Correct answer:  obtain legal counsel.

Simplified forum answer:  the guidance only refers to business (and yes an individual operating for profit is seen as a "business") which are in the BUSINESS of exchanging virtual currency for real currency (or one virtual currency for another one).

So it really depends on what you mean by "Bitcoin business". 

Are you planning on opening any exchange?  Then yes you must register. 
Are you panning on operating as a direct broker like coinbase?  Then yes you must register.
Are you planning on selling goods or services for Bitcoins?  Then no you do not need to register.

A company which sells widgets for Bitcoins is in the business of selling widgets for Bitcoins and thus isn't an "exchanger" per the guidance.

If the best orders on the book are a $60 bid and a $100 ask then simply put there is no trade.

Now the next person to come along can either
a) place an order at market and if they are buying pay $100 or if selling pay $60

OR

b) place limit order potentially better.  Say $70 bid (at which point the spread becomes ($70 - $100).

The unanswered answer is "an idea".  You provide the cash, they provide an idea and you get 25% 20% of the company.  So how many shares are you going to buy?

Someone saying something in court (or Congress) doesn't make it legal precedent.   Routinely criminals claim they are innocent in court right before they are convicted.  Yes testimony in Congress is essential a court and subject to purgury however the Fed Chairman wasn't giving a VERDICT he was providing testimony.  Google's CEO testified that allowing companies like Google to reptriate foreign profits without penalty would stimulate the US economy.  I guess since Google's CEO said it in Congress (court) it is now suddenly the law of the land.  Companies all over the US are bringing back foreign profits ... er wait they aren't because he was merely testifying not providing any legal precedent or verdict.   Today companies that repatriate foreign profits are STILL subject the same punitive taxation that existed before Google's CEO testified.  Testimony has no legal precedent.  It never has and it never will.  Congress COULD (but didn't) act upon the chairman's testimony to codify it in the form of statute explicitly defining gold as "non-money".  Had they done so it would be the law of the land and gold wouldn't be money however they didn't and as such the testimony was just that, testimony.

If you still don't get it, well I have to conclude you are trolling.

It still was merely a statement by the Fed chairmain.  It holds no legal weight, it isn't legal precedent, it is no defense against future prosecution.

Run a ponzi scheme involving gold and hopefully your legal defense will be more than "but Ben Bernanke said".

pump and _______

Fill in the blank.


But I am pretty sure it didn't go from $1 to $5 in one day.
http://www.cryptocoincharts.info/period-charts.php?period=6-months&resolution=day&pair=nvc-btc&market=btc-e

I didn't know that.  Congrats!

Find a court precedent saying that and you might have something.  Ben Bernkake's comments are just that comments, they aren't the "law of the land" anywhere on the planet.

My guess is it wouldn't simply because the BB ponzi would have very high friction and thus would be unattractive to most victims.  Also while one can buy and sell BB, I have not seen any merchants accepting BB as payment for other goods and services so making the claim they are "money" would be difficult.  Although the need for money is not absolute.  I can't remember the case but there is precedent for "money" in the securities requirement to include more than what most would consider "money".  The courts are going to look more broadly at value and liquidity.  If the payment is in something that has value and there is liquid market to exchange the asset for conventional money or goods/services it likely meets the definition of "money" for this statute.  Maybe I can find the cite of the previous case.

The small scale, and difficulty in proving the statutory definition likely means any BB ponzi would just be off the radar of regulators.  It probably wouldn't be legal (or at the very least would be on real shaking legal ground) but you might not be prosecuted.

Well to be clear (and it may just be a typo in your example) the courts never said Bitcoins are an investments/securities merely that an investment/security involving Bitcoins is still an investment/security if it otherwise meets the criteria for a investment/security.  
In your example aluminum cans wouldn't be an investment/security however it is possible that some future court could rule that a ponzi scheme which involved cans to still be an illegal investment/security.

In short the prosecution still needs to prove (and it is painfully easy in this case) that a particular transaction is a security and an illegal one at that.  The ruling by the judge simply means that the (always weak and unsupported) defense of "oh this thing it isn't a security because ... Bitcoin" has no legal merit.


Exactly.  A good layman test would be for someone to replace bitcoin (or gold or aluminum cans) with USD in a hypothetical transaction.  Would the courts rule the USD transaction a security?  If so then they likely will rule the Bitcoin one a security as well.

Imagine the scenario was:

In this example nobody would argue that it was anything other than a ponzi scheme and illegal security.  Until today some have had the belief that merely changing USD for BTC made it magically not a security or if a ponzi outside the jurisdiction of regulators.  The "because Bitcoin" defense.

The court hasn't even ruled that Mr. Shavers has operated a ponzi scheme or illegal security at this point (although it would appear to be a slam dunk case so it is an inevitability).  For a judge to rule that, the prosecution still needs to prove that a ponzi scheme existed and that the transactions in question were part of an unlicensed security. The judge is merley saying a defense of "because Bitcoin" has no legal merit.  It never did some people simply took a lack of legal action to mean legal action wasn't possible.

This is a very important point likely lost in the telephone game of people generalizing statement and removing context after the FinCEN announcement.

FinCEN by virtue of the BSA have very wide (I would argue maybe too wide) authority to regulate far more than just transactions involving "money".  A simplified, definition (which shouldn't be relied upon for legal purposes) is that FinCEN regulates the transfer of value.  FinCEN never said Bitcoin is money (and never said it wasn't), they didn't even say it was "currency".  Instead in the guidance they relegated it to the term "virtual currency", which doesn't exist in any relevant statute.  FinCEN's guidance was that the exchange of virtual currencies for real currencies (and vice versa) as well as the exchange of one virtual currency for another (aka "being an exchanger") constitutes money transfer.  Depsite the word money in the name, money transfers involve a lot more than just money.


As best one could make the statement that FinCEN said "Bitcoin is a value that substitutes for currency".  As you point out this was incorrectly simplified to "Bitcoin is money" but was never correct until today.

The judge never said Bitcoins are securities/investments.  He said what Pirate offered was a security/investment.  The fact that they were denominated in Bitcoins didn't automatically make them not a security/investment (a highly dubious theory held by many for a long time).

Plus a demurage of all coins not used over time, and a fee per new address, and a fee per client download, plus a fee to get a copy of the blockchain.

Good idea + powerpoints = $12 M.

Did you sign up for Columbia house 12 CD for just 1 Satohi and then never buy the selection of the month at over inflated prices?
Did you remove the "do not remove under penalty of law" tag from your mattress when no-one was looking?
Do you sometimes go down the stairs two at a time when you are late for a meeting throwing caution to the wind like a rodeo daredevil?
Have you ever attempted to divide by zero? Was it intentional?
Have you ever operated electronics beyond their responsibly rated frequency (something the cool kids may call "overclocking")?
Have you ever employed a cheat code to get past a part of a video game where you keep dying?
Do you ever click the "I'm feeling lucky" button when using google?

No once again they would be raising $5M.  Words don't have meaning when you try to use an existing word and create a new definition.   Language works because people agree to the same definition for the same words or expression.

In that example:
The hypothetical company is raising $5M.  
The hypothetical company is being valued (possibly correctly, possibly incorrectly that is up for investors to decide) at $10M prior to the equity sale.
The hypothetical company is being valued at $10M + $5M = $15M after the equity sale.

The amount raised is still only $5M.

Also I would point out it isn't necessary for a company to have "tangible assets" of $x.  A company valued at $10M doesn't have $10M in tangible assets.   If you add up the value of all of google's servers, and desk chairs, and company laptops it won't come anywhere near the value of the company.  Companies are generally evaluated on the net present value of future cashflow. 

Note: none of this should be taken that this paper company is worth the $12M in self valuation.  It isn't.  It likely isn't worth 5% of that but it doesn't make your statements any more accurate.

Both ckolivas and optimiz are saying the same thing just in a different way.  Maybe this helps.  The nonce which solves a block only solves that specific EXACT block.  If you change anything, even a single bit it will produce a new different hash that will (almost always) be invalid.

Thus you can NEVER use a nonce that solves a blockheader created by the pool for any other purpose.  The pool/miner is rewarded by a transaction inside the block, if you change that, you change the block.  If you broadcast the block as is, well it doesn't matter who broadcasts it, the reward will go the the address(es) in the coinbase.

So
YES you can withhold a block from the pool.  In all pools except PPS this means your reward will go down as well as you are sharing a % of the total revenue produced by the pool and you have reduced the total revenue.  In a PPS pool your payment is fixed so it doesn't directly cost you anything but you don't gain directly either.  However if enough people did this the pool would eventually fail, the operators would lose, and you may need to go to a pool with less favorable terms. 

NO you can't "steal" the block reward, allow another pool to solve the block, or somehow gain any larger share of the reward.  

I wasn't saying it is a good deal, it isn't.  It would be beyond stupid to put $3M for a mere 20% of a company which currently exists as only an idea.  I was just correcting that the term "raising equity" refers to what is added to the company.  The fact that their evaluation of the existing equity being worth $12M is just stupid doesn't change the fact that they are only RAISING $3M in capital.

Take a real company, one which has real assets, real customers, real products and is looking to expand.  Say a trusted third party evaluates that the company is currently worth $10M and the company is looking for $5M to expand production.  The company would offer a 1/3rd equity stake to new investors to raise $5M in equity.  After the equity sale is complete the company would have a fair value of $15M and would rise or fall base ond the success of management, future sales, etc.  The fact that after the equity sale is complete the company is worth $15M doesn't change the fact that the company is only raising $5M.

Simple version:
The founders are claiming their existing company is worth $12M.  They are looking to raise an additional $3M in exchange for 20% of the company.  They are only raising $3M but it only makes sense if one believes the existing company (w/o IPO capital) is worth $12M.  It obviously isn't but that doesn't change the amount of equity they are raising.

This.  They aren't raising $12M in value because by the vaulation of the company their idea/concept is ALREADY worth $12M.

(Shareholder Equity) = (Assets) - (Liabilities)

Prior to public offering
Equity (owned by founder) = Assets (idea)
$12M = $12M

After public offering
Equity (public + founder) = Assets (ideas + cash)
$15M ($3M + $12M) = $15M ($12M + $3M)

 

This.  /thread.

(or it should be, but it won't and they likely will sell some shares and later "investors" will be crying about lost funds and how they couldn't see it coming).