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From the BBC article: ''The authorities said the pair were engaged in a scheme to sell more than $1m (£603,000) in bitcoins to users of online drug marketplace

From the BBC article: ''The authorities said the pair were engaged in a scheme to sell more than $1m (£603,000) in bitcoins to users of online drug marketplace the Silk Road.'' This is ridiculous! Please tell me how selling Bitcoin to someone is illegal? What that person does with the Bitcoin they acquire not the responsibility of the exchange. This smells like another case of gvt scare tactics to protect the bankers and their out-dated & thieving business models. Anyone remember liberty exchange ?

matthewmacleod 13y ago
"Each defendant is charged with conspiring to commit money laundering, and operating an unlicensed money transmitting business." Does that answer your question? It's far from ridiculous.
- deleted 13y ago
  [deleted]
mkautzm 13y ago
It is the literal definition of money laundering dude. If you purchased something illegally with some currency or good or service with the intention of converting that currency, good or service into a different currency, that's called money laundering and it's illegal.
coldtea 13y ago
>This is ridiculous! Please tell me how selling Bitcoins to someone is illegal? What that person does with the Bitcoins they acquire not the responsibility of the exchange. You know that it's illegal for actual banks to assist in money laundering right? Money has to pass through specific channels and be exposed to specific checks to be wired from country to country (in some countries even from person to person after a certain amount). Else you're liable to be caught for assisting in money laundering. So, yes, if you help people to move money, you can be held liable for what they're doing with it.
- 300bps 13y ago
  You know that it's illegal for actual banks to assist in money laundering right? You know that when a bank does it though, nobody gets arrested right? They just get a small fine that is a fraction of their net profit from their illegal activities. When someone with Bitcoin is accused of money laundering, everyone involved is arrested and every asset they have is immediately frozen. It's a tremendous double standard. http://www.rollingstone.com/politics/blogs/taibblog/outrageous-hsbc-settlement-proves-the-drug-war-is-a-joke-20121213#ixzz2on2hF9sl http://www.rollingstone.com/politics/blogs/taibblog/outrageo...
  - logfromblammo 13y ago
    From the evidence available to us, HSBC has been a naughty, naughty bank, laundering drug money with impunity. The fines levied against HSBC for these activities have been laughably small. It's not really a double standard, though. It only appears that way if you believe our society to be founded upon the foundations of justice and law. If you believe it is founded upon the premise that the powerful cannot be wrong, it makes perfect sense.
  - coldtea 13y ago
    >This issue was brought to my attention by pals who had investigated Julia and rejected it for this very reason. You know that it depends, right? With some heavy big banks nobody gets arrested, with others, and especially smaller ones, people go to jail. Also the US isn't the only country with such laws -- people have gone to jail in other countries.
  - gnaritas 13y ago
    > It's a tremendous double standard. And a terrible legal argument.
  - grkvlt 13y ago
    You know that when a bank does it though, nobody gets arrested right? They just get a small fine that is a fraction of their net profit from their illegal activities. That is to say: 'You know that one of the times a bank did this, nobody got arrested right? ...' You can hardly generalise from the one exceptional case recently involving HSBC to the conclusion that all banks everywhere always get away with money laundering.
berberous 13y ago
Read the complaint: http://www.scribd.com/doc/202555785/United-States-vs-Charles-Shrem-and-Robert-M-Faiella http://www.scribd.com/doc/202555785/United-States-vs-Charles... The e-mails are bad.
rayiner 13y ago
Selling Bitcoin isn't illegal, and the indictment actually says something to that effect. What got Shrem in trouble was conspiring with BTCKing to deliver him Bitcoins that bypassed BitInstant's anti money laundering controls, for the specific purpose of facilitating illegal activity on Silk Road.
objclxt 13y ago
It's called being an accessory to a crime. It's not a new concept. http://en.wikipedia.org/wiki/Accessory_(legal_term) http://en.wikipedia.org/wiki/Accessory_(legal_term) If you ask me to front up some money for you to buy some drugs, I'm an accessory to your drug transaction. Similarly, if I sell you some Bitcoins and I know that you're going to go and buy drugs with them...well, you get the idea.
hcal 13y ago
I'm guessing we'll find out that the government thinks they were somehow specifically and knowingly facilitating money laundering for the silk road to hide drug trade profits. Again, thats just a guess. If they specifically sought out the users or owners of the Silk Road and told them they could convert their bitcoin to dollars anonymously, than thats a little different than if they were just operating a regular exchange that regular investors use.
frobozz 13y ago
Selling bitcoins (or any other currency or asset) to someone for money that they have obtained illegally is money laundering. Obviously, all transactions cannot be held to the same standards of diligence. e.g. How can a bureau de change at an airport be expected to know that it is accepting a £5 note from a pickpocket? However some transactions are expected to attract a degree of diligence, either based on magnitude or some other circumstance. It is clear that they appear to have been attempting to sell a large sum of bitcoins to people who are at least on the grey side of the law. In such a situation, one might expect that a quantity of the money they receive from the transaction might be dirty. Whether the defendants are guilty of (attempted) money laundering is for a jury to decide.
aestra 13y ago
That's like asking "how is buying a TV illegal?" When you knew the TV was stolen.

matthewmacleod 13y ago

"Each defendant is charged with conspiring to commit money laundering, and operating an unlicensed money transmitting business." Does that answer your question? It's far from ridiculous.

deleted 13y ago
[deleted]

mkautzm 13y ago

It is the literal definition of money laundering dude. If you purchased something illegally with some currency or good or service with the intention of converting that currency, good or service into a different currency, that's called money laundering and it's illegal.

coldtea 13y ago

>This is ridiculous! Please tell me how selling Bitcoins to someone is illegal? What that person does with the Bitcoins they acquire not the responsibility of the exchange. You know that it's illegal for actual banks to assist in money laundering right? Money has to pass through specific channels and be exposed to specific checks to be wired from country to country (in some countries even from person to person after a certain amount). Else you're liable to be caught for assisting in money laundering. So, yes, if you help people to move money, you can be held liable for what they're doing with it.

300bps 13y ago
You know that it's illegal for actual banks to assist in money laundering right? You know that when a bank does it though, nobody gets arrested right? They just get a small fine that is a fraction of their net profit from their illegal activities. When someone with Bitcoin is accused of money laundering, everyone involved is arrested and every asset they have is immediately frozen. It's a tremendous double standard. http://www.rollingstone.com/politics/blogs/taibblog/outrageous-hsbc-settlement-proves-the-drug-war-is-a-joke-20121213#ixzz2on2hF9sl http://www.rollingstone.com/politics/blogs/taibblog/outrageo...
- logfromblammo 13y ago
  From the evidence available to us, HSBC has been a naughty, naughty bank, laundering drug money with impunity. The fines levied against HSBC for these activities have been laughably small. It's not really a double standard, though. It only appears that way if you believe our society to be founded upon the foundations of justice and law. If you believe it is founded upon the premise that the powerful cannot be wrong, it makes perfect sense.
- coldtea 13y ago
  >This issue was brought to my attention by pals who had investigated Julia and rejected it for this very reason. You know that it depends, right? With some heavy big banks nobody gets arrested, with others, and especially smaller ones, people go to jail. Also the US isn't the only country with such laws -- people have gone to jail in other countries.
- gnaritas 13y ago
  > It's a tremendous double standard. And a terrible legal argument.
- grkvlt 13y ago
  You know that when a bank does it though, nobody gets arrested right? They just get a small fine that is a fraction of their net profit from their illegal activities. That is to say: 'You know that one of the times a bank did this, nobody got arrested right? ...' You can hardly generalise from the one exceptional case recently involving HSBC to the conclusion that all banks everywhere always get away with money laundering.

berberous 13y ago

Read the complaint: http://www.scribd.com/doc/202555785/United-States-vs-Charles-Shrem-and-Robert-M-Faiella http://www.scribd.com/doc/202555785/United-States-vs-Charles... The e-mails are bad.

rayiner 13y ago

Selling Bitcoin isn't illegal, and the indictment actually says something to that effect. What got Shrem in trouble was conspiring with BTCKing to deliver him Bitcoins that bypassed BitInstant's anti money laundering controls, for the specific purpose of facilitating illegal activity on Silk Road.

objclxt 13y ago

It's called being an accessory to a crime. It's not a new concept. http://en.wikipedia.org/wiki/Accessory_(legal_term) http://en.wikipedia.org/wiki/Accessory_(legal_term) If you ask me to front up some money for you to buy some drugs, I'm an accessory to your drug transaction. Similarly, if I sell you some Bitcoins and I know that you're going to go and buy drugs with them...well, you get the idea.

hcal 13y ago

I'm guessing we'll find out that the government thinks they were somehow specifically and knowingly facilitating money laundering for the silk road to hide drug trade profits. Again, thats just a guess. If they specifically sought out the users or owners of the Silk Road and told them they could convert their bitcoin to dollars anonymously, than thats a little different than if they were just operating a regular exchange that regular investors use.

frobozz 13y ago

Selling bitcoins (or any other currency or asset) to someone for money that they have obtained illegally is money laundering. Obviously, all transactions cannot be held to the same standards of diligence. e.g. How can a bureau de change at an airport be expected to know that it is accepting a £5 note from a pickpocket? However some transactions are expected to attract a degree of diligence, either based on magnitude or some other circumstance. It is clear that they appear to have been attempting to sell a large sum of bitcoins to people who are at least on the grey side of the law. In such a situation, one might expect that a quantity of the money they receive from the transaction might be dirty. Whether the defendants are guilty of (attempted) money laundering is for a jury to decide.

aestra 13y ago

That's like asking "how is buying a TV illegal?" When you knew the TV was stolen.