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1  Bitcoin / Press / [2014-05-15] First They Came For The Porn Stars... on: May 15, 2014, 11:40:12 PM
This is a really interesting DB article imo. Possible implications for BTC at the end. Also some good comments on the site. Apparently the Native American banks stepped in to help some of the gambling sites.

Editorial By Wendy McElroy

The Department of Justice (DOJ) program is called Operation Choke Point. The choke point is America's payment infrastructure through which an estimated $5 trillion in consumer purchases flow each year; more than eight million merchants use it to process credit and debit card payments. The DOJ is targeting banks and payment companies, such as PayPal, with a tsunami of subpoenas and other expensive legal demands. The demands go away if the institutions refuse to do business with people whose activities are deemed "objectionable" although they are legal. The DOJ is imposing its own moral criteria on who can participate in the market place.

Jason Oxman, CEO of the Electronic Transactions Association, stated in the D.C. Watchdog The Hill (April 24): "The theory behind this enforcement program has superficial logic: increase the legal and compliance costs of serving certain disfavored merchant categories, and payments companies will simply stop providing service to such merchants. And it's working—payments companies across the country are cutting off service to categories of merchants that—although providing a legal service—are creating the potential for significant financial and reputational harm...."

Banks that do not comply may face the same treatment as the Four Oaks Bank in North Carolina. The feds sued, alleging that Four Oaks either knew or should have known something was wrong with processing Internet gambling entities, among other "questionable" businesses. Four Oaks settled for $1.2 million without admitting wrongdoing.

Which Legal Businesses May Be Ostracized From the Mainstream?

On April 28, FOX News reported that a subsidiary of JPMorgan Chase had informed hundreds of people in the porn industry of the impending closure of their accounts; no future business would be conducted. (The DOJ denies any connection with Operation Choke Point.) PayPal has followed suit. Porn stars may have captured the headlines but the most commonly targeted industry so far has been payday lenders. Who's next?

A 2011 report from the Federal Deposit Insurance Corporation (FDIC) entitled "Managing Risks in Third-Party Payment Processor Relationships" offers an indication. Among the 30 businesses the report named as being high-risk for fraud are ammunition sales, coin dealers, drug paraphernalia, escort services, firearm sales, home-based charities, mailing lists, on-line gambling, pharmaceutical sales, racist materials, tobacco sales and travel clubs.

The FDIC is responsible for "each depositor [being] insured to at least $250,000 per insured bank." How many banks will risk losing their insured status if the FDIC flexes that particular muscle?

According to the Wall Street Journal (August 7, 2013), the FDIC is already a full partner in Operation Choke Point. The WSJ claimed the program initially resulted from a 2009 Executive Order signed by President Obama, which established a Financial Fraud Task Force. After secretive meetings between the DOJ, FDIC and a newly-formed Consumer Financial Protection Bureau (CFPB), Operation Choke Point was launched in early 2013. Details are difficult to fill in because the DOJ refuses to provide information to the public despite requests from Congress.

On August 22, 2013, 31 members of Congress requested a briefing from Attorney General Eric Holder and FDIC Chairman Martin Gruenberg. The request stated: "it has come to our attention that the DOJ and the FDIC are leading a joint effort that according to a DOJ official is intended to 'change the structures within the financial system'," in order to choke "'off from the very air" that short term lenders needed to survive. "We are especially troubled by reports that the DOJ and FDIC are intimidating some community banks and third party payment processors with threats of heightened regulatory scrutiny unless they cease doing business with online lenders." Congress also expressed concern that the program had no statutory authority: "Neither Dodd-Frank, nor any other legislation passed by Congress, has given the DOJ/FDIC or any other federal agency the authority to 'take away the very air' that online lenders 'need to survive.' "

In late September, a DOJ representative met with members of Congress but refused to answer questions about Operation Choke Point, claiming the DOJ was under no obligation to do so. According to Breitbart News (Jan. Cool, "the official also refused to state her name, which was discovered only after she left her business card on the table." The official later refused comment to Breitbart. Nevertheless "that same week ... her subordinate ... was eager to provide specific details of Operation Choke Point to an important meeting of bank examiners...sponsored by the Federal Financial Institutions Examination Council (FFIEC)."

The FFIEC is self-described as "a formal interagency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions." Two of the powerful agencies with which it coordinates are the FDIC and CFPB.

"Who Will Be Next?"

That's the question everyone is asking. The porn and payday loan industries are low-hanging fruit because so few outsiders will speak up in their defense. If Breitbart is correct, then the "under-the-radar project" is more broadly designed "to destroy [all] three sectors of the private lending industry: third party payment processors, payday lenders, and online lenders."  In short, the program would eliminate competitors to the mainstream banks.

"And, then, who?" The Obama administration has a track record of using federal regulations and agencies against those it ideologically dislikes. When its own actions are restrained by law or the Constitution, it pressures what remains of the private sector into acting as an arm of the state to enforce federal policy.

For example, the federal government may be constrained by the First Amendment but media outlets that can be bribed or threatened are private entities; they can fire or censor employees more freely. The federal government may be constrained by the Second Amendment but it can bribe or threaten private banks into refusing to do business with gun shops.

Second Amendment activists are already quoting Martin Niemöller's famous quotation about the rise of Nazi Germany: "First they came for the Socialists, and I did not speak out – Because I was not a Socialist...." Their concern is a reasonable one. In the past, some banks have terminated relationships with people in the firearm industry. Moreover, some online services – such as Google, eBay and PayPal – have already adopted policies that are hostile to the sale of firearms and ammunition.


An unintended consequence of Operation Choke Point is that some "high risk businesses" are turning to cyber-currencies, especially to Bitcoin. Cryptocoins News (May 1) reported, "bitpay has proven to be an incredible ally to the porn industry and has led Bitcoin's charge into the high chargeback industry. and now Verotel both accept Bitcoin using bitpay; both are able to charge lower fees without the risk of chargeback. OKCupid has been using Bitcoin for over a year now... Almost as long as the DOJ has been unintentionally pushing these industries towards Bitcoin." Legal marijuana shops have also been pushed toward bitcoin.

Of course, the inevitable next question is, "How vulnerable are crypto-currency processors to Operation Choke Point?" Fortunately, businesses that are being "choked" can still accept bitcoin without third party processing and act as their own banks. The final irony of the federal program may be that it encourages the growth of private banking.
2  Other / Off-topic / Crypto question - looking for simple messaging app. on: April 30, 2014, 03:07:50 PM
I need something simple for sending private messages. But I don't want the output to look like private or encrypted email. I'm in no way a crypto expert but I've tried a couple of the mainstream programs out there and for my purposes they're way overkill, but even worse, any casual eavesdropper would know I'm sending an encrypted message. What I would like to find is a simple client that would let me specify both the key (also plain text which I then place in the message subject header or wherever) and the output text. Example: Dave is at work and wants to send a private message to Tom.

Original message: Dude, last night I banged the Manager's admin.

Key (and message subject): Report

Output message: Tom, can you send me the Q1 report for company X

Tom receives the Output message, decodes it with the key "Report" because he knows I really couldn't give a fuck about any reports, and now reads the original message.

Is this possible? I'm not talking about using this for sending something like a copy of a private key -- I can use a high end package for that. This would be just simple messages/dirty jokes/comments about the HR chick's rack etc that I don't want those nosy types in IT to intercept. This way I could send something innocuous looking via gmail or the work email and even if I sent it to the wrong recipient it wouldn't matter. 
3  Bitcoin / Bitcoin Discussion / How to pay bills in the US from overseas? on: April 04, 2014, 12:21:28 AM
Hi, I have a few bills I need to pay in the US but I don't have a bank account there. Any suggestions as to what would be the most efficient and cheapest way to pay them going from BTC to USD? I guess I could do several wire transfers but that is painful. It's probably going to be an ongoing situation so I don't have an issue setting up an account with a US exchange if I need to.  
4  Economy / Economics / [2014-1-28] Let Banks Fail Is Iceland Mantra as 2% Joblessness in Sight on: January 28, 2014, 12:50:30 PM

Pretty good article and some good comments too.
5  Other / Off-topic / Daemon - Daniel Suarez on: January 28, 2014, 05:41:47 AM
Having some free time, I started reading Daemon by Daniel Suarez. I think it was published in 2009 and it's a very good read imo, reminiscent of Michael Crichton. It's about a CEO of a gaming company who is dying but leaves behind a daemon that starts to infiltrate systems and companies around the world. But there are definitely parallels to the way bitcoin was started and is spreading. I haven't finished it yet and there's a sequel. His next book is about drones. If you haven't read it and you have some time, I would recommend it.
6  Bitcoin / Bitcoin Discussion / 10 minutes of crypto history on: January 16, 2014, 03:00:17 AM
Just occasionally it's nice to revisit the origins of what made this possible. Also anything written by Simon Singh is worth reading.
7  Bitcoin / Bitcoin Discussion / Tipping bartenders and waiters etc with mBTC on: December 11, 2013, 02:39:21 PM
I did this as bit of fun last night. I asked the bar staff if they would like the tip in mBTC. Within a few minutes there was a group of five or so people learning about bitcoins. One of the bar tenders had a samsung, the other an iphone. I downloaded mycelium on to the samsung and sent her the tip and then she split it with the other bar tender by sending to some iphone app I had never heard of. People were suitably impressed and it's probably not a bad way to spread the message. It didn't hurt that during the discussion the price rose a few points.
8  Bitcoin / Bitcoin Discussion / Fukushima revisited? on: April 11, 2013, 08:16:04 PM
This is horribly reminiscent of the Fukushima disaster, thankfully not in human cost, but in highlighting the management disconnect and incompetence in Japanese companies. I'm pretty sure the guys who managed the infrastructure knew there were significant problems but japanese employees are not exactly encouraged to say anything that might cause any loss of face to their managers. It couldn't have come at a worse time for bitcoins when the public spotlight was turned directly on it. It was bitcoins' chance to shine and the results are awful. If it was just a successful DDOS hack attack and temporary downtime, then the public would have understood. Instead if it was indeed the result of totally inadequate capacity and security planning - i.e. fundamental mismanagement - then the management team should be publicly outed. The reputational damage to BTC is irreparable. I hope I'm wrong.
9  Economy / Speculation / Bitcoin needs to do a "stock split" and add new (sub)names on: April 07, 2013, 11:39:06 PM
I always ask anyone I'm talking with whether they've heard of bitcoins. 99% of the time the answer is no (and I mix with some clued up people). Within a minute most of them are intrigued. But now when they hear that the price is ~$150+ their response is, "Oh it's too high. It's risen too fast, too quickly." If however, the price was $1.50 or even $15+ they would probably jump in and spend just as much money. It's a psychological thing, like buying a thousand penny stocks vs spending $600 on a single share of Google. I think the bitcoin powers that be, need to think about naming the equivalent dimes, nickels and pennies of the BTC world so that newcomers aren't faced with sticker shock. One of the most common newbie misunderstandings is that bitcoins aren't divisible and a well presented naming convention would really help. Just my ever humble opinion, but what do others think? Do those names exist already?
10  Other / Beginners & Help / solo 401k vs self directed IRA for investing in bitcoins on: March 08, 2013, 03:51:27 AM
I've seen a couple of threads talking about the possibility of using self directed IRAs + LLC to invest in bitcoins. But a solo 401k looks like a better option, if you have a solo business. Has anyone looked into it?
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