Me too, actually.  I can't have many strong opinions on these issues, because I have too little knowledge.  I'd like to have more, and to have any mistaken impressions I have cleared up, or if I'm not mistaken, have enough knowledge to be more confident in my opinions.

Otherwise, I'll just tend to get more paranoid, probably.

I'll have to disagree on that.  Aaron Swartz was a fucking hero.

Shrem is at best a goddamn jackoff who ran a shady business that made bogus claims, called itself BitInstant despite often taking days to process transactions, and had no interest but making money for himself.

He does not deserve to be anywhere in the same sentence as Aaron Swartz.

Very good point.  However, we also can't afford to ignore when something that seems (to the world) to represent Bitcoin itself is actually becoming a potential threat to us.

I frankly do not think, as some do, that the Bitcoin Foundation has reached this level.  It still seems, on net, to be a beneficial thing.

But suppose it does cross over entirely to the dark side.  What then?  Doesn't the BCF essentially run this site?  What happens then?

Well, according to their own site, they claim their address is

2 Kirkpatrick Street Second Floor | New Brunswick, NJ 08901 | (866) 312-3979
Hours Monday-Thursday 4-8 Saturday 10-1 | Routing & Transit Number 021283961.

I'm not really interested enough to hunt down corporate records and stuff, nor am I saying you're wrong, but this is what they say on their own site.

Sounds fun to me.  But I'm on a MacBook.

Yep, and as I have pointed out probably in this thread before, Bharara generally goes after cases where the numbers concerned are billions, not millions.  You frankly would not see a case like this against a bank that did the same thing for the same amount of money.

This case is about making examples of people.  It's about putting heads on pikes.

Justice need not apply.

That's actually a seemingly strong argument, to the point you've seen it over and over again in news stories, i.e. Shrem bought pot brownies from Silk Road, so he must have known it was nothing but a crime operation.

If this is actually their strongest argument, though, it's really weak.  It's sort of like arguing that because the co-owner of a mall once scored weed at the food court there, this is proof he knew the mall itself was actually just a drug operation in disguise.  It looks good on paper the first time you see it, but not if you actually think about it much.

I don't see enough to convict on money laundering just because the dude scored some pot brownies.  I can even see some juries getting pissed off at having their time wasted on a case like this where the prosecution's lead argument is basically bullshit.

Well, in case you want to view Preet Bharara as some kind of monotone villain, here's what he's doing when he isn't doing this current dumb shit.


JPMorgan-Madoff Case Won’t Be Last Big One, Preet Bharara Says

Is it pathetically inadequate that banksters get a fine, however large, while someone like Shrem is facing prison?  Of course.

But frankly, these banksters cover their tracks better, as well as having better political connections.  They would never have left the series of emails that Shrem did.  Even though the internal communications of the banksters often do lead to adverse inferences that they know damn well that they're laundering drug money or Ponzi schemes, they have a whole language of euphemisms unique to themselves that their high priced white shoe lawyers can talk them out of if push comes to shove.

Shrem fucked up, pure and simple.  Banksters being scum has nothing to do with it.

And unfortunately for him, he's on the wrong end of the shotgun barrel here.  Preet Bharara is simply the fastest gun in the East on these issues, whatever you might think of him personally.  My personal opinion is he is a highly talented attorney and rather than being a cynical politician, actually idealistically believes he is doing the right thing.  That makes him more, not less dangerous, because he's fairly often actually doing the wrong thing.

You've kind of stated the issue as it is for most people.  Nobody around here has much reason to like Preet Bharara.  But in this case, he's going after people nobody likes much.  Good jerb, Preet.

Yes, but to come under the ambit of the money laundering laws, there generally has to be an actual intent to facilitate illegal activity, or at least "willful blindness."  "Willful blindness" is fairly tough to prove, and that's where they'd have to go on this, because nothing in the evidence (so far) cited shows that Shrem actually knew specifically and intended to effect drug trafficking.

However, he did (if the allegations in the complaint are true) commit a crime most people can't commit.  Most people are in no position to submit a "Suspicious Activity Report" (SAR) or to fail to do so.  Shrem cleverly put himself behind the 8-Ball when he became the AML guy for BitInstant, and became eligible to commit a crime most people will never even be able to commit, that is, the failure to submit an SAR when it is legally required.

That is the exact opposite of a smart move.  If you're going to sign on with the feds to do federal business, expect them to go after you with a vengeance if you fuck them on exactly what you agreed to do when you signed up.

This is why I think the actual money laundering charge is pretty thin.  They have lots of evidence Shrem knew the transactions were suspicious and should have triggered the reporting requirement, especially for someone who was supposedly the AML officer for a corporation, including correspondence with the co-founder. 

The intent to launder money is not at all clear, though.  Money laundering is a specific intent offense.  While that need not necessarily be as specific as, say, intent to launder the proceeds of cocaine sales by Pablo Escobar to fund terrorists, just to pick a glaring example, it certainly has to be more specific than just an intention to collect fees on processing transactions that seem a little fishy.

Federal prosecutors also tend both to overstate and understate their claims in a complaint.  First, they overstate in that they quite often allege dire offenses with incredibly lengthy maximum sentences, but second, they understate in that they only cite enough evidence to establish sufficient probable cause to bring the complaint at all.

We can neither assume they can prove the claims they have made nor that they only have as much evidence as they cite in the complaint. 

I'm pretty suspicious of the 20 year maximum sentence money laundering claims, but if they can prove the factual claims they have made with regard to the failure to report (still a big if), they have him at least on that.  I suspect front-loading the complaint with the charge with a life-ruining potential sentence is to try to force a plea to the well founded but lesser charge.  Or something even less than that.

Exactly what on Earth did I say that you decided to turn into this outlandish straw man and then attack?  I think I was very, very clear that other law enforcement agencies would, almost as a matter of course, have been aware of this case in some form or another and would have had to have made a conscious decision not to prosecute.  Read better next time, please.

The correspondence between Shrem and co-founder Gareth Nelson made it clear that both co-founder and Shrem viewed the activity of the BTCKing account as suspicious and as exceeding the size of transactions that would qualify for mandatory reporting.  Shrem assured Nelson that he'd handle it, but instead, gave BTCKing advice on how to structure such transactions in the future, instead of performing his mandatory (and assumed) duty to report suspicious activity.

From 31 CFR § 1022.320


Arguably, the activity involved falls under the "illegal activity" in (i) and the "criminal activity in (iv), but even if it doesn't, the "avoid any transaction reporting requirement" in (i) and the "structuring" language in (ii) certainly apply.  While there is a lot of ground where this language is arguably ambiguous and there are many situations where it might be difficult to determine whether a certain activity triggered a responsibility to file an SAR, this case is not one of them.

Shrem clearly knew the activities of the BTCKing account were in excess of reporting requirements, and explicitly made his knowledge clear to Nelson.  Rather than file an SAR, he allowed the activities to continue under a variety of ruses so transparent that Nelson continued objecting to him allowing them.

Frankly, arguably, they have enough to go after Nelson, too, but he did a much better job covering his ass in his correspondence.  Also, perhaps he's been being cooperative, so I'd tread carefully if you've had any questionable dealings with that guy.  I find it curious the only paper about him in this case so far is a few mentions of him in the indictment, and wouldn't be surprised in the least if he turns into a witness friendly to the prosecution or is busily hanging out other people to dry to save his own skin.  To me, it seems they have, at the very least, enough to slap him with a fine.

Now, I don't think the more serious money laundering case is as clear-cut as the prosecution would have us believe, though.  I think it's there more to scare him into pleading to the non-reporting charge or some lesser included offense of the money laundering case.

There's no indication any criminal action was filed let alone settled.  There's no indication anyone but the SEC is involved, which has no independent power to bring a criminal prosecution.  If the government had settled, it wouldn't be on any less terms than a return of the stolen money.  However, the civil action over the stolen money is still proceeding in federal court.  There is no good reason to believe there was ever a criminal case for there to be a plea bargain.

The SEC shares responsibility with the FBI and FinCEN for determining whether a crime has occurred, and the facts in the civil complaint they filed unambiguously state that Shavers was running an illegal Ponzi scam, which is a criminal as well as civil violation.  Someone, somewhere in a position to prosecute considered it and chose not to do so, if not many someones.  This is somewhat similar to how Full Tilt could and should have been prosecuted just for their Ponzi-like activity and criminal self-dealing, but instead, were prosecuted for running a poker site (technically mainly for using banks in doing so).

Actually, BitInstant was dodgy from the word go, advertising "instant" Bitcoin transactions that often took days in practice.  It went belly-up after its business model failed.  I don't have any love lost for that particular service.  I wouldn't say they'd qualify as a scam and, in fact, the other exchanges have similar problems.  It seems they were pushing through Silk Road transactions with the added vig ahead of non-lawbreaking users.


Sadly true.  Look at what happened to pirateat40.  Oh, yeah.  Nothing.  There's a civil suit by the SEC, which means the worst he'd have to do is return the money he stole and pay a fine.  Anyone who had run a Ponzi scam of this size denominated in dollars would be looking at hard time and would probably now be awaiting trial from behind bars or, if bailed out, the bail would be enormous.

Looks like a student-run publication to me.  So we can expect journalism to improve soon EVEN MORE than it already has in the last few years.  Hooraw.

While I am no fan of that action, which personally cost me a lot of money (not lost on the sites but income I would have made), I'll note one of those sites was Full Tilt Poker, which turned out to be operating as little better than a Ponzi scam.  The fact is that he is a prosecutor, and it is his job to prosecute offenses against federal law.  I assume he's actually in favor of the laws he prosecutes, but it would be completely irrelevant.

I sometimes get annoyed when the same kind of people who would vociferously object to "judicial activism" and "judge-made law" nonetheless object to prosecutors doing their job and prosecuting violations of laws they had nothing whatsoever to do with passing into law.  Who does that?  The people we elect to Congress.

No purpose is served by pretending everyone on the other side of this is some kind of incompetent buffoon or cartoonish villain.  It is exactly that kind of short-sighted arrogance that has led DPR and now Shrem by the nose into a deep pile of shit.

Not saying you're responsible of this, but I've certainly seen a lot of it on this and other threads.

There's page after page in the criminal complaint that says exactly otherwise.  In fact, he'd bought drugs off Silk Road himself.


Legally, it is once you register as a money transmitter.


Well, good luck on that.  Tell me how it goes in a couple years.  In the meanwhile, those "scare tactics" have him behind bars for the foreseeable future.  Frankly, I'd find that kind of scary if I were he, too.  Or if I were in his contact list.  Or if I had anything to do with a "Foundation" with his name on it as Co-Chair.

It's just to spare them their time wasted posting whiny-ass walls of text at me.  If they want to waste their time anyway, no concern of mine.  Why bother talking to someone who's ignoring them?