Bitcoin Forum

http://finance.yahoo.com/news/three-indicted-u-over-major-144238269.html

"Prosecutors said Shalon and Orenstein also ran payment processors IDPay and Todur, through which they collected $18 million of fees to process hundreds of millions of dollars of transactions for criminals.

Shalon was also accused of running the illegal bitcoin exchange Coin.mx with Murgio, and concealing at least $100 million in Swiss and other accounts."

The question now is.. Did they have a BitLicense? :D

Of course not because they are not based in NY.

Florida does require a Money Transmitter license for any Bitcoin exchange. A such license is very expensive(over 500K) and I don't think it's worth it based on the BTC tradings that a company can get these days.

Don't be fooled by the bots you see in actions on any exchanger platform.I am talking about real transactions. It's hard to maintain a licensed company. You need staff (employees) and the salaries are not low in USA.

Example: you need a compliance officer.

A salary for a such position is around of 3000-4000 usd/month without taxes which are not small at all.

You need a collaboration with lawyer. This should be around of 1000-3000 per month(depends on lawyer). you need yearly audit. the cost is around of 10,000 USD or more(depends on how many transactions you have), advertising, common bills (electricity, phones, internet, rent), taxes.

For a small company, a such license is useless.The costs per month can easily reach at 20,000 usd or more. So, first you need to make 20,000 usd and then to think about a net profit for "yourself"(owner).
Very hard to make these money.

Do not look at Coinbase and others like them. They were/are financed by shareholders with millions of USD; otherwise they would be bankrupted.

Gemini also bypassed the BitLicense process with Gemini Trust Company, LLC regulated as a fiduciary.  ;D .... I can bet you a dollar, Coin.mx did neither. You cannot get away

with this kind of thing, there are just to many other competitors out there paying these license fees, who will expose you. They will squash you like a bug.   ::)

https://www.cryptocoinsnews.com/gemini-bitcoin-exchange-launches-needs-no-bitlicense-fincen/

My post was ironic, but I was actually thought they were based in NYC and were operating illegally :) Even if you're not based in NYC, to operate there you have to have a BitLicense... Am I wrong?

And thanks for the insight on the money one has to spend to maintain this... Didn't know it was this much. I guess that's where there is only a handful of nice exchanges and only a few having a BitLicense.


I guess there's ways to make everything happen... ::) And the market is fierce, nobody wants trading fees to be "distributed" across exchanges. Everyone wants the big share of the cake :D

18 million of fees from a paymenbt processing site not many have heard of sort of sounds fake. Why would criminals use them when they have something like bitcoin in the first place :P e

They were scammy anyway...  If the BTC price was listed on google as $100, it'd be listed on their website as $110.  Then the fees too...  I only used them because I could buy instantly with my credit card.  I was willing to pay their inflated price for the convenience of getting it instantly.  I recently discovered a BTC atm in my city, so now I don't have to worry about that retardedness of buying online...

18 million out of hundreds of millions doesn't sound like a very good deal if it's criminal money. I'd be wanting more for money laundering.

That doesn't always indicate scammy behavior . A lot of other sites have price difference with respect to google. Most of the sites have its own traders so price vary independently. However mostly its close and with 5 dollars.

I think this is the reason that Bitcoin will need to go mainstream in developing nations before it ever goes mainstream here in the US. Too many regulations will prevent bitcoin from being as successful as it could be. While regulations do help in some cases, it hurts the little guy way more than it helps and makes improvements slow to happen.

Actually, I think Coin.mx was shut down not for helping criminals (that just seems to be something the media says every time something involves Bitcoin; all bitcoiners are criminals apparently  :-\) but rather they didn't have the licensing to be transmitting such large amounts of money. Of course, some of that money may have come from criminal activity, but they were not charged for being accomplices in helping criminal activity since they would have no way of knowing whether the money they were exchanging was from illegal activity or not.

They were also based in Florida AFAIK.

Here is an article from Coindesk about the arrests and shut down. (http://www.coindesk.com/coin-mx-arrested-operating-illegal-bitcoin-exchange/)

What use are Bitcoins to criminals if they can't turn them into fiat? There's a limit to what you can buy with Bitcoins. Criminals need payment processors to convert their Bitcoins to fiat, but I admit I had not heard much about Coin.mx until they got busted. I never thought it dealt with such large sums of money to obtain 18 million in fees. I doubt many of the major exchanges earn that much in a year.

Bad story, but how much was the percentage fee in this exchange, 18$ million on fees seems very high, do other exchanges earn like this?

Hey at least they didn't just disappear with millions in cold-storage like most big cash-flow entities in BTC people like to NOT talk about..

Whatever you do don't suggest some form of central transparent crediting authority.. People just dismiss it as government intrusion.. Go figure..

Isn't this like an old news? Weren't they shut down few months ago already? Or this is just a follow up? I don't get it!

It's ONLY millions of dollars and malicious behavior against the country the money comes from.. Just like it was ONLY millions of dollars from honest investors when all those owners took off with cold storage..

QUICK sweep it under the rug!!!

Please explain how it was malicious behavior. How is not registering with the central government malicious behavior? Sure they were unlicensed, but they weren't stealing money from people, they were just provided a service. It was not malicious at all, just unlicensed so of course the government doesn't like it.

There are new charges made against the owners of Coin.mx now. That Coindesk link posted earlier was to a story written on July 21, 2015. However, there is a new Coindesk story about the new charges written today. They are now getting charged with hacking banks and laundering money through their exchange. They were already charged with being an illegal payment processor and running an illegal exchange.

http://www.coindesk.com/us-prosecutors-unseal-new-charges-against-bitcoin-exchange-operator/

The BTC industry is full of such cases. 90% or more is black market. There is no news in this :)

$18 million in fees, they must have had clients with pretty big pockets. Dealing with bitcoins has its risks. people should definitely check if it's legal before they do things like this. But I guess being legal wasn't their main concerns.

It has to be brought up in the courts. So that process takes months. They also need to collect as much evidence so to convict the accused(company) to the fullest extent of the law. That's why this won't be out of the news until the final verdict is decided and justice is served for all involved.

Let he who has not sinned cast the first stone: https://en.bitcoin.it/wiki/Tax_compliance

These days if you want to play big your going to pay big! But when the government doesn't get there fair share you can bet your last to bits there going to get you one way or another! But when it comes to hacking banks now were not talking state charges it all merges to the feds! I would hate to be in there shoes right now!! :'(

 ;D :D ::)

Okay but eventually we're going to have to do some coding to make it close to impossible to make illegal activity with Bitcoin happen. I have absolutely no idea how we're going to make that happen, but we better think of something quickly. Honestly, time is running out to make this currency look professional.

Follow up: This is getting weird :

http://www.maxkeiser.com/2015/11/russia-did-not-hack-jpm-as-nsa-chief-suggested/

"Keith Alexander, the NSA director from 2005 until last March, said he had no direct knowledge
of the attack though it could have been backed by the Russian government in response to sanctions
imposed by the U.S. and EU over the crisis in Ukraine."

"Notice that ‘experts’ never go challenged by the mainstream media.

A year later, we learn that the ‘state level’ hackers were actually two Israeli-Americans and a Florida-based man whose nationality is not mentioned.

UPDATE: All three were Israelis with US citizenship."

Also
"Aaron, 31, a U.S. citizen who lives in Moscow and Tel Aviv, remains at large and is the subject of an FBI "wanted" poster."

WTF?

Damn, these are very serious charges! I mean illegal payment processor that is a bit US way to make all Bitcoin related businesses get heavily regulated, but all of this above is much more serious than illegal payment processor.

With these charges, they are pretty much done!

Especially in a country where theft and financial crimes yield stronger punishment than most classes of murder prosecution.. It's a message to not mess with the rich or tax system they own.

I would have hoped by now that anyone running an exchange or using an exchange shouldn't be anywhere close to NYC because of the BitLicense nonsense. Trying to regulate Bitcoin is pointless since more and more exchanges will keep popping in other places where there aren't said regulations and people will use those services.

Well there is since the begining a black market where people sell and buy bitcoins without no one between them,soo a new exchange that hasnt a license isnt nothing new todays ,but well sure to run an exchange todays there are a lot issues to be done before be able to have on with a good income.

This is why i dont use unknown exchange, only use the well known and trusted one because you will have less a chance of them doing something bad ::)
Except cryptsy, they are on a watch list for now :P

A compliance officer only making $36k-$48k a year? Maybe if he's a teenager. lol My companies controller made $120k annually and the compliance officer was in the 90s. Both are VP level positions.

What counts in NYC WHO IS CRIMINAL and who is not?  ???

Where do you think state and national infrastructure and public property funding comes from? Taxes.

Unless you're going to seriously say people putting capital from commerce in to non-taxed currency doesn't hurt the host nation. That type of logic seems to work for justifying software piracy.

They were Jewish also judging by their name...  Since when can we trust them with our investments?

Yes, but it is not required to hire someone with high experience if you own a small company. We are not talking about Chase bank:).

He/she can learn along the way...but you are required  by law to hire someone on this position. That's why I said around of 45K/year.

The lack of a professional trained compliance officer leads to the BitInstant scenario.

If it was all money laundry practices..?? .

and whether the news is true it is..??

or just to drop a bad image towards BTC ..??

this only gives a bad name to digital currency...

Agree, but once the company grows you can hire a skilled compliance officer. Imagine that a small company cannot afford to pay someone with 10K per month +taxes.
Also, that company has many other expenses as well. Again, we are talking about a small company and not about something like Coinbase who had a lot of connections in the millionaire's world from California.

What I am saying is that a Bitcoin exchange (small company with a low budget; lower than 30,000 USD per month) has no chance to success in USA because it cannot cover the functional costs.

And pretty much any policy or design you care to mention will be assumed the mmaaaaaaannn trying to bring it down. Want a exchange to have verified owner identities with it? You're the mmaaaaaaaannn trying to bring down freedom.. Stop being a fascist..

This will be the reality and the rep till the average investor and user see bitcoin as a currency and not something valuable with nobody watching..

Many illegal Bitcoin activities are easily torn apart and failing many times. We'll be fine.

but good luck integrating it with a significant portion of society or a government when there are still people running off with millions and never identified..

I can go make a exchange or tumbler right now and run off with queued or stored bitcoin in months when it builds and nobody will ever even know my name.. I see dozens of such every few months..

Bitcoin is too grab&run to work as a currency right now..

yeah like the dude that stole that great amount of bitcoin on bitstamp, still untraced, and not caught

some of them know how to hide themselves very well, it will be practically impossible to trace

It's easy to say, but not easy when it comes to catch those bastards who commit such crimes stealing "monies" of people...
It's just in the computer, government officials tried to trace Satoshi but did they find him really???
(NOT TRYING TO SAY THAT SATOSHI'S A CRIMINAL)...

Bitcoin is anonymous so it has become good way for scammers and criminal to move funds and fbi are also getting irritated to trace the transaction. However on end those people get caught not due to trace of transaction but due to some silly human mistakes like silkroad owner have done unknowingly.

They didn't catch the dude that stole money from Bitfinex either, or the dude that stole money from Bter, or the dude that exit scammed the evolution market by stealing everyone's money. Sometimes they catch a thief like the Sheep marketplace owner who was arrested after exit scamming by stealing everyone's money, but most of the thieves get away with it.

Thought about the same as others when I read it. 18$ million in fees? that means a pretty high volume for a exchange I have never heard about till now. If they are helping criminal activity, it is good that they are caught.

Anyone used that exchange?

DO you really need a bitlicense to start a bitcoin exchange ? :o I was never aware of that ? How do we know a specific website or exchange is a approved of that license ?Does bitcoin organisation issues this licenses?

First thing is that people like this make me sick, if they were truly laundering money for criminal activity, but it sickens me just as much to hear about all these laws requiring licensing and such when it comes to accepting Bitcoin.  So does this mean that everyone who accepts Bitcoin for payment needs to have a license?  How far will ti go? People need to start stand up and fighting this before the governments shuts it down before we can push it forward.

While I have no idea about the money laundering or hacking allegations, and therefore will not speak of it, I can say that I used Coin.mx dozens of times in the past to buy BTC instantly with my credit/debit card. Nearly every transaction was flawless; could deposit, purchase, and withdraw funds instantly once verified. The few times that there were slight hiccups, due to site maintenance or something similar, their Support team was amazing and very helpful. They also had a great referral system where you and the person you referred got $5-$15 of Bitcoin for free, which they honored every time. Their exchange was one of the only BTC exchanges I would actually recommend to people, because they were honest and easy to use.

I just wanted to speak up on their behalf, with other people commenting calling them scammers. In my personal experience buying Bitcoin through them I can say that they were very legitimate. I have no idea about the claims of illegal activity, but I am sad to see them caught up in that if true. Also, their fees for buying BTC with credit/debit were pretty high, but with many people scamming them with chargebacks after buying BTC, the fees had to be higher to account for that.

100 million $ :O

but it's a famous exchange?
never heard of it!

the next ones are Kraken, Coinsetter, US exchangers without financial license.