8 ms·

Bitcoin Foundation Receives Cease And Desist Order From California

287 points by pelle 13y ago

deleted 13y ago
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codex 13y ago
State money transmission laws are very strict, requiring, among other things, a bond to be posted to protect the public. Accoring to FinCEN, anyone selling units of a decentralised virtual currency to another person for real currency is a money transmitter--so, for example, if you operated a business exchanging U.S. dollars for Bitcoins, you must be licensed. I don't know if the Bitcoin Foundation did this in California; perhaps there is some other wrinkle of state law at play here.
- pelle 13y ago
  Yet the Bitcoin foundation is neither a operator of a virtual currency service or an exchanger according to FinCEN rules. Tradehill and Coinbase are based out of California and are following all federal and state rules.
  - quackerhacker 13y ago
    I thought Coinbase was based out of SF and even backed by YC? Not sure though, seeing on the privacy page an Oregon address. https://coinbase.com/about https://coinbase.com/about
    - rdl 13y ago
      If you google that address, it is an old address for earth class mail, a commercial mail scanning/forwarding service. (I use them too; they rock if you move a lot, or live overseas.)
  - jeremyw 13y ago
    Interesting that you say that. Coinbase is verifiably registered with FinCEN, but not the states, as far as I can see. (Square, mentioned in the article, actually is registered in California.) http://www.fincen.gov/financial_institutions/msb/msbstateselector.html http://www.fincen.gov/financial_institutions/msb/msbstatesel... http://www.dfi.ca.gov/directory/money_transmitters.html http://www.dfi.ca.gov/directory/money_transmitters.html
- vessenes 13y ago
  As you might guess, we have deep expertise on-hand for the Foundation as to MTB/MSB laws, and can confidently state we do not engage in MTB or MSB activity at the Bitcoin Foundation; we're just a member organization. The state of California is blanket C&D-ing all Bitcoin businesses.
  - genwin 13y ago
    Given the online ads included in the letter, it appears they googled for "bitcoin" and used a screen grabber to copy/paste the law text. It's sad how messed up the CA gov't has gotten.
    - vessenes 13y ago
      Yes, this seems likely.
  - codex 13y ago
    I wouldn't be surprised if the C&D were blanket. That said, when you Google for "Bitcoin Foundation" you see an "About" section in the #1 result (your website) which begins, "Our mission is to help people exchange...". I wouldn't put it past the state not to have read any further. ;-)
  - anigbrowl 13y ago
    OK, but isn't it a fact that the Bitcoin Foundation's membership is made up of MTB/MSB firms? https://bitcoinfoundation.org/members https://bitcoinfoundation.org/members
- mtgx 13y ago
  That's okay, but what does that have to do with the Bitcoin Foundation? I hope they take them to Court.
- gst 13y ago
  The Bitcoin foundation does neither exchange or trade Bitcoins, nor does it release any Bitcoin client. Its only mission is to "standardize, protect and promote" the use of Bitcoin. Charging the Bitcoin foundations for violations against the money transmission laws would be like charging NRA for violations against firearm laws. This would be a very alarming precedent and would basically violate your rights for free speech.
  - dustcoin 13y ago
    The best argument in favor of the C&D I can think of is that the Bitcoin Foundation pays a salary to the lead developer of the reference client and daemon.
    - gst 13y ago
      If you violate money transmission laws because you pay a salary to someone (without being a licensed money transmitter) there would be lots of people violating those laws in California.
      - dustcoin 13y ago
        I agree, I'm just speculating on California's justification for the C&D, assuming it isn't simply a result of ignorance of how bitcoin works and the role of the Bitcoin Foundation.
        venomsnake 13y ago
        Isn't a simpler explanation that they are just stupid and didn't take 5 minutes to find out exactly who they are sending the letter to and just sent it to the first google result for bitcoin?
        anigbrowl 13y ago
        That's a two way street. I'm guessing the Bitcoin Foundation might have overlooked some of its due diligence obligations; it looks to me like CA is 'piercing the corporate veil' if you're familiar with that legal term.
pelle 13y ago
This is the equivalent of suing the American Bankers Association for a lack of a banking license.
- dragonwriter 13y ago
  > This is the equivalent of suing the American Bankers Association for a lack of a banking license. Not really; the most obvious difference is that a C&D isn't equivalent to a suit.
stevewilhelm 13y ago
The Bitcoin Foundation site [1] accepts donations via Bitcoin. Whose server are they using? [1] https://bitcoinfoundation.org/donate https://bitcoinfoundation.org/donate
- andrewpi 13y ago
  That's irrelevant -- accepting donations isn't providing money transmission services to the public.
- vessenes 13y ago
  There is no need to use a server to accept donations via Bitcoin.
Havoc 13y ago
Good luck with that. Nobody is putting that genie back into the bottle any time soon....
javajosh 13y ago
This C&D demonstrates a rather alarming ignorance about Bitcoin, and an even more alarming tendency of modern enforcement agencies to halt any activity they don't understand. It is an embarrassment to Paul T. Crayton and the State of California, and this "default deny" stance on innovation has just as much chilling effect as patent trolls.
- quackerhacker 13y ago
  Exactly what I feel. California is known for incubating tech and embracing new methods. This is about as disappointing as when I heard that Nevada was first to legalize automated vehicles before us and it took lobbying from Google to push the approval here.
  - smsm42 13y ago
    California people are known for being innovative and resourceful. California government is known for being inept, wasteful, inefficient, incompetent, corrupt and constantly balancing on the brink of bankruptcy. It is a mystery how such wonderful people keep electing such miserable government...
    - tankenmate 13y ago
      You must be new here... First past the post has a lot to answer for. A largely unaccountable (by design) bureaucracy also has a rather heavy hand in the matter too.
      - smsm42 13y ago
        This bureaucracy has not come from Mars, you know... I'm still at loss how people in California can invent technologies which alter the whole course of the civilization but are stuck with the government which is, by any outsider account, certifiably insane - and don't even try to do anything of effect about it. Or maybe the said people just have enough money that they don't care? After all, if things go bad you can always take your money and move to the next country which haven't go bad yet.
ISL 13y ago
Does the letter advance any evidence that the Foundation is acting as a money transmitter?
- deleted 13y ago
  [deleted]
- dragonwriter 13y ago
  C&D notices are, in theory, courtesies and don't usually include evidence. If you aren't doing what the C&D says that the person issuing thinks you might be doing, then you have nothing to cease or desist. The goal isn't to convince you of the facts of your action (it may be, in part, to convince you of the impact of the relevant law), so there is no purpose to include evidence. If they decide to file a lawsuit, then evidence will become an issue.
drcode 13y ago
I wonder if Mr. Teveia Barnes (correction: Mrs) is aware of her place in history: One of the brightest minds of our generation spent years of his life developing a technology that has essentially no other purpose but to make her C&D (which we knew would come one day) completely ineffective. (This is assuming Mrs. Teveia believes that the bitcoin foundation runs the servers that make up the bitcoin network, which I think is what this is all about.)
- thinkcomp 13y ago
  Commissioner Teveia Barnes is female. So it's "Commissioner Barnes," not "Mr. Teveia." You can see what she thinks here: https://www.youtube.com/watch?v=gmiY35brih0 https://www.youtube.com/watch?v=gmiY35brih0
- Nursie 13y ago
  Just because it's technically not possible for the state of california to shut down bitcoin does not mean that the state (generic, not just cali) could not effectively kill it by outlawing businesses and individuals from dealing in it. It would certainly end the 'bitcoin everywhere' dreams the fanatics have. I would expect to see a lot more of this. There are a buttload of laws around money transmission and exchange, anr BTC probably breaks a lot of them.
  - drcode 13y ago
    They could certainly limit bitcoin's appeal, but that is kind of beside the point: I'm sure the automobile broke plenty of horse carriage laws, too. If enough people find bitcoins useful (big if) they will somehow become normalized with respect to the law.
C1D 13y ago
For a long time I've admired Silicon Valley and America as a whole. It had been my dream to work and create a sartup there but after all of this. After seeing how free Americans really are I am now unsure about moving there. Although America has great opportunities for people like me, it doesn't seem worth it especially since I've found out how some people get blacklisted for no reason. PS. I hope I didn't offend anyone
- shabe 13y ago
  No offense taken from me. I believe that America is changing extremely fast, some for the good but, unfortunately far too much for the bad. Opportunity still exists but many of the "powers that be" have forgotten what truly made America great. The pursuit of their and many others agenda's have hurt many good hard-working entrepreneurs and others, intentional or not. "More government" seems to be their only answer to any "problem" and this attitude has cost Americans far too much and unfortunately has spawned the evils of "Crony Capitalism", giving the false impression that true Capitalism is bad.
  - babesh 13y ago
    Some of those entrepreneurs are creating that crony capitalism. Don't try painting entrepreneurs with a pristine brush. See Cisco CEO's meeting with Obama on how to improve the country. See what others in the meeting wanted. See which of those are coming to fruition. I bet in return we got acquiescence on rampant NSA spying. Why does Obama come to the Bay Area so often? A: To raise money. What is that money buying?
- drivingmenuts 13y ago
  There are plenty of places in the US that have lots of startup action going on, but a ton less buzz. Austin, for one (disclaimer: I live in Austin). We don't necessarily have the same expertise or even interests that SV does and there are probably other problems that would never occur in SV. On the other hand, it's way easier to fly under the radar here, if that's your thing. Austin is a hell of a lot cheaper than SV and it's surrounds, in most ways, so you'll stretch your dollars further. I'd claim we're friendlier, but that's just a guess. We can be pretty tetchy here about some things. Silicon Valley isn't the only game in town. It's just the noisiest. And you couldn't pay me enough to put up with that.
MichaelGG 13y ago
Even if they were a money transmitter, what authority does California have over a Washington based nonprofit?
- dustcoin 13y ago
  The Bitcoin Foundation recently organized a large bitcoin conference in California. http://www.bitcoin2013.com/ http://www.bitcoin2013.com/
- mcherm 13y ago
  I suspect (although this is just speculation) that the authority is based on the fact that the Bitcoin Foundation is transmitting a lot of money to and from citizens of California. If, indeed, the Bitcoin Foundation were responsible for all bitcoin transactions (including those in California) then the legal authority would be clear. Perhaps California officials are simply mistaken and ill-informed about how bitcoin functions.
- dragonwriter 13y ago
  > Even if they were a money transmitter, what authority does California have over a Washington based nonprofit? If they were a money transmitter, and operated as such in California, California's authority over them would not be affected by either the fact that they were based on Washington or the fact that they were a non-profit.
thinkcomp 13y ago
Most of the comments here are not particularly well-informed and should be ignored. Yes, the Bitcoin Foundation (probably--I don't know anything about them other than what I've read) isn't strictly speaking a money transmitter. Yes, the California Department of Financial Institutions--which will cease to exist in 7 days when it gets merged into the California Department of Corporations--is totally ignorant of Bitcoin. But they know the law pretty well. Especially the one that they wrote. (See the name Robert Venchiarutti on the letter? He's really the one behind it. The DFI lawyers just do what they're told. They don't even like the law. Venchiarutti actually wrote it, with the help of TMSRT's lobbyists.) That being said, the law to worry about here isn't even the one cited. It is, as I've stated quite frequently, 18 U.S.C. § 1960 (http://www.plainsite.org/laws/index.html?id=14426 http://www.plainsite.org/laws/index.html?id=14426). And that law says that you don't have to be a money transmitter to get a letter such as the one received by the Bitcoin Foundation (http://www.scribd.com/fullscreen/149335233?access_key=key-2lnhtenm4qb1mydngxac&allow_share=false&show_recommendations=false http://www.scribd.com/fullscreen/149335233?access_key=key-2l...). "(a) Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business..." The question then becomes whether the Bitcoin Foundation has any "control" or "direction" over its members and/or affiliates, who are most clearly in violation of the law under section (b). These words are vague. It could be argued that it does. There is an extremely high chance that people will go to jail over this whether people here think it's stupid or not. It's too bad no one took me seriously when I pointed out that the MTA was going to cause problems two years ago. I've been doing the industry's dirty work ever since. It would have been a lot faster and easier with some help. Now we all have to hope that my constitutional challenge (http://www.plainsite.org/flashlight/case.html?id=716056 http://www.plainsite.org/flashlight/case.html?id=716056) is going to save the day. And it might, but that day may be pretty far off in the future at the current rate. Meanwhile, everyone should really be freaking out over AB 786 (http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB786 http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?...), presently before the California Senate, which makes the MTA worse than it already is by giving Robert Venchiarutti even more power. I've been successful in removing the clause that created a new thought crime, but the rest is still pretty bad--unless you're a payroll company. Amazing what lobbying can do. If you want to help, click on the "Comments to Author" tab at the link above, register with the State of California, and tell Assemblyman Dickinson that the MTA should be repealed for all of the reasons I outline at https://s.facecash.com/legal/20130225.packetnumbered.pdf https://s.facecash.com/legal/20130225.packetnumbered.pdf: its overly broad scope, inability to sensibly regulate mobile technology, and unconstitutional nature. Money transmission takes place over the internet, which is in the domain of the federal government, not the states. See /ALA v. Pataki/, 969 F.Supp. 160 (1997), http://scholar.google.com/scholar_case?case=10174094889155823351 http://scholar.google.com/scholar_case?case=1017409488915582.... Also CC: Eileen Newhall <eileen.newhall@sen.ca.gov>, Mark Farouk <mark.farouk@asm.ca.gov>, Senator Jerry Hill <jerry.hill@sen.ca.gov>, Marc Hershman <marc.hershman@sen.ca.gov>, and BCC me: Aaron Greenspan <aarong@thinkcomputer.com>. If you live in California make sure to say where. Be polite. Reading material: https://news.ycombinator.com/item?id=5308013 https://news.ycombinator.com/item?id=5308013
mrerrormessage 13y ago
Only the state of California may issue phony currency, apparently.
jahewson 13y ago
> Freedom of choice in currencies is probably the most important free speech issue of our time. That sentence requires some serious mental gymnastics to agree with, which I find beyond me.
- gasull 13y ago
  When money is just information, it's indistinguishable from speech.
mchusma 13y ago
It is worth pointing out that the state can put out Cease And Desist orders, and warnings on its website with no: 1) Evidence of wrongdoing 2) Communication with the accused 3) Method of reconciliation I have my own personal example: I received a letter ordering us to cease and desist from doing online notarization through California notaries. We were not doing so, so in effect we sent back a letter stating: "We have not, and never have, conducted the activity you accuse us of." They basically responded saying "ok, we agree that you haven't done anything wrong but if you do anything we will prosecute you to the full extent of the law." A few weeks later, they posted a "consumer warning" on their website saying that our company was in effect defrauding companies. Then, several other states copied that language without contact. I spoke with the government officials, I told them we were hurt by these baseless accusations, and they admitted that they really had no evidence of any wrongdoing. They basically said "we are too busy to update the website right now but we will do so shortly." After months of effort, I was able to one by one get most of these ultimately removed or reworded to a reasonable position. California was the last holdout. I basically began the process of suing them for massive damages and that ultimately was the only thing that was able to get them to change the wording. So overall, my learning is that it genuinely scares me what government agencies can do without any evidence or judicial process. I would guess that the Bitcoin Foundation can respond with "you are wrong, please provide evidence" and get away with it for now.
- einhverfr 13y ago
  Indeed. Additionally there are questions regarding how clear a statute needs to be before you send people to prison for 5 years. Crime by analogy, once the bread and butter of Soviet justice, has unfortunately been becoming more common in the US (see the prosecution of Jeffrey Skilling for "honest services fraud" and the prosecution of Dr Hurwitz for unlawful distribution of narcotics).
  - messick 13y ago
    Are you really offering up the CEO of Enron and a doctor who prescribed up to 1.6k pills per day to a single patient as victims of the big bad US Gov?
MaggieL 13y ago
"Sorry, you can't do this until we figure out how to tax it. And it took us 18 years to figure out how to tax Amazon..."
tlrobinson 13y ago
It's hard for me to reconcile how much I like living in California with how much I dislike the state and local governments here.
- javajosh 13y ago
  If there was a more technology & freedom enlightened state I would emigrate there. I wonder if there is enough political will for Silicon Valley to secede from California?
- rdl 13y ago
  If I were doing a Bitcoin business, it sure wouldn't be in California. Aside from the obvious startup friendly Seattle or Austin, it might make sense to pick some small state who could have favorable laws (South Dakota for credit card issuers...)
- anigbrowl 13y ago
  I know, it's like you want all the benefits and none of the costs.
  - tlrobinson 13y ago
    I seriously doubt the government is responsible for most of the reasons I enjoy living in California vs. other areas.
    - anigbrowl 13y ago
      Nice goalpost-shift there. I never claimed that it was.
      - tlrobinson 13y ago
        Then I don't understand what point you were trying to make.
ciokan 13y ago
Seriously!? Did you really thought you can send and receive untraceable money without lovely U.S. putting an end to it?
lowglow 13y ago
Here is an interview we did at Techendo with Constance Choi of Payward (They are building http://kraken.com http://kraken.com) regarding the current legalities and regulatory landscape of virtual currencies: http://www.techendo.co/posts/techendo-episode-8-legalities-of-bitcoin-virtual-currency http://www.techendo.co/posts/techendo-episode-8-legalities-o...
tekromancr 13y ago
Wow, a government that fails to understand technology. Shocker, that.
bmmayer1 13y ago
The People's Republic of California is at it again.

287 points by pelle 13y ago

deleted 13y ago

[deleted]

codex 13y ago

State money transmission laws are very strict, requiring, among other things, a bond to be posted to protect the public. Accoring to FinCEN, anyone selling units of a decentralised virtual currency to another person for real currency is a money transmitter--so, for example, if you operated a business exchanging U.S. dollars for Bitcoins, you must be licensed. I don't know if the Bitcoin Foundation did this in California; perhaps there is some other wrinkle of state law at play here.

pelle 13y ago
Yet the Bitcoin foundation is neither a operator of a virtual currency service or an exchanger according to FinCEN rules. Tradehill and Coinbase are based out of California and are following all federal and state rules.
- quackerhacker 13y ago
  I thought Coinbase was based out of SF and even backed by YC? Not sure though, seeing on the privacy page an Oregon address. https://coinbase.com/about https://coinbase.com/about
  - rdl 13y ago
    If you google that address, it is an old address for earth class mail, a commercial mail scanning/forwarding service. (I use them too; they rock if you move a lot, or live overseas.)
- jeremyw 13y ago
  Interesting that you say that. Coinbase is verifiably registered with FinCEN, but not the states, as far as I can see. (Square, mentioned in the article, actually is registered in California.) http://www.fincen.gov/financial_institutions/msb/msbstateselector.html http://www.fincen.gov/financial_institutions/msb/msbstatesel... http://www.dfi.ca.gov/directory/money_transmitters.html http://www.dfi.ca.gov/directory/money_transmitters.html
vessenes 13y ago
As you might guess, we have deep expertise on-hand for the Foundation as to MTB/MSB laws, and can confidently state we do not engage in MTB or MSB activity at the Bitcoin Foundation; we're just a member organization. The state of California is blanket C&D-ing all Bitcoin businesses.
- genwin 13y ago
  Given the online ads included in the letter, it appears they googled for "bitcoin" and used a screen grabber to copy/paste the law text. It's sad how messed up the CA gov't has gotten.
  - vessenes 13y ago
    Yes, this seems likely.
- codex 13y ago
  I wouldn't be surprised if the C&D were blanket. That said, when you Google for "Bitcoin Foundation" you see an "About" section in the #1 result (your website) which begins, "Our mission is to help people exchange...". I wouldn't put it past the state not to have read any further. ;-)
- anigbrowl 13y ago
  OK, but isn't it a fact that the Bitcoin Foundation's membership is made up of MTB/MSB firms? https://bitcoinfoundation.org/members https://bitcoinfoundation.org/members
mtgx 13y ago
That's okay, but what does that have to do with the Bitcoin Foundation? I hope they take them to Court.
gst 13y ago
The Bitcoin foundation does neither exchange or trade Bitcoins, nor does it release any Bitcoin client. Its only mission is to "standardize, protect and promote" the use of Bitcoin. Charging the Bitcoin foundations for violations against the money transmission laws would be like charging NRA for violations against firearm laws. This would be a very alarming precedent and would basically violate your rights for free speech.
- dustcoin 13y ago
  The best argument in favor of the C&D I can think of is that the Bitcoin Foundation pays a salary to the lead developer of the reference client and daemon.
  - gst 13y ago
    If you violate money transmission laws because you pay a salary to someone (without being a licensed money transmitter) there would be lots of people violating those laws in California.
    - dustcoin 13y ago
      I agree, I'm just speculating on California's justification for the C&D, assuming it isn't simply a result of ignorance of how bitcoin works and the role of the Bitcoin Foundation.
      - venomsnake 13y ago
        Isn't a simpler explanation that they are just stupid and didn't take 5 minutes to find out exactly who they are sending the letter to and just sent it to the first google result for bitcoin?
        anigbrowl 13y ago
        That's a two way street. I'm guessing the Bitcoin Foundation might have overlooked some of its due diligence obligations; it looks to me like CA is 'piercing the corporate veil' if you're familiar with that legal term.

pelle 13y ago

This is the equivalent of suing the American Bankers Association for a lack of a banking license.

dragonwriter 13y ago
> This is the equivalent of suing the American Bankers Association for a lack of a banking license. Not really; the most obvious difference is that a C&D isn't equivalent to a suit.

stevewilhelm 13y ago

The Bitcoin Foundation site [1] accepts donations via Bitcoin. Whose server are they using? [1] https://bitcoinfoundation.org/donate https://bitcoinfoundation.org/donate

andrewpi 13y ago
That's irrelevant -- accepting donations isn't providing money transmission services to the public.
vessenes 13y ago
There is no need to use a server to accept donations via Bitcoin.

Havoc 13y ago

Good luck with that. Nobody is putting that genie back into the bottle any time soon....

javajosh 13y ago

This C&D demonstrates a rather alarming ignorance about Bitcoin, and an even more alarming tendency of modern enforcement agencies to halt any activity they don't understand. It is an embarrassment to Paul T. Crayton and the State of California, and this "default deny" stance on innovation has just as much chilling effect as patent trolls.

quackerhacker 13y ago
Exactly what I feel. California is known for incubating tech and embracing new methods. This is about as disappointing as when I heard that Nevada was first to legalize automated vehicles before us and it took lobbying from Google to push the approval here.
- smsm42 13y ago
  California people are known for being innovative and resourceful. California government is known for being inept, wasteful, inefficient, incompetent, corrupt and constantly balancing on the brink of bankruptcy. It is a mystery how such wonderful people keep electing such miserable government...
  - tankenmate 13y ago
    You must be new here... First past the post has a lot to answer for. A largely unaccountable (by design) bureaucracy also has a rather heavy hand in the matter too.
    - smsm42 13y ago
      This bureaucracy has not come from Mars, you know... I'm still at loss how people in California can invent technologies which alter the whole course of the civilization but are stuck with the government which is, by any outsider account, certifiably insane - and don't even try to do anything of effect about it. Or maybe the said people just have enough money that they don't care? After all, if things go bad you can always take your money and move to the next country which haven't go bad yet.

ISL 13y ago

Does the letter advance any evidence that the Foundation is acting as a money transmitter?

deleted 13y ago
[deleted]
dragonwriter 13y ago
C&D notices are, in theory, courtesies and don't usually include evidence. If you aren't doing what the C&D says that the person issuing thinks you might be doing, then you have nothing to cease or desist. The goal isn't to convince you of the facts of your action (it may be, in part, to convince you of the impact of the relevant law), so there is no purpose to include evidence. If they decide to file a lawsuit, then evidence will become an issue.

drcode 13y ago

I wonder if Mr. Teveia Barnes (correction: Mrs) is aware of her place in history: One of the brightest minds of our generation spent years of his life developing a technology that has essentially no other purpose but to make her C&D (which we knew would come one day) completely ineffective. (This is assuming Mrs. Teveia believes that the bitcoin foundation runs the servers that make up the bitcoin network, which I think is what this is all about.)

thinkcomp 13y ago
Commissioner Teveia Barnes is female. So it's "Commissioner Barnes," not "Mr. Teveia." You can see what she thinks here: https://www.youtube.com/watch?v=gmiY35brih0 https://www.youtube.com/watch?v=gmiY35brih0
Nursie 13y ago
Just because it's technically not possible for the state of california to shut down bitcoin does not mean that the state (generic, not just cali) could not effectively kill it by outlawing businesses and individuals from dealing in it. It would certainly end the 'bitcoin everywhere' dreams the fanatics have. I would expect to see a lot more of this. There are a buttload of laws around money transmission and exchange, anr BTC probably breaks a lot of them.
- drcode 13y ago
  They could certainly limit bitcoin's appeal, but that is kind of beside the point: I'm sure the automobile broke plenty of horse carriage laws, too. If enough people find bitcoins useful (big if) they will somehow become normalized with respect to the law.

C1D 13y ago

For a long time I've admired Silicon Valley and America as a whole. It had been my dream to work and create a sartup there but after all of this. After seeing how free Americans really are I am now unsure about moving there. Although America has great opportunities for people like me, it doesn't seem worth it especially since I've found out how some people get blacklisted for no reason. PS. I hope I didn't offend anyone

shabe 13y ago
No offense taken from me. I believe that America is changing extremely fast, some for the good but, unfortunately far too much for the bad. Opportunity still exists but many of the "powers that be" have forgotten what truly made America great. The pursuit of their and many others agenda's have hurt many good hard-working entrepreneurs and others, intentional or not. "More government" seems to be their only answer to any "problem" and this attitude has cost Americans far too much and unfortunately has spawned the evils of "Crony Capitalism", giving the false impression that true Capitalism is bad.
- babesh 13y ago
  Some of those entrepreneurs are creating that crony capitalism. Don't try painting entrepreneurs with a pristine brush. See Cisco CEO's meeting with Obama on how to improve the country. See what others in the meeting wanted. See which of those are coming to fruition. I bet in return we got acquiescence on rampant NSA spying. Why does Obama come to the Bay Area so often? A: To raise money. What is that money buying?
drivingmenuts 13y ago
There are plenty of places in the US that have lots of startup action going on, but a ton less buzz. Austin, for one (disclaimer: I live in Austin). We don't necessarily have the same expertise or even interests that SV does and there are probably other problems that would never occur in SV. On the other hand, it's way easier to fly under the radar here, if that's your thing. Austin is a hell of a lot cheaper than SV and it's surrounds, in most ways, so you'll stretch your dollars further. I'd claim we're friendlier, but that's just a guess. We can be pretty tetchy here about some things. Silicon Valley isn't the only game in town. It's just the noisiest. And you couldn't pay me enough to put up with that.

MichaelGG 13y ago

Even if they were a money transmitter, what authority does California have over a Washington based nonprofit?

dustcoin 13y ago
The Bitcoin Foundation recently organized a large bitcoin conference in California. http://www.bitcoin2013.com/ http://www.bitcoin2013.com/
mcherm 13y ago
I suspect (although this is just speculation) that the authority is based on the fact that the Bitcoin Foundation is transmitting a lot of money to and from citizens of California. If, indeed, the Bitcoin Foundation were responsible for all bitcoin transactions (including those in California) then the legal authority would be clear. Perhaps California officials are simply mistaken and ill-informed about how bitcoin functions.
dragonwriter 13y ago
> Even if they were a money transmitter, what authority does California have over a Washington based nonprofit? If they were a money transmitter, and operated as such in California, California's authority over them would not be affected by either the fact that they were based on Washington or the fact that they were a non-profit.

thinkcomp 13y ago

Most of the comments here are not particularly well-informed and should be ignored. Yes, the Bitcoin Foundation (probably--I don't know anything about them other than what I've read) isn't strictly speaking a money transmitter. Yes, the California Department of Financial Institutions--which will cease to exist in 7 days when it gets merged into the California Department of Corporations--is totally ignorant of Bitcoin. But they know the law pretty well. Especially the one that they wrote. (See the name Robert Venchiarutti on the letter? He's really the one behind it. The DFI lawyers just do what they're told. They don't even like the law. Venchiarutti actually wrote it, with the help of TMSRT's lobbyists.) That being said, the law to worry about here isn't even the one cited. It is, as I've stated quite frequently, 18 U.S.C. § 1960 (http://www.plainsite.org/laws/index.html?id=14426 http://www.plainsite.org/laws/index.html?id=14426). And that law says that you don't have to be a money transmitter to get a letter such as the one received by the Bitcoin Foundation (http://www.scribd.com/fullscreen/149335233?access_key=key-2lnhtenm4qb1mydngxac&allow_share=false&show_recommendations=false http://www.scribd.com/fullscreen/149335233?access_key=key-2l...). "(a) Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business..." The question then becomes whether the Bitcoin Foundation has any "control" or "direction" over its members and/or affiliates, who are most clearly in violation of the law under section (b). These words are vague. It could be argued that it does. There is an extremely high chance that people will go to jail over this whether people here think it's stupid or not. It's too bad no one took me seriously when I pointed out that the MTA was going to cause problems two years ago. I've been doing the industry's dirty work ever since. It would have been a lot faster and easier with some help. Now we all have to hope that my constitutional challenge (http://www.plainsite.org/flashlight/case.html?id=716056 http://www.plainsite.org/flashlight/case.html?id=716056) is going to save the day. And it might, but that day may be pretty far off in the future at the current rate. Meanwhile, everyone should really be freaking out over AB 786 (http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB786 http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?...), presently before the California Senate, which makes the MTA worse than it already is by giving Robert Venchiarutti even more power. I've been successful in removing the clause that created a new thought crime, but the rest is still pretty bad--unless you're a payroll company. Amazing what lobbying can do. If you want to help, click on the "Comments to Author" tab at the link above, register with the State of California, and tell Assemblyman Dickinson that the MTA should be repealed for all of the reasons I outline at https://s.facecash.com/legal/20130225.packetnumbered.pdf https://s.facecash.com/legal/20130225.packetnumbered.pdf: its overly broad scope, inability to sensibly regulate mobile technology, and unconstitutional nature. Money transmission takes place over the internet, which is in the domain of the federal government, not the states. See /ALA v. Pataki/, 969 F.Supp. 160 (1997), http://scholar.google.com/scholar_case?case=10174094889155823351 http://scholar.google.com/scholar_case?case=1017409488915582.... Also CC: Eileen Newhall <eileen.newhall@sen.ca.gov>, Mark Farouk <mark.farouk@asm.ca.gov>, Senator Jerry Hill <jerry.hill@sen.ca.gov>, Marc Hershman <marc.hershman@sen.ca.gov>, and BCC me: Aaron Greenspan <aarong@thinkcomputer.com>. If you live in California make sure to say where. Be polite. Reading material: https://news.ycombinator.com/item?id=5308013 https://news.ycombinator.com/item?id=5308013

mrerrormessage 13y ago

Only the state of California may issue phony currency, apparently.

jahewson 13y ago

> Freedom of choice in currencies is probably the most important free speech issue of our time. That sentence requires some serious mental gymnastics to agree with, which I find beyond me.

gasull 13y ago
When money is just information, it's indistinguishable from speech.

mchusma 13y ago

It is worth pointing out that the state can put out Cease And Desist orders, and warnings on its website with no: 1) Evidence of wrongdoing 2) Communication with the accused 3) Method of reconciliation I have my own personal example: I received a letter ordering us to cease and desist from doing online notarization through California notaries. We were not doing so, so in effect we sent back a letter stating: "We have not, and never have, conducted the activity you accuse us of." They basically responded saying "ok, we agree that you haven't done anything wrong but if you do anything we will prosecute you to the full extent of the law." A few weeks later, they posted a "consumer warning" on their website saying that our company was in effect defrauding companies. Then, several other states copied that language without contact. I spoke with the government officials, I told them we were hurt by these baseless accusations, and they admitted that they really had no evidence of any wrongdoing. They basically said "we are too busy to update the website right now but we will do so shortly." After months of effort, I was able to one by one get most of these ultimately removed or reworded to a reasonable position. California was the last holdout. I basically began the process of suing them for massive damages and that ultimately was the only thing that was able to get them to change the wording. So overall, my learning is that it genuinely scares me what government agencies can do without any evidence or judicial process. I would guess that the Bitcoin Foundation can respond with "you are wrong, please provide evidence" and get away with it for now.

einhverfr 13y ago
Indeed. Additionally there are questions regarding how clear a statute needs to be before you send people to prison for 5 years. Crime by analogy, once the bread and butter of Soviet justice, has unfortunately been becoming more common in the US (see the prosecution of Jeffrey Skilling for "honest services fraud" and the prosecution of Dr Hurwitz for unlawful distribution of narcotics).
- messick 13y ago
  Are you really offering up the CEO of Enron and a doctor who prescribed up to 1.6k pills per day to a single patient as victims of the big bad US Gov?

MaggieL 13y ago

"Sorry, you can't do this until we figure out how to tax it. And it took us 18 years to figure out how to tax Amazon..."

tlrobinson 13y ago

It's hard for me to reconcile how much I like living in California with how much I dislike the state and local governments here.

javajosh 13y ago
If there was a more technology & freedom enlightened state I would emigrate there. I wonder if there is enough political will for Silicon Valley to secede from California?
rdl 13y ago
If I were doing a Bitcoin business, it sure wouldn't be in California. Aside from the obvious startup friendly Seattle or Austin, it might make sense to pick some small state who could have favorable laws (South Dakota for credit card issuers...)
anigbrowl 13y ago
I know, it's like you want all the benefits and none of the costs.
- tlrobinson 13y ago
  I seriously doubt the government is responsible for most of the reasons I enjoy living in California vs. other areas.
  - anigbrowl 13y ago
    Nice goalpost-shift there. I never claimed that it was.
    - tlrobinson 13y ago
      Then I don't understand what point you were trying to make.

ciokan 13y ago

Seriously!? Did you really thought you can send and receive untraceable money without lovely U.S. putting an end to it?

lowglow 13y ago

Here is an interview we did at Techendo with Constance Choi of Payward (They are building http://kraken.com http://kraken.com) regarding the current legalities and regulatory landscape of virtual currencies: http://www.techendo.co/posts/techendo-episode-8-legalities-of-bitcoin-virtual-currency http://www.techendo.co/posts/techendo-episode-8-legalities-o...

tekromancr 13y ago

Wow, a government that fails to understand technology. Shocker, that.

bmmayer1 13y ago

The People's Republic of California is at it again.