Paying out in PayPal (BTC -> USD) not accepting PayPal (USD -> BTC).

I am not sure.  I am not a laywer (I would image the person in the article obtained counsel).

The govt would not appear to have followed its own procedures:
http://www.law.cornell.edu/uscode/text/18/983

The DOJ should have provided written notice to all parties more than 30 days before the forfeiture and thus provide an opportunity to fiile a claim.  If they didn't (and I don't think they did) then that might (no I have no interest in reading those pages of statute) give certain rights for a late claim.

On edit:

So it looks like in some cases, one can file not a claim but an attempt to set aside the forfeiture (and thus allow a claim as it is if the forfeiture never happened).

BitSimple is reliable (and a better price), so I wouldn't say "only reliable option".

https://BitSimple.com

Nothing is ever that "simple".  Sites should strive to make things transparent.  It is a better/cleaner interface to ask the user the amount they want to withdraw and then add the fee to that and show the user the total.

As an example billpay for consumers is often free, but billpay for businesses is often a charge.  I think we pay $0.20 or something like that.  I don't have to make sure to add $0.20 to the amount of the billpay because the bank will deduct it.  The bank pays what I ask them to pay, and they deduct the $0.20 from the account balance.

I mean if you leave it all on users and say "user error" then why even have websites.  Give users instructions and have them manually construct the TCP/IP packets to communicate with the service.  Ok I wasn't being serious on that one but you get the point.

You vast underestimate the amount of energy and time required to brute force a private key, not by a factor of a hundred or a thousand but by a factor of billions and billions.

The actual charge is "conspiracy to engage in money laundering" not money laundering.
http://www.justice.gov/usao/nys/pressreleases/January14/SchremFaiellaChargesPR/Faiella,%20Robert%20M.%20and%20Charlie%20Shrem%20Complaint.pdf
(see count #3)

A conspiracy charge (and this applies to any crime) doesn't require all conspirators to be directly engaged in the underlying crime.  If they were, the prosecutor would just charge them with the underlying crime (it is often easier to prove than the conspiracy).  All that is requires for a conspiracy charge is for each person to further the underlying crime by action and intent.  

Of course the fact that BitInstant is/was a MSB, and Charlie was the compliance officer, isn't going to go over well in court.

Pro tip #1: Don't register as a MSB if you intend to violate the obligations of a MSB.
Pro tip #2: Don't accept the role of the company compliance officer if you will feel tempted to break those rules in the future.

For those confused by the $95K number.  Pull up a year long Bitcoin chart.  Lookup exchange rate at the time the silk road was closed.   Multiply that by 1000.  It isn't $95K.

I am fairly certain no desktop client deducts miner fees from the amount sent.  MtGox charges 10x the min fee for withdraws but it is taken from account balance not the amount sent.  I am fairly certain bitstamp and coinbase do the same.    So it probably is some web wallet or smaller exchange.  Not sure why people use exchange accounts as a spending wallet but they do.    I agree with the OP it is an utterly stupid decision.  I mean it break even "common sense".  If I use my bank account to do a transfer, bill pay, or even bank wire there may be a fee but the fee is never deducted from the amount being sent.  It would cause all kinds unnecessary chaos, support calls, and upset customers in the traditional finance world as well.

If any user (or any service, exchange, web-wallet, etc) can confirm an instance where a tx fee, or withdraw fee was deducted from the amount sent please post an example as someone needs to beat that developer over the head with a book on software design.

Neither coinbase nor circle have a money transmitter license in any state.  I am not saying they need to (that is for their legal counsel to decide) just pointing out they don't have one.

Did it occur to you that regulation often is used by big entities (think banks, PayPal, WU) are a very cost effective mechanism of killing innovation?  The same entities which donate heavily to the campaigns of public officials, who then appoint the regulators who write the regulation and make sure to not "over-regulate". With the right "donations" the Chases, Western Unions, and VISAs of the world could put the barrier so high that it takes licensure off the table for entities with less than a billion dollar market cap.  That would make the only legal players in the US Bitcoin space ... the exact same players in the US financial space.   Regulation hard at work protecting ... the bottom line of old money enterprises.

Will that happen?  Who knows however I wouldn't be so naive to think NY is looking to pass "smart regulation" just because a suit said so on TV.  Look at the rest of the licenses in NY to get an idea of their track record on smart regulation (liquor license?, taxi medallion?, etc).   Also what would he say "most likely we are clumsily going to set the bar so high as too kill off innovation in NY and the United States and drive the revenue, jobs, and innovation overseas"?

I will leave you with words from the horses mouth

The irony is that NY despite being heavy handed with regulation has a rather narrow statuatory definition of money transmission.  It is highly unlikely that exchanging one currency into another meets that criteria (hint conventional currency exchangers are not money transmitters under NY law).

The regulators even commented on the fact that they likely will need to use the power to expand the scope of regulation to cover virtual currencies AS THE EXISTING REGULATIONS DO NOT COVER THAT ACTIVITY.

So how exactly would Bitcoin "follow the rules", when the rules as written today this 30th of January, in the two thousand and fourteenth year of our lord aren't applicable?  Somehow use precognition and follow the rules today, that regulators will think of next year?

Why because a regulator, on TV said so?  

A regulator's idea of not over regulating and the entire rest of the world's idea of not over regulating are two different things.  

Have you asked your customers?  It would be a good thing to know and they likely are the only ones who are going to know for sure.

Well Bitcoin is "complicated" so this isn't exactly correct.  

Most payments on the Bitcoin network are "PayToPubKeyHash" so the network is unaware of what the PubKey is, it only knows the hash of the pubkey being paid received an output.  The sender's client takes the address and reverses it to the PubKeyHash.  The PubKeyHash is actually what goes in the output of the tx.   Until that output is spent the network doesn't know what the correct pubkey is.

So to validate a spend the network needs to validate three things:
a) that the transaction is signed by the private key which corresponds to the public key (signature is valid).
b) that the PubKey when hashed (SHA-256) produces the PubKeyHash in the output of the prior tx (this pubkey corresponds to the address paid).
c) that this output has not already been spent (it is not a double spend).

An example might help.  Lets take this random tx:
https://blockchain.info/tx/83d51f7c87f275867288958d4f01afbde346370dedd3723cfe1c89ef3ba94012

Now to make it "simple" for end users Blockchain.info displays the Bitcoin address (i.e. 0.51 BTC was transferred to 162r6LJBJPhFQ3A9DjTKiww9sahzYWi1sV).  However the actual transaction doesn't include the address.  It includes the PubKeyHash.  The sender's client took the address 162r6LJBJPhFQ3A9DjTKiww9sahzYWi1sV and reversed it back to the pubkeyhash 373206576366c5c4cbd43e0e127262ce57bfe19d

If you look at the bottom of the page (you may need to enable showing scripts) you will see this:


In crude simplification it is saying this output (0.51 BTC) is locked and can only be spent by a tx signed by a private key which corresponds to a public key, that when hashed (SHA-256 & RIPEMD-160) produces this exact hash 373206576366c5c4cbd43e0e127262ce57bfe19d .  The Bitcoin network has no idea what pubkey hashes to that value (because hashes are one way functions) but it will instantly know it when it sees it.

If you attempted to spend this output with an incorrect pubkey which you could complete check "a" above, when your pubkey was hashed it would produce a different output.  Say it produced 966ca2c8a091088b8129ee3b053c51d799261eac .  Since 966ca2c8a091088b8129ee3b053c51d799261eac does NOT EQUAL 373206576366c5c4cbd43e0e127262ce57bfe19d the transaction is invalid (doesn't validate rule "b" above) and all nodes simply simply discard the transaction.

There is no guaranteed one to one relationship between private keys and public keys or between public keys and addresses (hashes).  As long as a private key can properly sign the transaction it is "valid" even if different.

So in theory you could have two private keys a & b which both produce the same public key K.  You could also have a set of keys (a & A) and (b & B) which when hashed produce the same address.  Both of those are forms of collision.

Public key cryptography is based on probability.  We can never say "it can't happen" we can simply say "the odds of it happening are so small that an attack would be infeasible".

In the theoretical world where are government functions work perfectly it would be.  The rejection would be universal across every country and would occur no matter how often companies attempted registration again.

In the real world?  Patent and trademarks are big business they are routinely used by large companies (who have hundreds of lawyers who do nothing but seek patents and trademarks) and used as a weapon.  Against larger competitors they are used to secure cross licensing deals, against smaller competitors they are used to simply destroy the competition.

Ahem
https://www.mtgox.com/press_release_20111014.html
https://oami.europa.eu/eSearch/#details/trademarks/010103646

Of course at the time MtGox stated they "had" to keep the trademark as there is no way to release a trademark into the public domain.  However there is now a non-profit foundation, however the trademark remains with a for profit company.  All for your own good, of course.  We all know that MtGox, its owners, and all future owners until the end of time will never attempt to profit from this very valuable trademark.

So it certainly is trademarked and today MtGox (without any legal obligation on their part) says you can use their property as you see fit.  Will they next year? Next decade?  Of course MtGox could easily transfer the trademark either to an existing non-profit or create a new perpetual trust whose sole goal is to protect the Bitcoin trademark but that hasn't happened.  I am sure they just haven't go around to it yet.

It doesn't matter if it is online or offline if you create a private key which can sign for an existing address you can spend those coins.

Of course the probability is so asininely small that for all practical purposes it is ~0% (offline doesn't increase or decrease this chance).  You won't do it today, you won't do it even with a planetary sized super computer operating at the thermodynamic limit for billions of years.

This may seem "weird" but all public key cryptography works on a similar concept.  For example you in theory "could" by just mashing random keys on your keyboard create a private key which would allow you to impersonate a bank's secure website because your private key can produce the signature that a browser would verify to ensure it is at the correct webserver.   Once again the odds of doing this are so asininely small that it can be considered ~0% for all practical intents and purposes.

Likewise here is my PGP public key:
http://pgp.mit.edu/pks/lookup?op=get&search=0xC5B8C5DDCDBD1C8E

The only thing which prevents you from signing documents as me is a random number (my private key).  In theory you could "find" that private key either intentionally or by dumb luck but practically it isn't going to happen. 

TL/DR version:  2^128 is much bigger than you think.

ops

Not sure why you keep linking ECDSA with SHA-256?  

ECDSA has smaller keys for a given key strength than RSA.  Since the blockchain is a historical ledger and the size of a transaction directly correlates to the size of the keys and signatures RSA would be a far inferior choice.  ECDSA achieves 128 bit security using a 256 bit private key (and 256 bit compressed public key).  That would require 3,076 bit RSA keys to provide the same level of security.  That means signatures and pubkey on the input side of a transaction would be ~12x larger.  If we assume a block was filled with 2 input and 2 output tx then for a given number of transactions Bitcoin-RSA would have blocks which are 8x larger.

Bitcoin doesn't "require" SHA-256.  It is possible to pay directly to the pubkey.  The using of a hashing function is completely separate from the use of a public key cipher.  So what is confusing is you keep asking about ECDSA and then say you are trying to understand the functionality of SHA-256. 

Bitcoin (as it relates to address & transactions) uses SHA-256 to provide the following benefits
a) reduction in the size of transactions (payments are to pubkeyhash not pubkey)
b) reduction in the size of addresses
c) (combined with checksum and address format) provide a method to detect invalid addresses and thus prevent human error
d) provide a level of quantum computing resistance.  Shor's algorithm only works against a private key when the pubkey is known.  Addresses are an encoded and checksumed representation of the pubkeyhash not the pubkey.

Bitcoin or Bitcoin-RSA could either be used with or without SHA-256 so if you question is on ECDSA why keep bringing up SHA-256?

Money laundering requires intent.  Receiving coins that you have no knowledge or reasonable suspicion they are involved in illegal activity is not money laundering.  Criminals have money.  I know it is a shocking fact but they do.  Not just Bitcoins, but also good ole US dollars as well.

There is a big difference between being an innocent counterparty, and actively evading the AML program your own company put in place.