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Bitcoin => Bitcoin Discussion => Topic started by: crazy_rabbit on May 15, 2013, 04:31:54 AM



Title: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: crazy_rabbit on May 15, 2013, 04:31:54 AM
Okay, as an American I can't help but think that Homeland Security might have a vested interest in not allowing the future of world currency to have it's power base in a non-american country.

Speaking cynically- this is a perfect opportunity for a large domestic (American Domestic) Bitcoin exchange to appear, most likely funded by the same people who fund the banks. (I know, tears in my eyes)

That said, for us "early adopters" it's a sign that Bitcoin is indeed the great all powerful financial dragon we always knew it to be. So dear Homeland security: I cringe at the thought that you might trample freedom, but if your actions serve to validate Bitcoin by reminding everyone you take it seriously as money (and subsequently make bitcoins worth $10,000 each down the road) I can but thank you.

There's a quote in american passports: "Go West Bitcoin young man, and grow up with the Nation".

Indeed! Exciting times!

EDIT: I'm just waiting for the quote "Those who would trade freedom for security deserve neither" to be worked into this.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: gramma on May 15, 2013, 04:35:31 AM
The NY Post seems to agree with you, and it is an interesting thought.  I look forward to what the morning will bring.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: Benson Samuel on May 15, 2013, 04:37:20 AM
Okay, as an American I can't help but think that Homeland Security might have a vested interest in not allowing the future of world currency to have it's power base in a non-american country.

Speaking cynically- this is a perfect opportunity for a large domestic (American Domestic) Bitcoin exchange to appear, most likely funded by the same people who fund the banks. (I know, tears in my eyes)

That said, for us "early adopters" it's a sign that Bitcoin is indeed the great all powerful financial dragon we always knew it to be. So dear Homeland security: I cringe at the thought that you might trample freedom, but if your actions serve to validate Bitcoin by reminding everyone you take it seriously as money (and subsequently make bitcoins worth $10,000 each down the road) I can but thank you.

There's a quote in american passports: "Go West Bitcoin young man, and grow up with the Nation".

Indeed! Exciting times!

EDIT: I'm just waiting for the quote "Those who would trade freedom for security deserve neither" to be worked into this.

+1


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: freedomno1 on May 15, 2013, 04:39:04 AM
Rarely can we say that Homeland security did good  ;D
Sorry topic name made me laugh nice


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: joesmoe2012 on May 15, 2013, 04:47:42 AM
Hopefully it will force more, better exchanges.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: Elwar on May 15, 2013, 04:48:20 AM
Baby steps. They must have seen how many people were wanting exchanges to be more decentralized so they went after MtGox to help us all move on to many other exchanges.

Thanks DHS.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: joesmoe2012 on May 15, 2013, 04:51:12 AM
Baby steps. They must have seen how many people were wanting exchanges to be more decentralized so they went after MtGox to help us all move on to many other exchanges.

Thanks DHS.

Exactly. Now that 90% of the traddes aren't hogged by mtgox, more exchanges will have the money to grow and thrive. The only reason mtgox is doing so well is all the media hype about it. Now that people will be forced to use different exchanges, we should consider ourselves lucky.

Spread out the money for trading to multiple exchanges, this is better for the trader because it introduces competition (of price, features, robustness, etc).

Hopefully a bunch of people don't lose their money though by mtgox claiming that the us govt seized the assets so there's nothing they can do.

I already bought BTC with all my USD@mtgox and sent it elsewhere.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: solex on May 15, 2013, 04:54:41 AM
I'm now not sure DHS is attacking Bitcoin. Maybe they are trying to attack specific users of it (e.g. online gambling providers):

https://bitcointalk.org/index.php?topic=178336.msg2152242#msg2152242



Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: bobdude17 on May 15, 2013, 06:32:26 AM
Okay, as an American I can't help but think that Homeland Security might have a vested interest in not allowing the future of world currency to have it's power base in a non-american country.

Speaking cynically- this is a perfect opportunity for a large domestic (American Domestic) Bitcoin exchange to appear, most likely funded by the same people who fund the banks. (I know, tears in my eyes)

That said, for us "early adopters" it's a sign that Bitcoin is indeed the great all powerful financial dragon we always knew it to be. So dear Homeland security: I cringe at the thought that you might trample freedom, but if your actions serve to validate Bitcoin by reminding everyone you take it seriously as money (and subsequently make bitcoins worth $10,000 each down the road) I can but thank you.

There's a quote in american passports: "Go West Bitcoin young man, and grow up with the Nation".

Indeed! Exciting times!

EDIT: I'm just waiting for the quote "Those who would trade freedom for security deserve neither" to be worked into this.

Well said.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: Stephen Gornick on May 15, 2013, 10:44:21 AM
Okay, as an American

You might want to put an asterisk on that statement:

Would anyone be interested in a Bitcoin meetup here in Milano?


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: aepfel on May 15, 2013, 12:10:45 PM
That thread, my dearest crazy_rabbit made my day. Thank you!


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: Liquid on May 15, 2013, 12:21:04 PM
This calmed my thoughts thank you  :D


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: alyssa85 on May 15, 2013, 01:30:01 PM
Okay, as an American I can't help but think that Homeland Security might have a vested interest in not allowing the future of world currency to have it's power base in a non-american country.

Speaking cynically- this is a perfect opportunity for a large domestic (American Domestic) Bitcoin exchange to appear, most likely funded by the same people who fund the banks. (I know, tears in my eyes)


It's only an issue if you need exchanges to change back into fiat.

The worst thing that happened to bitcoin was speculators piling in treating it like a commodity to increase their dollars. It's meant to be a peer-to-peer currency - so as such doesn't need banks nor exchanges as long as you stay in Bitcoin-World once you have your coins. This obsession with "trading" back and forth into fiat and watching the dollar price is a weakness. Govts can only control fiat and the use of fiat, so all these exchanges are points of weakness because they need conversion into fiat. Eliminate the obsessive need to switch back into fiat and you eliminate the threat of govts.

Perhaps the community needs to switch focus on teaching people how to earn bitcoins and strengthening bitcoin commerce, so that people don't ever have to deal with exchanges and banks, bitcoins will just circulate within bitcoin-world. Once that happens, bitcoin is beyond the reach of any government.

Can someone explain to me why everyone is so obsessed with trading against fiat?


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: uhoh on May 15, 2013, 02:28:41 PM
Baby steps. They must have seen how many people were wanting exchanges to be more decentralized so they went after MtGox to help us all move on to many other exchanges.

Thanks DHS.

This. The best thing about this news: we might finally get some decent liquidity into BETTER exchanges.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: Yogafan00000 on May 15, 2013, 02:31:28 PM

Can someone explain to me why everyone is so obsessed with trading against fiat?

You need exchanges to bootstrap the mainstream into the bitcoin currency.  This is going to take a decade and large numbers of people will not migrate into bitcoin without a stable exchange industry.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: stevegee58 on May 15, 2013, 02:45:08 PM
I welcome any events that mute this constant comparison between BTC and USD (or any other fiat currency for that matter).
We'll know when BTC has finally come of age when people are exchanging BTC for goods and services without first worrying about what the fiat exchange rate is.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: Zeke_Vermillion on May 15, 2013, 04:09:53 PM
I'm now not sure DHS is attacking Bitcoin. Maybe they are trying to attack specific users of it (e.g. online gambling providers):

https://bitcointalk.org/index.php?topic=178336.msg2152242#msg2152242



I would agree that is the most likely scenario. Attacking online gambling, contraband merchants, etc. Maybe the fix is to have each exchange customer in a SEPARATE bank account so that the feds can seize a single offending account instead of shutting the whole system down.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: Deslock Darkstar on May 15, 2013, 04:34:32 PM

It's only an issue if you need exchanges to change back into fiat.

The worst thing that happened to bitcoin was speculators piling in treating it like a commodity to increase their dollars. It's meant to be a peer-to-peer currency - so as such doesn't need banks nor exchanges as long as you stay in Bitcoin-World once you have your coins. This obsession with "trading" back and forth into fiat and watching the dollar price is a weakness. Govts can only control fiat and the use of fiat, so all these exchanges are points of weakness because they need conversion into fiat. Eliminate the obsessive need to switch back into fiat and you eliminate the threat of govts.

Perhaps the community needs to switch focus on teaching people how to earn bitcoins and strengthening bitcoin commerce, so that people don't ever have to deal with exchanges and banks, bitcoins will just circulate within bitcoin-world. Once that happens, bitcoin is beyond the reach of any government.

Can someone explain to me why everyone is so obsessed with trading against fiat?

DING, DING, DING! Give this person a cigar....


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: lunarboy on May 15, 2013, 05:18:57 PM

EDIT: I'm just waiting for the quote "Those who would trade freedom for fiat deserve neither" to be worked into this.

fixed  ;D


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: LorenzoMoney on May 15, 2013, 05:30:42 PM
Why do we all obsess about the price of Bitcoin against fiat currency? Because you cannot yet walk into your local grocery store and buy food with bitcoin. Because almost no one is paid in bitcoin. The day that a person can work and get paid in bitcoin, can pay taxes in bitcoin, buy gasoline in bitcoin, pay rent in bitcoin and buy dog food in bitcoin is the day that no one will really worry about what the price of bitcoin is relative to any local fiat currency.



Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: esenminer on May 15, 2013, 05:35:50 PM
 Unless I misunderstood the chain of events is as follows:

When purchasing with Dwolla

1) You send money to Dwolla
2) Dwolla transfers money to Mutum Sigillum
3) Mutum Sigillum transfers money to Mt Gox in Japan
4) Mt Gox credits your account

and the reverse when you sell into Dwolla

1) Mt Gox debits your account
2) Mt Gox sends transfer to Mutum Sigillum in US
3) Mutum Sigillum transfers money to Dwolla
4) Dwolla credits your account.

The affidavit states that when opening the account Mutum Sigillum answered 'No' to 'Do you deal in or exchange currency for your customers?' and 'No' to 'Does your business accept accept funds from customers and send the funds based on customer's instructions?' - so really the part of the law they broke has nothing to do with Bitcoin it's the transfer of funds between Mutum Sigillum and Mt Gox - maybe they believed this was legal (or a lawyer advised them as such) but clearly Mutum Sigillum accepts funds from customers and sends the funds based on customer's instructions even if Dwolla is in the middle. Really they should have just answered yes and complied with FinSEC. Anybody who has tried to send a wire transfer greater than $10k or even a Western Union greater than $1k has probably run into FinSEC regulations - mainly that the sender has to identify himself properly and that the transfer has to be reported.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: axus on May 15, 2013, 05:49:26 PM
In 2011, it could be argued that Bitcoin wasn't a currency.  Mt.Gox does not transmit USD, Euro, etc, or exchange between traditional currencies.  They take real currency from a customer, and facilitate trades of real currency for bitcoins.  This is no different from buying/selling World of Warcraft gold for real currency.  You could extend this further, and say that it is the same as any auction site.  Is Ebay a money transmitter, because you can buy/sell things?  Doesn't every single business "exchange money" for goods or services?

Unless I misunderstood the chain of events is as follows:

When purchasing with Dwolla

1) You send money to Dwolla
2) Dwolla transfers money to Mutum Sigillum
3) Mutum Sigillum transfers money to Mt Gox in Japan
4) Mt Gox credits your account

and the reverse when you sell into Dwolla

1) Mt Gox debits your account
2) Mt Gox sends transfer to Mutum Sigillum in US
3) Mutum Sigillum transfers money to Dwolla
4) Dwolla credits your account.

The affidavit states that when opening the account Mutum Sigillum answered 'No' to 'Do you deal in or exchange currency for your customers?' and 'No' to 'Does your business accept accept funds from customers and send the funds based on customer's instructions?' - so really the part of the law they broke has nothing to do with Bitcoin it's the transfer of funds between Mutum Sigillum and Mt Gox - maybe they believed this was legal (or a lawyer advised them as such) but clearly Mutum Sigillum accepts funds from customers and sends the funds based on customer's instructions even if Dwolla is in the middle. Really they should have just answered yes and complied with FinSEC. Anybody who has tried to send a wire transfer greater than $10k or even a Western Union greater than $1k has probably run into FinSEC regulations - mainly that the sender has to identify himself properly and that the transfer has to be reported.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: k9quaint on May 15, 2013, 05:52:11 PM
Unless I misunderstood the chain of events is as follows:

When purchasing with Dwolla

1) You send money to Dwolla
2) Dwolla transfers money to Mutum Sigillum
3) Mutum Sigillum transfers money to Mt Gox in Japan
4) Mt Gox credits your account

and the reverse when you sell into Dwolla

1) Mt Gox debits your account
2) Mt Gox sends transfer to Mutum Sigillum in US
3) Mutum Sigillum transfers money to Dwolla
4) Dwolla credits your account.

The affidavit states that when opening the account Mutum Sigillum answered 'No' to 'Do you deal in or exchange currency for your customers?' and 'No' to 'Does your business accept accept funds from customers and send the funds based on customer's instructions?' - so really the part of the law they broke has nothing to do with Bitcoin it's the transfer of funds between Mutum Sigillum and Mt Gox - maybe they believed this was legal (or a lawyer advised them as such) but clearly Mutum Sigillum accepts funds from customers and sends the funds based on customer's instructions even if Dwolla is in the middle. Really they should have just answered yes and complied with FinSEC. Anybody who has tried to send a wire transfer greater than $10k or even a Western Union greater than $1k has probably run into FinSEC regulations - mainly that the sender has to identify himself properly and that the transfer has to be reported.

Why would they need to transfer the money from Mutum Sigillum in US to Mt Gox in Tokyo for each customer transaction? As long as the Japanese regulators are happy, they could leave all or part of that pile of USD in Mutum Sigillum US.

Also, I am not sure what "customer instruction" could result in Mt Gox "sending" that money elsewhere. It is more like a merchant purchase deposit account than a currency exchange or money transmitting business. Money transmitting implies multiple destinations, deposit implies a single destination.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: wormbog on May 15, 2013, 05:59:41 PM
The MtGox head opened a US bank account under false pretenses. After FinSEC published their guidelines he failed to come into compliance, presumably based on the assumption that the Mutum Sigillum intermediary was enough to insulate him from prosecution. This prosecution was inevitable.

This action will put the fear into other exchange owners, who will now either shut down or come into compliance.

End result - legitimate, insured exchanges available to the masses. Bitcoin becomes ready for mainstream adoption.

No wonder so many VC's in Silicon Valley are pissing their pants with excitement!


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: esenminer on May 15, 2013, 06:07:09 PM
The actual warrant has nothing to do with Bitcoin. I'm guessing that Dwolla would only transfer to US accounts. Mt Gox setup a company in the US with a US account and used that account to act an intermediary between Mt Gox and Dwolla. In doing so they broke money laundering rules because this transfer of money was at the request of a client - not simply money in exchange for goods.

Say you want to put 10k USD into mt gox. You put 10k into Dwolla, Dwolla transfers to Mutum Sigillum and the Mutum Sigillum transfers to Mt Gox in Japan - the last step breaks US laws since its transferring money at your request as so it (according to the affidavit) makes it a money services provider and as a money services provider it has to comply with FinSEC - for example it has a duty to report the transfer for amounts over $x. Why you're transferring the money into Mt Gox is not important it's the transfer of funds between the two companies which breaks the law.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: esenminer on May 15, 2013, 06:08:47 PM
The MtGox head opened a US bank account under false pretenses. After FinSEC published their guidelines he failed to come into compliance, presumably based on the assumption that the Mutum Sigillum intermediary was enough to insulate him from prosecution. This prosecution was inevitable.

This action will put the fear into other exchange owners, who will now either shut down or come into compliance.

End result - legitimate, insured exchanges available to the masses. Bitcoin becomes ready for mainstream adoption.

No wonder so many VC's in Silicon Valley are pissing their pants with excitement!

I agree this will only force other exchanges to comply with existing laws which can only be good for Bitcoin.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: glendall on May 15, 2013, 06:13:06 PM
Going to be very interesting and expensive legal case if MTGOX even bothers .


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: AZIZ1977 on May 15, 2013, 08:14:03 PM
The MtGox head opened a US bank account under false pretenses. After FinSEC published their guidelines he failed to come into compliance, presumably based on the assumption that the Mutum Sigillum intermediary was enough to insulate him from prosecution. This prosecution was inevitable.

This action will put the fear into other exchange owners, who will now either shut down or come into compliance.

End result - legitimate, insured exchanges available to the masses. Bitcoin becomes ready for mainstream adoption.

No wonder so many VC's in Silicon Valley are pissing their pants with excitement!

I agree this will only force other exchanges to comply with existing laws which can only be good for Bitcoin.

Why should it be good? When crypto currency exchanges start to be regulated by the FED than they will introduce restrictions, taxes, etc.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: Rassah on May 15, 2013, 08:47:12 PM
The worst thing that happened to bitcoin was speculators piling in treating it like a commodity to increase their dollars. It's meant to be a peer-to-peer currency - so as such doesn't need banks nor exchanges as long as you stay in Bitcoin-World once you have your coins. This obsession with "trading" back and forth into fiat and watching the dollar price is a weakness. Govts can only control fiat and the use of fiat, so all these exchanges are points of weakness because they need conversion into fiat. Eliminate the obsessive need to switch back into fiat and you eliminate the threat of govts.

Um, no, speculation and fiat exchange was the best thing that happened to Bitcoin. It's the only reason that it's worth more than $1 per bitcoin right now, and is probably the only reason a lot of people, including you, have even heard of it, let alone taken it seriously. The idea that "if only we all used bitcoin without needing to exchange into fiat" is silly, since to get there, EVERYONE would have to be using bitcoin for everything already. That's the LAST step of bitcoin adoption, not the first, since even if you buy something with bitcoin, someone, somewhere, will have to trade those coins for cash to buy materials from suppliers, or food and room to sleep in.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: stevegee58 on May 15, 2013, 08:52:30 PM
No.  In the absence of a fiat currency exchange reference, buyers and sellers of goods and services would have arrived at pricing for their goods and services in BTC completely independently.

Look up auction theory and price theory.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: esenminer on May 15, 2013, 09:03:58 PM
The MtGox head opened a US bank account under false pretenses. After FinSEC published their guidelines he failed to come into compliance, presumably based on the assumption that the Mutum Sigillum intermediary was enough to insulate him from prosecution. This prosecution was inevitable.

This action will put the fear into other exchange owners, who will now either shut down or come into compliance.

End result - legitimate, insured exchanges available to the masses. Bitcoin becomes ready for mainstream adoption.

No wonder so many VC's in Silicon Valley are pissing their pants with excitement!

I agree this will only force other exchanges to comply with existing laws which can only be good for Bitcoin.

Why should it be good? When crypto currency exchanges start to be regulated by the FED than they will introduce restrictions, taxes, etc.

When the government brings regulation into an industry / sector etc.. it also brings legitimacy which brings trust which increases adoption etc...

I don't see why regulating exchanges would be a bad thing - for example the SEC regulates the stock markets in the US and most of the rules they enforce - like insider trading - are meant to protect investors not the exchange. For example imagine this.

1) I create a new coin called the XYZCoin and premine it.

2) At the same time I setup an exchange which trades XYZCoin.

3) I prepopulate the exchange with a couple of fake trades showing that XYZCoin is worth $0.03 or something. Maybe I put ''Trades might be simulated' in fine print somewhere.

Who's to say that the coins aren't worth $0.03? What if people actually sign up to trade and somebody purchases my premined coins? What if after I sell my coins I just shut down the whole thing?

This is why regulation is needed - things like this, you shouldn't be able to create a virtual-currency and then turn around and run / influence an exchange - it's a clear conflict of interest. You can't report that a virtual-currency traded at a value when it hasn't. Right now I don't even think a virtual-currency like Bitcoin has legal status so it makes it impossible to enforce any existing laws (like theft).

As for taxes I have no comment :) The US takes it's tax laws very seriously so, yeah, you should always pay your taxes if you live there. I might be mistaken but I think that you only need to pay taxes on something like Bitcoin when you convert to USD - assuming you live in the US. In theory if you never converted to USD then there would be nothing legally to pay taxes on.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: ScriptGadget on May 15, 2013, 09:08:38 PM
No.  In the absence of a fiat currency exchange reference, buyers and sellers of goods and services would have arrived at pricing for their goods and services in BTC completely independently.

Look up auction theory and price theory.

This.

I'm alot more interested in Bitcoin on its own than I am in Bitcoin as a way to transfer and exchange other currencies. I wonder how things might have been different if Bitcoin had been introduced first as a game currency like Lindens. I've noticed that people really don't convert Lindens in their head, and most things in SL are priced in Lindens only. (not comparing Bitcoin to Lindens, just observing the different pattern of adoption).


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: stevegee58 on May 15, 2013, 09:18:49 PM
There's an urban legend that one of the early miners (maybe Satoshi himself) bought a pizza for some crazy amount of BTC (1000?).  How's that for price theory?


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: ScriptGadget on May 15, 2013, 09:19:03 PM
As for taxes I have no comment :) The US takes it's tax laws very seriously so, yeah, you should always pay your taxes if you live there. I might be mistaken but I think that you only need to pay taxes on something like Bitcoin when you convert to USD - assuming you live in the US. In theory if you never converted to USD then there would be nothing legally to pay taxes on.

I've talked to my tax accountant, and she's digging into the details. So far it looks like there's some question on whether we should treat it as barter or as an investment. The IRS isn't very clear on this yet, and the details will effect how to value the bitcoins. Also how you earn or even how you accept them can effect if any bitcoin profits are taxed as income or capital gains, and one or the other might be better for your situation. I'll post what we figure out. What I took away from the meeting is that anyone dealing with Bitcoin in the US should be keeping careful track of transactions and the value of goods or services traded just in case it goes in the barter bucket. It's also a good idea to keep track of an exchange rate from that day in case they are going to be treated as currency by the IRS.

Remember the whole blockchain is right there for the IRS to read, and in the US the burden is on you to prove your income taxes are correct.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: BlueNote on May 15, 2013, 09:21:19 PM
The actual warrant has nothing to do with Bitcoin. I'm guessing that Dwolla would only transfer to US accounts. Mt Gox setup a company in the US with a US account and used that account to act an intermediary between Mt Gox and Dwolla. In doing so they broke money laundering rules because this transfer of money was at the request of a client - not simply money in exchange for goods.

Say you want to put 10k USD into mt gox. You put 10k into Dwolla, Dwolla transfers to Mutum Sigillum and the Mutum Sigillum transfers to Mt Gox in Japan - the last step breaks US laws since its transferring money at your request as so it (according to the affidavit) makes it a money services provider and as a money services provider it has to comply with FinSEC - for example it has a duty to report the transfer for amounts over $x. Why you're transferring the money into Mt Gox is not important it's the transfer of funds between the two companies which breaks the law.

This MS company is not a money transmitter. That claim is just ridiculous. Gox was just trying to accommodate its customers. If Dwolla didn't allow foreign companies to have accounts, then Gox set up a subsidiary in the US just to satisfy Dwolla. There's nothing wrong with MS then sending this money to its parent. MS doesn't send money to Gox "at customer request." It is owned by Gox. Where else would they send money? How many US companies send money abroad within their own corporate structure? Are they "money transmitter businesses" now too?

They know what Gox is and what it does. It's not a secret money transmitter trying to operate under the radar in the US. Give me a freaking break. You can't tell Gox to send USD to Aunt Mary in Idaho. What a joke.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: joesmoe2012 on May 15, 2013, 09:29:06 PM
The fact is that people want to buy bitcoins, the govt should be helping us not get ripped off, not freezing foreign entities assets that actually belong to americans.

take palm, hit forehead.



Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: idev on May 15, 2013, 09:39:33 PM
If regulation is what you seek and desire why use Bitcoin at all. Why don't you stop using Bitcoin and just use fiat. Problem solved.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: joesmoe2012 on May 15, 2013, 09:41:12 PM
If regulation is what you seek and desire why use Bitcoin at all. Why don't you stop using Bitcoin and just use fiat. Problem solved.

I'd prefer no regulation, or if we must have regulation, how about regulation that helps the people of the country, not regulation that potentially compromises millions of their hard earned $$$'s.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: Rassah on May 15, 2013, 09:44:20 PM
I'm alot more interested in Bitcoin on its own than I am in Bitcoin as a way to transfer and exchange other currencies. I wonder how things might have been different if Bitcoin had been introduced first as a game currency like Lindens. I've noticed that people really don't convert Lindens in their head, and most things in SL are priced in Lindens only. (not comparing Bitcoin to Lindens, just observing the different pattern of adoption).

Really? Because Lindens have a HUGE Linden to USD exchange market, and business owners that have to pay for their land plots and expenses in dollars pay very close attention to the Linden <=> USD exchange rate before setting the prices they are willing to sell stuff to. Were you around during the Linden crash, when the currency hyperinflated over the course of a week or two?


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: joesmoe2012 on May 15, 2013, 09:45:49 PM
I'm alot more interested in Bitcoin on its own than I am in Bitcoin as a way to transfer and exchange other currencies. I wonder how things might have been different if Bitcoin had been introduced first as a game currency like Lindens. I've noticed that people really don't convert Lindens in their head, and most things in SL are priced in Lindens only. (not comparing Bitcoin to Lindens, just observing the different pattern of adoption).

Really? Because Lindens have a HUGE Linden to USD exchange market, and business owners that have to pay for their land plots and expenses in dollars pay very close attention to the Linden <=> USD exchange rate before setting the prices they are willing to sell stuff to. Were you around during the Linden crash, when the currency hyperinflated over the course of a week or two?

Yeah but the second life people said that any SLL purchased with BTC would be forfeited didn't they?


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: esenminer on May 15, 2013, 09:49:08 PM
The actual warrant has nothing to do with Bitcoin. I'm guessing that Dwolla would only transfer to US accounts. Mt Gox setup a company in the US with a US account and used that account to act an intermediary between Mt Gox and Dwolla. In doing so they broke money laundering rules because this transfer of money was at the request of a client - not simply money in exchange for goods.

Say you want to put 10k USD into mt gox. You put 10k into Dwolla, Dwolla transfers to Mutum Sigillum and the Mutum Sigillum transfers to Mt Gox in Japan - the last step breaks US laws since its transferring money at your request as so it (according to the affidavit) makes it a money services provider and as a money services provider it has to comply with FinSEC - for example it has a duty to report the transfer for amounts over $x. Why you're transferring the money into Mt Gox is not important it's the transfer of funds between the two companies which breaks the law.

This MS company is not a money transmitter. That claim is just ridiculous. Gox was just trying to accommodate its customers. If Dwolla didn't allow foreign companies to have accounts, then Gox set up a subsidiary in the US just to satisfy Dwolla. There's nothing wrong with MS then sending this money to its parent. MS doesn't send money to Gox "at customer request." It is owned by Gox. Where else would they send money? How many US companies send money abroad within their own corporate structure? Are they "money transmitter businesses" now too?

They know what Gox is and what it does. It's not a secret money transmitter trying to operate under the radar in the US. Give me a freaking break. You can't tell Gox to send USD to Aunt Mary in Idaho. What a joke.

I'm not sure the claim is ridiculous. From Dwolla's point of view it was transferring money to a US account, the Mutum Sigillum account. Everyday (or whatever the process was) a wire transfer of all the funds transferred into the Mutum Sigillum account would be transferred to Mt Gox account in Japan. Why was this money transferred? There is clearly a correlation between clients making Dwolla payments, payments into the Mutum Sigillum account and then payments into the Mt Gox account. In the warrant there is an example of somebody paying into the Dwolla account and having their money show up in Mt Gox. It's not hard to make the connection and see that Mutum Sigillum was transferring funds at the request of clients. It was doing this is a roundabout way though Dwolla but whether the law can be interpreted this way is up to a court and it seems that they have agreed that the law does apply in this case and that Mutum Sigillum was acting as a money transfer agent. It could turn out that in court Mutum Sigillum will win which will set a precedent for others to use this method but I doubt it. The smart thing would have been for Mutum Sigillum to be a Money Transfer Agent and follow any regulations / laws / procedures which required it - maybe it was too expensive to setup or maybe they believed this was legal I'm not sure.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: jgarzik on May 15, 2013, 09:52:46 PM
There's an urban legend that one of the early miners (maybe Satoshi himself) bought a pizza for some crazy amount of BTC (1000?).  How's that for price theory?

Not urban legend, not Satoshi, and 10k not 1k: https://en.bitcoin.it/wiki/History#2010



Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: joesmoe2012 on May 15, 2013, 09:53:24 PM
There's an urban legend that one of the early miners (maybe Satoshi himself) bought a pizza for some crazy amount of BTC (1000?).  How's that for price theory?

Not urban legend, not Satoshi, and 10k not 1k: https://en.bitcoin.it/wiki/History#2010



Somebody also bought a porsche @ nearly $266.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: Rassah on May 15, 2013, 09:55:48 PM
I'm alot more interested in Bitcoin on its own than I am in Bitcoin as a way to transfer and exchange other currencies. I wonder how things might have been different if Bitcoin had been introduced first as a game currency like Lindens. I've noticed that people really don't convert Lindens in their head, and most things in SL are priced in Lindens only. (not comparing Bitcoin to Lindens, just observing the different pattern of adoption).

Really? Because Lindens have a HUGE Linden to USD exchange market, and business owners that have to pay for their land plots and expenses in dollars pay very close attention to the Linden <=> USD exchange rate before setting the prices they are willing to sell stuff to. Were you around during the Linden crash, when the currency hyperinflated over the course of a week or two?

Yeah but the second life people said that any SLL purchased with BTC would be forfeited didn't they?


I left SL before I found Bitcoin, and haven't been back since, so I don't know about that. I doubt that can be enforced, anyway, since, at least within the game, SLL is traded person-to-person, too.

There's an urban legend that one of the early miners (maybe Satoshi himself) bought a pizza for some crazy amount of BTC (1000?).  How's that for price theory?

It was 2 pizzas for 10,000. And without an easy way to exchange BTC for fiat, thus allowing many more users and businesses to join, there's an extremely good chance that 10,000BTC would let you buy maybe 4 pizzas instead of 2 today. Being able to swap BTC for oter currencies is one of the features that gives it its value.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: joesmoe2012 on May 15, 2013, 09:57:24 PM
I'm alot more interested in Bitcoin on its own than I am in Bitcoin as a way to transfer and exchange other currencies. I wonder how things might have been different if Bitcoin had been introduced first as a game currency like Lindens. I've noticed that people really don't convert Lindens in their head, and most things in SL are priced in Lindens only. (not comparing Bitcoin to Lindens, just observing the different pattern of adoption).

Really? Because Lindens have a HUGE Linden to USD exchange market, and business owners that have to pay for their land plots and expenses in dollars pay very close attention to the Linden <=> USD exchange rate before setting the prices they are willing to sell stuff to. Were you around during the Linden crash, when the currency hyperinflated over the course of a week or two?

Yeah but the second life people said that any SLL purchased with BTC would be forfeited didn't they?


I left SL before I found Bitcoin, and haven't been back since, so I don't know about that. I doubt that can be enforced, anyway, since, at least within the game, SLL is traded person-to-person, too.

There's an urban legend that one of the early miners (maybe Satoshi himself) bought a pizza for some crazy amount of BTC (1000?).  How's that for price theory?

It was 2 pizzas for 10,000. And without an easy way to exchange BTC for fiat, thus allowing many more users and businesses to join, there's an extremely good chance that 10,000BTC would let you buy maybe 4 pizzas instead of 2 today. Being able to swap BTC for oter currencies is one of the features that gives it its value.

They'd probably give me a pizza to get me to stop talking about bitcoins at this point.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: flound1129 on May 15, 2013, 10:13:20 PM
pay taxes in bitcoin

Parse error.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: BlueNote on May 15, 2013, 10:42:54 PM

I'm not sure the claim is ridiculous. From Dwolla's point of view it was transferring money to a US account, the Mutum Sigillum account. Everyday (or whatever the process was) a wire transfer of all the funds transferred into the Mutum Sigillum account would be transferred to Mt Gox account in Japan. Why was this money transferred? There is clearly a correlation between clients making Dwolla payments, payments into the Mutum Sigillum account and then payments into the Mt Gox account. In the warrant there is an example of somebody paying into the Dwolla account and having their money show up in Mt Gox. It's not hard to make the connection and see that Mutum Sigillum was transferring funds at the request of clients. It was doing this is a roundabout way though Dwolla but whether the law can be interpreted this way is up to a court and it seems that they have agreed that the law does apply in this case and that Mutum Sigillum was acting as a money transfer agent. It could turn out that in court Mutum Sigillum will win which will set a precedent for others to use this method but I doubt it. The smart thing would have been for Mutum Sigillum to be a Money Transfer Agent and follow any regulations / laws / procedures which required it - maybe it was too expensive to setup or maybe they believed this was legal I'm not sure.

The claim is absolutely ridiculous. Western Union is a money transmitting business, not Gox or their subsidiary. For heaven's sake, a money transmitter sends money from person A in X town to person B in Y town. That's the purpose of such a business. Taking funds from customers and moving it to your corporate headquarters in another country is not a money service business.

Let's not drink the government Koolaid. Perhaps you can argue that Gox should have done whatever idiotic groveling action would have satisfied the bureaucrats beforehand, but don't claim that this action makes any kind of legal sense. It's plainly ludicrous and just an exercise in raw power.




Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: User_513 on May 15, 2013, 10:57:07 PM
This could be the start of the most epic backfire ever. I agree that the US Govt just did crypto's a HUGE service today by validating to the world that Bitcoin IS money. I think the most simple solution is to give the US govt what it just asked for; lets all stop using their money, use ours only and we'll see where that gets them. What a bunch of incompetent boobs.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: joesmoe2012 on May 15, 2013, 11:10:38 PM

I'm not sure the claim is ridiculous. From Dwolla's point of view it was transferring money to a US account, the Mutum Sigillum account. Everyday (or whatever the process was) a wire transfer of all the funds transferred into the Mutum Sigillum account would be transferred to Mt Gox account in Japan. Why was this money transferred? There is clearly a correlation between clients making Dwolla payments, payments into the Mutum Sigillum account and then payments into the Mt Gox account. In the warrant there is an example of somebody paying into the Dwolla account and having their money show up in Mt Gox. It's not hard to make the connection and see that Mutum Sigillum was transferring funds at the request of clients. It was doing this is a roundabout way though Dwolla but whether the law can be interpreted this way is up to a court and it seems that they have agreed that the law does apply in this case and that Mutum Sigillum was acting as a money transfer agent. It could turn out that in court Mutum Sigillum will win which will set a precedent for others to use this method but I doubt it. The smart thing would have been for Mutum Sigillum to be a Money Transfer Agent and follow any regulations / laws / procedures which required it - maybe it was too expensive to setup or maybe they believed this was legal I'm not sure.



The claim is absolutely ridiculous. Western Union is a money transmitting business, not Gox or their subsidiary. For heaven's sake, a money transmitter sends money from person A in X town to person B in Y town. That's the purpose of such a business. Taking funds from customers and moving it to your corporate headquarters in another country is not a money service business.

Let's not drink the government Koolaid. Perhaps you can argue that Gox should have done whatever idiotic groveling action would have satisfied the bureaucrats beforehand, but don't claim that this action makes any kind of legal sense. It's plainly ludicrous and just an exercise in raw power.




Agree completely. In this case dwolla was the msb right?


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: proudhon on May 15, 2013, 11:34:52 PM
The funny thing about all this is that this isn't really a thing that happened to bitcoin, it's a thing that happened to an exchange because its owner failed to comply (mistakenly or intentionally) to the pre-existing regulations of the district in which he opened a bank account.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: BitDreams on May 15, 2013, 11:35:55 PM
I was thinking similar things before I clicked on the thread. Thanks for saying it so well!


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: frozen on May 16, 2013, 01:27:35 AM
I don't see why regulating exchanges would be a bad thing - for example the SEC regulates the stock markets in the US and most of the rules they enforce - like insider trading - are meant to protect investors not the exchange.

No victim = no crime. Who's the victim with regards to "insider trading"? Is Inside Trading Really a Crime? (http://mises.org/daily/5289)

The SEC destroys markets, it doesn't make them safer:

Madoff and the Failure of the SEC (http://mises.org/daily/3260)
The SEC Makes Wall Street More Fraudulent (http://mises.org/daily/3273)
The SEC Short Sells Us Down the River (https://mises.org/daily/3139)


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: frozen on May 16, 2013, 01:34:10 AM
Remember the whole blockchain is right there for the IRS to read...

Exactly what information does the blockchain provide to the IRS that would implicate a person in tax fraud?


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: bbulker on May 16, 2013, 02:11:35 AM
In my opinion this is not an indicator that they are for or against Bitcoin, simply aware.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: JimCGSavings on May 16, 2013, 02:33:17 AM
...Can someone explain to me why everyone is so obsessed with trading against fiat?

Yes! It's called greed. (grin)


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: freedomno1 on May 16, 2013, 02:37:13 AM
There's an urban legend that one of the early miners (maybe Satoshi himself) bought a pizza for some crazy amount of BTC (1000?).  How's that for price theory?

Not urban legend, not Satoshi, and 10k not 1k: https://en.bitcoin.it/wiki/History#2010



Somebody also bought a porsche @ nearly $266.

Lol just posted in that topic
https://bitcointalk.org/index.php?topic=137.new#new


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: smoothie on May 16, 2013, 02:44:30 AM
Mark has had enough time to get his shit I'm order. There are no excuses aside from either pride or negligence.

Reminds me of the attitude BFL has.


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: Rassah on May 16, 2013, 03:06:49 AM
No victim = no crime. Who's the victim with regards to "insider trading"? Is Inside Trading Really a Crime? (http://mises.org/daily/5289)

If I sell you a piece of shit rust bucket of a car, and claim that it's a good car without any problems, I would be lying and committing fraud. Hell, even if it was legal, I would be lying, committing fraud, and being a general scumbag who should lose all trust for ever.
When you are insider trading, you are selling piece of shit stock to someone while telling them it's a good stock without any problems.

The article is pretty much all right, except they use a rise in share prices in their example. I wonder what their example would have been like if the trader at the bar overheard bad news?


Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: solex on May 16, 2013, 03:30:38 AM
No victim = no crime. Who's the victim with regards to "insider trading"?

If I sell you a piece of shit rust bucket of a car, and claim that it's a good car without any problems, I would be lying and committing fraud. Hell, even if it was legal, I would be lying, committing fraud, and being a general scumbag who should lose all trust for ever.
When you are insider trading, you are selling piece of shit stock to someone while telling them it's a good stock without any problems.

It is even broader than that, because the stock might be better than the market is valuing it.

Basically there is an obligation upon issuers of publicly listed securities that news is disseminated to the market such that everyone can act upon it at the same time. Insider trading occurs where insiders act on news before it is public. Directors, for example, of company X, have a board meeting and decide to make an acquisition of company Y. While this is known to insiders these people might buy shares of company Y via personal accounts, before the news is made public in anticipation of a quick profit by selling afterwards.

The victim is the investing public, shareholders who own company Y shares and sell their shares in the period between the board meeting and news being made public. Some of them would have sold to the inside traders, and wouldn't have sold with the same knowledge.

I have seen the insider trading term thrown around regarding Bitcoin. However, it never applies to currencies.



Title: Re: Why Homeland Security might be the best thing to happen to Bitcoin
Post by: esenminer on May 16, 2013, 03:35:28 AM
I don't see why regulating exchanges would be a bad thing - for example the SEC regulates the stock markets in the US and most of the rules they enforce - like insider trading - are meant to protect investors not the exchange.

No victim = no crime. Who's the victim with regards to "insider trading"? Is Inside Trading Really a Crime? (http://mises.org/daily/5289)

The SEC destroys markets, it doesn't make them safer:

Madoff and the Failure of the SEC (http://mises.org/daily/3260)
The SEC Makes Wall Street More Fraudulent (http://mises.org/daily/3273)
The SEC Short Sells Us Down the River (https://mises.org/daily/3139)


I'm not sure that insider trading is a victimless crime. Say you and some random person each buy 1000 shares at $5k in Corporation Y. Corporation Y has been pretty successful and shares rise to $10 / each. One day a close buddy of yours at Corporation Y calls you and tells you that in 2 weeks they are going to make a negative revelation which is going to send their stock price tumbling. You quick unload your 1000 shares for a cool $10k - not bad you made $5k. In 2 weeks the announcement is made, share prices tumble to $1k and some random person has lost $4k of value in their shares. I guess you could argue that the random investor hasn't lost any money until they sell their shares and whether or not you sold your shares has nothing to do with their actions - they could have also sold at any time - but I think it's clear that you had an unfair advantage over the random investor. Wouldn't you consider the random investor a victim here?  Wouldn't you be pissed if you were the random investor? This is why officers in a company are required to publicly disclose any share sales. I mean if everybody sees the CEO of Corporation Y unload their shares then it's a pretty big indicator some bad news is coming. These kinds of rules are needed in a trading market to keep the playing field level and somebody needs to enforce them. The SEC was only an example that I thought everyone would be familiar with - the point was that some rules and regulations should be in place in crypto-currency exchanges so investors are treated fairly and equally without any extra risk.

I find it strange that currently obtaining bitcoins by exchanging them for cash/credit is either a little convoluted or risky. If we want Bitcoin to be widely accepted and used then obtaining them should be simple and straightforward and exchanges where they are obtained from should be trustworthy and regulated so that people feel safe and secure in buying them.