not subject to FinTrac Money Transmitters regulations. Yet...

MWil 13y ago

I just really liked this quote in the comments because it made me chuckle - "You don't get into positions of power of life and death over proles by being ignorant, only acting as if you are, which is genius-level sociopathy. If you REALLY try it sometime, you may just become the President of the United States, and have the power to slaughter babies in the Rose Garden in front of the world's press, and not suffer any real punishment whatsoever."

downandout 13y ago

Governments are terrified of Bitcoin and are trying to destroy the value by eliminating providers of liquidity. No buyers, no value. As to some of the comments stating that they have not been "suspended by the state" - that is a disingenuous argument that only a lawyer could love. The state sent them a letter accusing them of violating laws that carry the organizational equivalent of the death penalty, and possible jail time for the founders. It was intended to threaten and intimidate them into suspending operations, and it worked.

mikeash 13y ago
Alternative interpretation: governments couldn't give a rat's ass about Bitcoin, but care deeply about financial institutions (at least, those too small to purchase legislators) actually following the rules. This company is transmitting money, Virginia requires companies that transmit money to be licensed, this company is not licensed, seems pretty straightforward to me. One can argue about the merits of the regulation in question, but since regulations like this long predate Bitcoin, it's clearly not any sort of reaction to Bitcoin or any other virtual currency.
- downandout 13y ago
  Wrong. This company does not sell Bitcoins - they buy them (the state's "initial investigation" - which likely consisted of reading a complaint filed anonymously by a competitor - had this entirely wrong). They are only "transmitting money" in the same way that people who buy things from Amazon or eBay are when they buy products. By your definition, I guess I need to become a licensed MSB next time I buy a replacement power supply on eBay.
  - TylerE 13y ago
    How is this really any different from Western Union?
    - downandout 13y ago
      I don't even understand the comparison. They were buying (not selling) Bitcoins directly from sellers. Western Union is specifically engaged in the business of enabling people to send money to others.

meerita 13y ago

How they can ban bitcoin use in an state?

e3pi 13y ago

Say a Craigslist service exclusively for bitcoin. Would the glorious state of Virginia have a problem with this? An eBay auction exclusively for btc? Where service wets beak with $$ only, or also/with btc micro payments? A problem?

Uchikoma 13y ago
An eBay auction exclusively for EUR? Yes.

Uchikoma 13y ago

Bitcoin supporters on HN: One thread: Bitcoin is the future of money Other thread: Bitcoin is not money, so why apply money rules? It either is or isn't.

dragonwriter 13y ago
You see the same thing a lot with disruptive startups -- where they are hailed as the radical new future of a particular industry and it is argued that they should not be compelled to obey the regulations of the industry they seek to enter and disrupt (and, often, a substantial part of their operations rely on them being allowed to ignore those regulations or having the regulations rewritten to support them.) See, e.g., Airbnb and its issues with many cities regulations of short-term renting.
- Uchikoma 13y ago
  Exactly. AirBnB and Uber (Stockholm) come to mind too.

smkiv 13y ago

Assuming that OP was simply buying bitcoin (and nothing else...i.e. not automatically selling on an exchange on the backend or something...), then this could be a big shot to Bitcoin. Unlike other recent headlines (around i.e. Mt. Gox, etc.), it seems like the question here is whether or not bitcoin constitutes "stored value" under VA law[1]. If so, this would render anyone who buys and sells bitcoin a Money Transmitter Business. That said, I doubt FinCEN would consider Bitcoin "stored value" based on their definition [2] and recent "guidelines". Stored value laws were created for things like prepaid cards (I believe...[3]), which were cracked down on because of their role in money laundering. [1] http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+6.2-1900 http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+6.2-1900 [2] http://www.fincen.gov/financial_institutions/msb/definitions/stored_value.html http://www.fincen.gov/financial_institutions/msb/definitions... [3] http://www.gpo.gov/fdsys/pkg/FR-2011-07-29/pdf/2011-19116.pdf http://www.gpo.gov/fdsys/pkg/FR-2011-07-29/pdf/2011-19116.pd...