Bitcoin Forum

Internet-traded bitcoins are a form of currency . . . a Texas federal judge ruled Tuesday

Bitcoin is a form of currency because it can be used to purchase goods or services and exchanged for more traditional forms of money, U.S. Magistrate Judge Amos L. Mazzant wrote in a decision Tuesday

Bitcoin is a form of currency because it can be used to purchase goods or services and exchanged for more traditional forms of money

Bullshit, the same apply to gold but gold IS NOT money

http://www.forbes.com/sites/afontevecchia/2011/07/13/bernanke-fights-ron-paul-in-congress-golds-not-money/

And since bitcoin is, in my opinion, digital gold, i say that it is not money.

Law360, Los Angeles (August 06, 2013, 9:03 PM ET) -- Internet-traded bitcoins are a form of currency subject to federal securities laws, a Texas federal judge ruled Tuesday, refusing to dismiss the U.S. Securities and Exchange Commission's claims accusing the founder of Bitcoin Savings & Trust of running a Ponzi scheme.

Bitcoin is a form of currency because it can be used to purchase goods or services and exchanged for more traditional forms of money, U.S. Magistrate Judge Amos L. Mazzant wrote in a decision Tuesday.

Bullshit, the same apply to gold but gold IS NOT money

http://www.forbes.com/sites/afontevecchia/2011/07/13/bernanke-fights-ron-paul-in-congress-golds-not-money/

And since bitcoin is, in my opinion, digital gold, i say that it is not money.

Now my question is: is gold considered "currency" for USA?

Well, i already know that stealing gold is punished, no need for that.

I am not saying that bitcoins can be stolen because they are not currencies! Of course if pirate ran that bitcoin ponzi he must be punished

I think, if I set up contracts to give 1 apple per day in exchange for a one-time payment of 10 apples, then when I run away it should still be illegal. It would be an other question whether it is a Ponzi scheme, rather than merely a breach of contract.

Looks like pirateat40's case is being tried in Texas.

If his best defense is that "Bitcoin is not real money" he needs to hire a new lawyer

He is representing himself http://www.rpgcodex.net/forums/smiles/emo-emot-smug.gif

Bullshit, the same apply to gold but gold IS NOT money

http://www.forbes.com/sites/afontevecchia/2011/07/13/bernanke-fights-ron-paul-in-congress-golds-not-money/

And since bitcoin is, in my opinion, digital gold, i say that it is not money.

It is clear that Bitcoin can be used as money.  [...]  The only limitation of Bitcoin is that it is limited to those places that accept it as currency.

Black's defines money (http://thelawdictionary.org/money/) as anything used as money, and currency (http://thelawdictionary.org/currency/) as the subset of money that has been authorized by law.  The is different from conventional usage which holds the two terms to be synonyms, only weakly defined.

The judge in this case is clearly using the two words interchangeably, consistent with conversational English, and clearly also in the very broad definition that Black held for money.


If BTCST had traded in gold coins I would expect pretty much the same ruling.  For that matter, if there was a community that used sheep as money, and he had run this scam on them, I'd fully expect the judge to interpret the "investment of money" fork of the Howey test through the victim's eyes and issue the same ruling.

Lawyers have an ethical duty to try every possible defense, so this question was inevitable.  Of course, the answer was just as inevitable, as some of us have been saying for the last few years now.  Courts mostly operate on value, and most of the value that they see is not granted by the decree of some authority, but by the perceptions of the parties involved.

Let all of the scammers be on notice.  Your defense is now solely in your ability to keep your scams small enough that it isn't worth hunting you down.  Your claims that it wasn't really theft/fraud/whatever because bitcoins aren't issued by the government will fall on deaf ears, and some of you are going to end up in prison......

2. Bitcoin being defined as "currency" by a Federal Judge is actually bad as it opens Bitcoin up to a whole host of US laws designed to prevent people from creating their own currency. Can you say "Liberty Dollar".

2. Bitcoin being defined as "currency" by a Federal Judge is actually bad as it opens Bitcoin up to a whole host of US laws designed to prevent people from creating their own currency. Can you say "Liberty Dollar".

http://www.law360.com/articles/462977



It's nice to see the U.S. courts acknowledge reality once in awhile.

THIS should be the concern. Bitcoin being a currency means now the entire banking infra can enforce laws and policies on bitcoin. Welcome to fees, regulation, and loss of freedom.

This!

My thought exactly. If Bitcoin is considered money then that will automatically ruin its "decentralized" nature.

- snip -
If you exchange bitcoins for fiat currencies it is income regardless, and you will have to pay taxes on it with or without these type of rulings.

If he used toothpicks instead of bitcoins, Judge would rule investment securities either way.

Black's defines money (http://thelawdictionary.org/money/) as anything used as money, and currency (http://thelawdictionary.org/currency/) as the subset of money that has been authorized by law.  The is different from conventional usage which holds the two terms to be synonyms, only weakly defined.

Right. The judge's opinion is simply that "Bitcoin investments met the requirements of an investment contract and thus constituted “securities” under federal securities laws." This is based on a Supreme Court decision: "An investment contract is any contract, transaction, or scheme involving (1) an investment of money, (2) in a common enterprise, (3) with the expectation that profits will be derived from the efforts of the promoter or a third party." That's Bitcoin. Deal with it.

This has some implications. One is that anyone operating a "Bitcoin exchange" in the US will have to meet the SEC requirements for being a broker/dealer.  

This could set a precedent in one federal district. That could also be appealed and may end being interpreted differently in different federal districts.

It will be important for a direct case challenging regulation to be brought when the feds finally decide to actually take one of the exchanges to court.

I think it is pretty clear in this context that the judge is right.  It is hard to imagine any judge applying the Howey test (http://en.wikipedia.org/wiki/Securities_and_Exchange_Commission_v._W._J._Howey_Co.) getting hung up on a narrow definition of money.

It is important to keep in mind that the judge is merely confirming what everyone already knows, namely that bitcoin is used as money.  In this case, he's deciding whether or not an "investment of money" was offered.  The law in question is about regulating "investment of money", not about money itself.

I wouldn't read a whole lot into this.  The judge isn't saying that bitcoin itself is a security subject to regulation under the Securities Act, just that contracts which would otherwise be covered by that act aren't excluded just because the money used isn't the dollar.

Create a gold based Ponzi scheme and I guess we'll find out.
 ;D

Would this apply to those that exchange Bitcoin<->USD and vice versa out in the open (Satoshi Square)? I'm thinkin of starting an open exchange where I live but don't want to get in trouble for it.

well, if you make a business out of it instead of an occasional swap here and there you probably would want to cover your bases with your State and FinCEN

Nagle, these implications were understood well in advance to this 'precedent', well before FinCEN/GAO guidelines released earlier this year. I remember saying it here on this forum back in 2011, if a business is in handling and processing 3rd party USD here in States, first-most thing such business needs is to become licensed for money transmitting and money business service and fully AML compliant in every state it's going to operate. I just don't see how current case relates to or affects any of this.

Would this apply to those that exchange Bitcoin<->USD and vice versa out in the open (Satoshi Square)? I'm thinkin of starting an open exchange where I live but don't want to get in trouble for it.

it's called Precedent

http://en.wikipedia.org/wiki/Precedent

well, if you make a business out of it instead of an occasional swap here and there you probably would want to cover your bases with your State and FinCEN

Nagle, these implications were understood well in advance to this 'precedent', well before FinCEN/GAO guidelines released earlier this year. I remember saying it here on this forum back in 2011, if a business is in handling and processing 3rd party USD here in States, first-most thing such business needs is to become licensed for money transmitting and money business service and fully AML compliant in every state it's going to operate. I just don't see how current case relates to or affects any of this.

the precedent with this particular case is that
- snip -

Well sadly FinCEN guidance doesn't just stop at third party funds they include second party as well (but only for Bitcoin) so that was not entirely expected.

Example:  you send money to BCB by WU.
you ----> WU -----> BCB  
Obviously a Money Transmitter.

Example: you exchange USD for Euros with a currency exchanger at the airport.
USD:  You ----> Broker
EUR:  Broker ---> You
Not a Money Transmiter.  It is a MSB (dealer in foreign currency) but the rules at the state level are negligible compared to a money transmitter

Example: you exchange USD for BTC with a BTC dealer/broker (coinbase)
USD:  You ----> Coinbase
BTC:  Coinbase ----> You

Between the three scenarios, the later two have far more in common then the first one.  The last two only involve two parties (a business and its customer) while the "classic" MT example Western Union involves three parties (sender, MoneyTransmitter, receiver).  However FinCEN ruled that an exchanger of virtual currency is a money transmitter while an exchanger of real currency (under MSB regs of BSA) is NOT a MT but a different class of MSB.

This is the result of FinCEN trying to force a round peg into a square hole.  

This case isn't over yet.  There is plenty of time for both defense and plaintiff to make a variety of arguments about what bitcoin is or isn't.  How bitcoin is defined, how its value is determined, and how ownership is determined could all play a part in this case.  There is no way to know for certain what precedent will be set by this case until after it is over.

this is interesting and you have a good point. but if you take MtGox for example there are no You << >> MtGox exchanges, there are You authorizing MtGox to handle your funds and orders on your behalf with other parties - clearly a transmitter, such as paypal btw.

On this we can all agree. except i don't think it's important in this case how bitcoin is defined to be honest.

This is the result of FinCEN trying to force a round peg into a square hole. 

the precedent with this particular case is that if you operate bitcoin securities business here in states you fall under SEC jurisdiction, that is all, no other precedent had been ruled and established with it.

This case isn't over yet.  There is plenty of time for both defense and plaintiff to make a variety of arguments about what bitcoin is or isn't.  How bitcoin is defined, how its value is determined, and how ownership is determined could all play a part in this case.  There is no way to know for certain what precedent will be set by this case until after it is over.

I guess this paves the way for more regulations and other B/S as well.  Then again with all the trouble Mt. Gox was having maybe we're already at that point.

I agree although ironically again Forex companies are not MT they are broker dealers.  Still if FinCEN articulated third party that would at least be consistent with existing classification.  However FinCEN didn't leave the line there.  They went with ANY exchange (unless exempt) of real currency for virtual currency or virtual currency for another virtual currency they felt the need to include virtual to virtual yet real to real is not consider a MT by existing law.

The funny (if it wasn't costing me a small fortune) part is that means it works like this (unless an exemption applies):
Exchange Virtual Currency for Virtual Currency = Money Transmitter
Exchange Virtual Currency for Real Currency = Money Transmitter
Exchange Real Currency for Virtual Currency = Money Transmitter
Exchange Real Currency for Real Currency = Not a Money Transmitter

I guess this paves the way for more regulations and other B/S as well.  Then again with all the trouble Mt. Gox was having maybe we're already at that point.

Create a gold based Ponzi scheme and I guess we'll find out.
 ;D

Create a gold based Ponzi scheme and I guess we'll find out.

There have been many, many gold-based Ponzi schemes. Here's  one from this year. (http://www.nypost.com/p/news/local/manhattan/ponzi_scheme_busts_67w0utUZicaTBCn8vFWIvN) Gold mining scams go back to the 18th century at least. Here's some background. (http://www.cerm3.mining.ubc.ca/documents/areviewofrecentminingstockscams.pdf)

It's worth learning about the history of financial scams. None of the ones involving Bitcoin are new.

Bullshit, the same apply to gold but gold IS NOT money

http://www.forbes.com/sites/afontevecchia/2011/07/13/bernanke-fights-ron-paul-in-congress-golds-not-money/

And since bitcoin is, in my opinion, digital gold, i say that it is not money.

gold is different it has monetary value bitcoin does not, our money is not backed by gold anymore so it is kind of like bitcoin its not backed by anything.

1. Trendon Shavers isn't going to jail at all in this proceeding, this is a civil action only.

2. Bitcoin being defined as "currency" by a Federal Judge is actually bad as it opens Bitcoin up to a whole host of US laws designed to prevent people from creating their own currency. Can you say "Liberty Dollar".


Just my .02 btc,


~BCX~

And gold is not backed by anything.

[Gold] has monetary value

our money... its not backed by anything.

The same does not apply to gold because gold cannot be spent as a day to day currency as it is not accepted anywhere, because raw gold is unsuitable to be a currency in this age. Bitcoin however can already be used to purchase goods and services from a growing list of vendors. So yes, Bitcoin is currency. Gold is a store of wealth and speculative tool.

ummmm YEP!!

Sorry but I am pretty sure Gold would be accepted by a fuck load more people on the planet in exchange for goods and services then bitcoin ever would.

Bitcoins a speculative tool and almost completely useless as a legit currency.

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anyway this is all US centered bs.....there's a few billion other people outside the US who don't give a flying fuck about US judges or congress or whatever

You are very shortsighted.  I'm not necessarily saying that bitcoin will be accepted "by a fuck load more people on the planet in exchange for goods and services", but I see that as one potential outcome.

Gold on the other hand is a speculative tool and almost completely useless as a internet age currency.

Bullshit, the same apply to gold but gold IS NOT money

http://www.forbes.com/sites/afontevecchia/2011/07/13/bernanke-fights-ron-paul-in-congress-golds-not-money/

And since bitcoin is, in my opinion, digital gold, i say that it is not money.

You can say what you want, but apparently the U.S. court has decided to define bitcoin with the label of "currency" (which probably has more to do with the ineptitude of Mr. Shaver's legal team than with the judge's deep understanding of the technical issues behind defining bitcoin).

The fact that Mr. Bernanke chooses to state that gold is not "money" has very little to do with whether the U.S. courts would consider gold to be a "currency".

Can you find me a court case where gold was determined not to meet the requirements of being a currency?

As much as I'd like to see Mr. Shavers spend time in jail for his crimes, I really want him to have the best legal team possible.  This case is likely to set a lot of precedents for bitcoin, and if his legal team isn't top notch, many of those precedents are likely to be detrimental to bitcoin in the long term.

Edit: it's ok found it a few posts down
who's mr shavers? all google gave me was mach 3's (not really mach 3's but lots of hairdressers)

Create a gold based Ponzi scheme and I guess we'll find out.
 ;D