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Ripple fined for acting as a money services business without registration
- tomasien 11y agoI think the title is wrong, they didn't register with FinCen or comply with BSA AML. Money Transmitter stuff is a really different thing, did I miss something?
- sctb 11y agoWe updated the title to use language from the news release, which didn't use the term "money transmitter".
- lambda 11y agoThe title currently reads "Ripple fined for acting as a money services business without registration", and the complaint says "Ripple Labs willfully violated several requirements of the Bank Secrecy Act (BSA) by acting as a money services business (MSB)and selling its virtual currency, known as XRP, without registering with FinCEN". That looks like the title matches the contents. Did the title change since you wrote the question? It is important on Hacker News, when addressing anything about the title of a submission (or about the precise URL of the submission), to quote the title or URL you are talking about, as moderators sometimes silently change the title or update the URL to point to the actual underlying story rather than blogspam.
- colinsidoti 11y agoOh! I've been waiting for a good place to ask this. I made www.stripepal.com as a weekend project. It's a super lightweight wrapper built on top of Stripe Checkout and Stripe Connect. Does anyone know if that makes me a money transmitter or money services business?
- anigbrowl 11y agoThere are multiple reasons that you should talk to a lawyer before going ahead with this, not least the cease-and-desist letter you are sooner or later going to receive from Paypal complaining about infringement of their trademark.
- TTPrograms 11y agoPayPal has a trademark on "Pal"?
- pzxc 11y agoIf the names are similar and they are in the same industry/sector -- so that the typical consumer might confuse them -- then yes that absolutely can and does get attacked as a trademark infringement. See Facebook versus Teachbook cough I mean Teachquest. Or Microsoft versus Lindows cough I mean Linspire.
- biot 11y agoThe test is whether or not the use of Pal is likely to cause confusion for the goods and services that the trademark was registered for. If this was a service to help you adopt a new puppy, there's little likelihood of confusion. However, if your company has "Pal" in the name and the explicit intent of the company is to provide financial services just like PayPal does, then yeah... you're going to get hammered. It's basically raising a giant middle finger towards both Stripe and PayPal.
- colinsidoti 11y agoErr, I certainly didn't mean to be raising any middle fingers. I've just always thought it was weird Stripe doesn't have a lightweight payment page, considering how simple it was to build this with Stripe Checkout and their automatic email receipts. I've been sitting on this idea for almost three years, and with time it got so easy to build that I finally took a few weekends out. Here's a post from back when I'd have to build out the checkout experience and receipts myself: https://news.ycombinator.com/item?id=4507050 https://news.ycombinator.com/item?id=4507050 I'll have to look deeper into this trademark issue though. Anyone have any alternative name ideas?
- unethical_ban 11y agoI wonder how sustainable this is in the long-term: trying to shut down every website/protocol where imaginary numbers that are valued by multiple people are hosted.
- xyzzy123 11y agoYou police the interactions between the virtual currency and $COUNTRY banking system. To have any real liquidity, such exchanges need to have valuable reputation, i.e, be organisations subject to the law. Yes, you can launder money through World of Warcraft but the payments usually go through Paypal. Online poker is another obvious way to launder hit hard by KYC.
- lectrick 11y agoThis will only cause people to flee to the virtual currency and stay there, over time. It literally incentivizes staying in the virtual currency... just like people like to "stay" in cash, now (in fact, just today a contractor offered me no tax if I paid him cash...) How the powers that be do not see this, astounds me. As soon as the first cryptocurrency acquires some semblance of price stability, it becomes more dangerous to the old system. Given 2 options, one with a lot of friction and one without, no matter the "marketshare" of the first, the latter one will eventually win. The only way fiat can prevent this is to stop punishing good actors with AML/KYC compliance. The fact that these laws still refer to and try to regulate geographically-focused transfers of money (which make literally no sense in an Internet cryptocurrency context... If I fly in a plane and have a Bitcoin wallet app on my phone which gives me access to spend 15 grand worth of Bitcoins anywhere (including ON the plane, if it has wifi), do I have to "declare" the "carrying" of more than $10,000 "cash"?) shows how behind-the-times this worldview is.
- xyzzy123 11y agoYou're describing one trip through "the loop". Remember, the state will react to crypto growth too. There's a transitivity aspect to it. Ultimately taxes need to be paid in fiat, and large organisations will eventually get stomped on for accepting crypto if it subverts government control. On the second trip through the loop, you have crypto which can be used for small (in a sense, black market) transactions and fiat which can be used to pay things like utility bills or buy stuff from companies which must accept fiat. Individuals will provide exchange services (buy iphones with crypto!) at their own risk, basically by subverting KYC with small transactions. [We are already here]. What's the nth trip through the loop? I'm personally not sure, but interested in your views.
- 27182818284 11y agoI'm really confused on this. I thought that the IRS taxed cyrptocurrencies as property? If that's true, how is the "and selling its virtual currency, known as XRP, without registering" a problem? I can understand the aspect of transmitting money and how that could get them into trouble, though.
- dragonwriter 11y ago> I thought that the IRS taxed cyrptocurrencies as property? If that's true, how is the "and selling its virtual currency, known as XRP, without registering" a problem? Because tax law and money service business law are completely different areas of law with different applicable definitions, such that what a particular thing is treated as for tax purpose has no bearing whatsoever on how money service business law regards it.
- MCRed 11y agoOne thing I've observed many times over the years is that the government likes to have its cake and eat it too. For instance, they ruled that gold coins were legal tender. Then one bright employer started paying his employees in gold coins from the US Mint. If I give you 12 $50 gold coins that are legal tender, I've paid you $600 dollars, right? Say your salary is one of those a month. What should you claim as your income on your taxes? $600? That's well below the $4k and you don't even have to file. https://en.wikipedia.org/wiki/American_Gold_Eagle https://en.wikipedia.org/wiki/American_Gold_Eagle But the IRS decided that it didn't matter that they were $50 legal tender, and took him to court where the court rules that the "value" of them was what mattered. So here they are literally claiming it is one way when it's convenient to them and another when that is more convenient. The laws are written, always, to give maximum power and flexibility to the government and little to none to you. Expecting consistency out of them would be a mistake.
- A_COMPUTER 11y agoIt's difficult to use that particular example, because in reality he was still paying them with cash, but just the cash value of the gold coins, rather than the gold coins themselves. I'm not disagreeing with you that the government wants to have its cake and eat it too, but so did that guy. Maybe the case wouldn't have been so clear-cut if he'd actually paid them in gold coins.
- gonzo 11y agoI was trying to figure out the 'Why' and then I got to Roger Ver being an investor in Ripple.
- aaronbrethorst 11y agoContext: http://talkingpointsmemo.com/edblog/im-so-so-glad-this-guy-exists http://talkingpointsmemo.com/edblog/im-so-so-glad-this-guy-e...
- fips140 11y agoContext? Yeah, right.
- deleted 11y ago[deleted]
- zaroth 11y agoFrom 'Ripple_Facts.pdf' On September 30, 2013, XRP II negotiated an approximately $250,000.00 transaction by email for a sale of XRP virtual currency with a third-party individual. XRP II provided that individual with a “know your customer” (“KYC”) form and asked that it be returned along with appropriate identification in order to move forward with the transaction. The individual replied that another source would provide the XRP virtual currency and did not “require anywhere near as much paperwork” and essentially threatened to go elsewhere. Within hours, XRP II agreed by email to dispense with its KYC requirement and move forward with the transaction. Open source information indicates that this individual, an investor in Ripple Labs, has a prior three-count federal felony conviction for dealing in, mailing, and storing explosive devices and had been sentenced to prison, see United States v. Roger Ver, CR 1-20127-JF (N.D. Cal. 2002);
- MCRed 11y agoIF you think back to the days when the USA was founded, there was a great many risks facing the new government-- British spies could have been sent to undermine it, criminals of all manner and sort were out there as well. There were any number of excuses to make banks register transactions, limit ownership of firearms, control speech to stop anti-american and pro-british propaganda and the like. But they didn't. In Britain, they saw the result of onerous regulations piled on top of each other for decades--- always with good excuses and claims of noble intentions-- and how it stifled the spirit. As a result they fought, and then they went thru two forms of government in rapid succession ending up with the constitution which was only able to be passed after the Bill of Rights was added. One of the arguments against tacking on the bill of rights was that by naming these rights they would be limited, and no mere 10 amendments could encompass all of mans rights. Thus, if you read the preamble to the bill of rights you'll notice a curious phrase that makes it clear that the rights are not granted by the constitution and not subject to its interpretation, but universal and pre-dating the constitution. They chose freedom. In the past 14 years, since 2001, but also since WWII, 1915 and the civil war to different degrees, we have seen our rights eroded, repeatedly and in small increments. Since 2001 it's been fast enough to be shocking to me, but at this point a 20 year old probably has never known a world without mass survielance. My point is, people can talk about "money laundering"[1], terrorism and tax evasion-- these are all excuses. (There weren't even federal taxes before 1915, and for good reason. It took a constitutional amendment, which some debate was never properly ratified, to even get them.) If the USA doesn't turn around and start embracing freedom, then more and more quickly we will slide to the despotism that caused use to leave the British in the first place. Only in this age there are no colonies-- but there is cyberspace. When bitcoin is illegal, only criminals will have bitcoin. When the black market grew to a certain size, the USSR fell. There's, in fact, an entire revolutionary movement[2] whose goal is to build and grow a black market to such a size that it forces the government to reveal the violence "inherent in the system" as Monty Python put it. IF you're a frog in a pot of water, would you rather think of it as a hot tub or leap out into the fire? [1] Literally a thought crime, that at the federal level is so broadly written that if you transfer money from your checking account to your savings account in order to pay your visa, you're guilty. IT's a catch all that wins convictions, never mind legal or moral principles. [2] Counter-Economics, which came from the counter-cultural era, but is taking form more and more technologically these days. Google New Libertarian Manifesto by SEK3
- redbeard0x0a 11y agoThey should be going after Proctor & Gamble because Tide is a form of alternative currency. http://nymag.com/news/features/tide-detergent-drugs-2013-1/ http://nymag.com/news/features/tide-detergent-drugs-2013-1/
- desdiv 11y agoThat brings a whole new meaning to "money laundering".
- zaroth 11y agoRemember reading this a few years ago, and at the time I was pretty sure this was a submarine ad for Tide.
- maxerickson 11y agoRipple is not in trouble for using some form of alternative currency. They are in trouble for facilitating transactions between other parties without keeping track of who those people are. It's fun to pretend that the government is always completely arbitrary in its actions, but it isn't very realistic.
- mike_hearn 11y agoThe point is that by manufacturing Tide, that was in some sense also "facilitating transactions". Where the line is drawn is pretty arbitrary and vague.
- maxerickson 11y agoIt isn't that vague, P&G isn't buying Tide, no questions asked, from anyone who wants to sell it to them.
- nmrm 11y agoAnd in fact, if you read the article about Tide, the people who are buying Tide, no questions asked, from anyone who wants to sell it to them are committing felonies and are tracked down in sting operations.
- Animats 11y agoI'm surprised that Ripple didn't register with FinCen. It's not hard. After registering, a US money service business has to file reports on "suspicious transactions". This is done electronically, although the data formats are incredibly antiquated.[1] Each record is like a 1000+ column punched card, and they're filed as big batches. On the other hand, there's not much of an attack surface against FinCen, and since their opposition is drug cartels, that's an issue. [1] http://bsaefiling.fincen.treas.gov/docs/TestingProcedures.pdf http://bsaefiling.fincen.treas.gov/docs/TestingProcedures.pd...
- lifeisstillgood 11y agoSurprised does not come close - the list of deeply connected investors is long (AndresseenHorowitz, GoogleVentures) and yet the phrase "MoneyServiceBusiness" did not cross anyone's mind? Is this CEO ignoring good advice or fire and forget investors ? Or perhaps even more worryingly, a disconnect between Silicon Valley investors and the FinTech regulators in the East Coast - those three thousand miles will take a lot of bridging. A bit of history on this ruling will be interesting.
- wmf 11y agoWe are now in a "post-Uber" world where regulatory arbitrage is considered just another business strategy.
- rizwank 11y agoYou make it sound like it wasn't a standard Business practice before Uber.
- reviseddamage 11y agoits a dangerous position, if people start to find courage from Uber...You don't go to jail for decades for exercising regulatory arbitrage when taking paid rides in your car.
- cms07 11y agoToo bad people aren't going to jail for openly flouting regulations. That would probably stop a lot of it.
- deleted 11y ago[deleted]
- morpheous 11y agoOh fuck!, this is the WRONG kind of publicity.
- notsony 11y ago>"Pursuant to the agreement, Ripple Labs will also undertake certain enhancements to the Ripple Protocol to appropriately monitor all future transactions." Can anybody from Ripple comment on what those protocol changes will be?
- Natanael_L 11y agohttps://www.coinprices.io/articles/ripple-moves-to-require-identification-from-all-users https://www.coinprices.io/articles/ripple-moves-to-require-i...
- drawkbox 11y agoIn theory, a smart forward-thinking country could come along and look at themselves as a company/reserve and make a virtual currency + exchange that is desired because they will not touch it. They could create a killer currency, a neutral country that doesn't play in the theatre of games. Like the Swiss used to do with banking. However banking is also getting more regulated. Money flow is living under a rule where "papers please" is the norm, untracked cash is suspect. Many of the excuses for this much regulation on a currency is the War on Drugs and the War on Terror. The demand just keeps getting higher and higher for a killer currency.
- roymurdock 11y agoThe "killer currency" must reach a point where it is robust enough to withstand what Kroll, Davey, and Felten describe as a "Goldfinger" attack. [1] They use basic game theory to show that any actor participating within the Bitcoin community would not commit a 51% attack. They go on to identify the biggest threat to a budding virtual currency: some outside actor being able to take a sufficiently large short position on Bitcoin (or otherwise gain utility from Bitcoin's destruction), then mounting or simply threatening to mount a 51% attack. This would start a death spiral that would cause rational actors not to participate in the network at an increasing rate. They conclude that good, active governance is necessary to make sure that Bitcoin and similar virtual currencies survive. The creators will need to "touch" the currency in order to protect and maintain its value. A true killer currency would be a virtual currency that is pegged to some well-chosen and largely diversified basket of essential goods such as wheat, lumber, metals, energy, etc. Peg the currency to a broad range of economic inputs and raw materials. [1] Full paper here: https://www.cs.princeton.edu/~kroll/papers/weis13_bitcoin.pdf https://www.cs.princeton.edu/~kroll/papers/weis13_bitcoin.pd...
- Natanael_L 11y agoAny peg requires a trusted third party. It would be like tying gold certificate ownership to cryptocurrency tokens, like colored coins. And when you have that trusted third party, why do you have independent miners? In other words, you get Ripple again rather than Bitcoin or an altcoin. You drop the decentralization.