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Oh, and since when does selling BTC anywhere, including Silk Road, constitute a crime? It's what you buy with BTC, or any other currency, that is the crime. Si
by patio11 13y ago
Oh, and since when does selling BTC anywhere, including Silk Road, constitute a crime? It's what you buy with BTC, or any other currency, that is the crime.
Since September 23, 1994, when they passed the Money Laundering Suppression Act.
http://www.law.cornell.edu/usc-cgi/get_external.cgi?type=pubL&target=103-325 http://www.law.cornell.edu/usc-cgi/get_external.cgi?type=pub...
See Title 18 Section 1960:
http://www.law.cornell.edu/uscode/text/18/1960 http://www.law.cornell.edu/uscode/text/18/1960
(a) Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both.
There are three prongs which can get you classified as an unlicensed MSB, and they are evaluated with an OR gate not an AND gate. The slam-dunk one is:
[You are an unlicensed MSB if you] fail[] to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code, or regulations prescribed under such section;
Lets see if buying Bitcoins and reselling them to effect money movements qualifies:
(1) Money transmitting business.— The term “money transmitting business” means any business other than the United States Postal Service which—
(A) provides check cashing, currency exchange, or money transmitting or remittance services, or issues or redeems money orders, travelers’ checks, and other similar instruments or any other person who engages as a business in the transmission of funds, including any person who engages as a business in an informal money transfer system or any network of people who engage as a business in facilitating the transfer of money domestically or internationally outside of the conventional financial institutions system
Well, yep, that is exactly what this guy's business is.
This is why the affadavit says "I checked with FinCEN. Nobody with that name is now or was ever registered with them." This makes an absolutely airtight, slam-dunk case for a federal felony.
Can I again recommend to HN that if someone against posts a blog saying "Hey it's really easy to make money by straw-purchasing coins on Coinbase for buyers from LocalBitcoins" that you really, really think twice about doing that?
- jnbiche 13y agoYou're right, obviously. But the real question is: do you think all these money laundering laws are a good idea?
- jasonlotito 13y agoYes. Especially knowing what I know about the world of money laundering.
- enraged_camel 13y agoCan you share? So that, you know, you actually contribute to the thread.
- jasonlotito 13y agoNo, actually, I can't. Or at least, I'm not sure what I can say specifically, so I'd rather just not saying anything. Regardless, I can point you to further information on money laundering. Here is a recent article: http://www.wired.co.uk/news/archive/2013-10/21/money-laundering-online http://www.wired.co.uk/news/archive/2013-10/21/money-launder... There is a link at the bottom to a PDF that provides a good overview. Suffice it to say, money laundering is a very real problem.
- xixi77 13y agoThat link seems to describe the various ways money laundering is done; I don't see it answering the question why it is "a very real problem" though.
- tinco 13y agoThe real problem that it has solved is that criminals have no easy straightforward ways of laundering money, since all but the strictly monitored and regulated money pathways have been outlawed. Imagine if these laws weren't there, how money laundering would go. A criminal would make some money, and just go to his local unregulated/unmonitored cash exchange to wire the money to a swiss bank account. Since there's no monitoring or regulation, no IRS or FBI would ever know it.
- 13y ago
- torbjorn 13y agoI know it is how the legal system works but it seems kinda silly that laws from 1994 and 1960 apply to bitcoin.
- justincormack 13y agoWhy? They are designed to stop people making money from crimes. Seems to be exactly what was intended.I happen to think that drugs should be legal but that's a different issue.
- hawleyal 13y agoThey are designed to prevent people from making too much money anonymously.
- deleted 13y ago[deleted]
- betterunix 13y agoTaxes took care of that already. Money laundering rules are designed to make it hard to conceal how you earned large amounts of money.
- chc 13y agoIs it equally silly that laws from the 19th century apply to somebody born in the '80s? It seems like more or less the same thing — laws keep applying to new instances of the things covered until the laws are changed.
- Fomite 13y agoI know its is how the legal system works, but it seems kinda silly that murder laws from 1860 apply to my autonomous knife-throwing killbot.
- nknighthb 13y agoOn the contrary, what's silly is when politicians decide every new technology demands a new law instead of simply ensuring laws are written to cover particular evils regardless of the tools being used.
- aspensmonster 13y ago>or any network of people who engage as a business in facilitating the transfer of money domestically or internationally outside of the conventional financial institutions system Wouldn't that definition mean that every single bitcoin user is in violation of the act?
- maxerickson 13y ago'engage as a business' means you are probably doing quite a bit of it.
- patio11 13y agoWhile you might think that and I might be inclined to agree with you, that interpretation is at variance with the laws of the United States. FinCEN was delegated rulemaking authority, and their rule is that if you're in check cashing, travelers checks, or what have you, there is a $1,000 a day minimum below which you don't have to be registered, but if you're in funds transfer as a business, you require registration for transferring one red cent. http://www.fincen.gov/financial_institutions/msb/definitions/msb.html http://www.fincen.gov/financial_institutions/msb/definitions... No activity threshold applies to the definition of money transmitter. Thus, a person who engages as a business in the transfer of funds is an MSB as a money transmitter, regardless of the amount of money transmission activity.
- maxerickson 13y agoThe real big risk seems to be that they might not acknowledge that the transfer of bitcoin can happen 'in person'.
- xhrpost 13y agoIANAL, but it appears that if you did all your purchasing and selling within Coinbase (a registered MSB), you would be complying with the law. In the end though, this stuff hasn't been decided in court.
- deleted 13y ago
- deleted 13y ago[deleted]
- granfalloon 13y agoThe money laundering charge, however, might not be such a slam dunk (Count 3, I think). That requires a showing that the BitInstant guy intended to promote illegal activities. Courts are usually pretty flexible when it comes to showing intent, but I think a good defense lawyer might be able to argue reasonable doubt with respect to whether the guy KNEW that BTCKing's customer's were going to use the bitcoin to buy drugs.
- dragonwriter 13y ago> Courts are usually pretty flexible when it comes to showing intent, but I think a good defense lawyer might be able to argue reasonable doubt with respect to whether the guy KNEW that BTCKing's customer's were going to use the bitcoin to buy drugs. Maybe, but operating an unlicensed money transmission business is also an illegal activity, and is specifically one of the illegal activities alleged to be furthered by the money laundering conspiracy.