That was a random jumble of buzz words and phrases saying absolutely nothing.

HSBC's "deal" involved paying $5B, accepting a $20B plus prison time suspended sentence with 5 year probation, and the not so subtle threat that if HSBC went down it would take down the US financial system, and plunge the country back into recession.

Not sure that is going to work here.

I think we are going around in circles.


1022.320 is extremely broad and vague, as pointed by others.  

You have no idea if a tx you believe is routine, is reported by an MSB because THEY believe it fits the guidelines in 1022.320.  The idea that you would know what rises to (as an example) "serves no business or apparent lawful purpose" in the mind of the compliance officer of every single financial institution (to include MSBs) in the world, all of which are prohibited to share such criteria with you, and for whom there is a penalty for not reporting (if regulators later believe the report was intentionally withheld), is just silly.

For example say you transferred $5,000 to PayPal but you mistyped and only wanted to transfer $500.  So when it clears you transfer back $4,500 but pick the wrong account and transfer it into a different account linked to your PayPal account.  It is possible (I have no idea only PayPal would know) that they would view that as "serves no business or apparent lawful purpose", it is also possible that they wouldn't.  The criteria is very subjective.  Likewise if you deposited cash into your bank account and then later had an emergency that day and withdrew cash from a different branch that might also (once again solely up to the determination of the financial institution) result in a SAR.  I am not saying it would, because I am not foolish enough to think I can predict the actions of thousands of different entities when it comes to a loose and subjective set of criteria.

You may think you know when a SAR is required or not but the criteria is so broad and vague, that a given activity may be reported by one entity and not reported by another.  

It likely isn't the answer you want to hear but ...

the source code

https://github.com/bitcoin/bitcoin

If you mean the low level mechanics of the actual mining software you would need to look at the source code of those projects (cgminer, etc).

Not exactly, the criteria is rather vague and open ended.  The intent of the requirement is for financial institutions (including MSBs) to file reports on activity that is suspicious.  Suspicious doesn't mean criminal, or known to be unlawful beyond a reasonable doubt, it simply means suspicious.

From FinCEN point of view there is no such thing as an unnecessary SAR.  SAR doesn't mean criminal activity.  Plenty of criminal activity simply never warrants a SAR because there is no circumstance that creates any level of suspicion by the financial institution.  On the other hand every day thousands of SARs are filed on legitimate activity.

It is a suspicious activity report not a criminal activity report.

http://www.fincen.gov/financial_institutions/msb/msbsar.html

They aren't awarded 25 coins.  They are awarded the current subsidy (right now 25 BTC) PLUS the value of fees of all tx included in the block.  For most blocks right now that is slightly more than 25 BTC.

Example of a recent block.
https://blockchain.info/block-index/463885

Notice the first tx has no input only an output.  That is the coinbase tx.  It is how miners "get paid".  The protocol requires a block to have one and only one coinbase tx per block.  It is the first tx in any block.  Unlike any other tx it has no input only an output.  The miner is minting some coins from nothing (the subsidy) and collecting the tx fees for all tx in the block at the same time.

You will notice the value of the coinbase is not 25.0000000 BTC it is 25.09845377 BTC.   The value of all the fees paid on the 706 tx in the block combined is 0.09845377 BTC.

The miner paid itself 25 BTC (subsidy) + 0.09845377 (fees) = 25.09845377 BTC (total).

Miners can't cheat because all nodes on the network verify blocks.  All nodes know what the current subsidy is and they can verify the amount of fees paid on all the tx in the block.  If the coinbase is "too much" the block will be rejected.   As a weird exception the miner could actually pay himself less.  A coinbase of 25.09845376 BTC for this block would be valid as would a coinbase of 25 BTC or 0 BTC.  However a coinbase of 25.09845378 would be instantly recognized by every node on the network as invalid and deleted.

Rannasha explained it.  It is actually a pretty clever solution and it only loosely couples the tx (and fee) to the miner.

Miners (solo miner is no different than a pool) are allowed to put a special tx in the block called the coinbase.  Now to prevent unlimited printing of coins, all nodes compute what the coinbase should be a block which pays miners "too much" is simply considered invalid by the rest of the network and deleted.

To be valid the value of the coinbase <= value of block subsidy + (value of all tx_inputs in the block - value of all tx_outputs in the block).

Note miners can (and have probably due to bugs) pay themselves less.  They could even pay themselves nothing and in essence unmint coins.  It likely was an oversight as I see no good reason for the validation requirement to not be coinbase = value of subsidy + fees.

The default fee for that transaction would either be 0 or 0.1 mBTC ($0.08) so this was selected by the user.

However I do think it would be a good idea if the client warned users before doing something that 99.9999999999% of the time is simply a mistake.  Paying a fee 100x what is required is almost always going to be a mistake and for the one in a million that it isn't the user could always override the warning.

And here if you want to back into the dark ages before any forum <shudder>.
http://www.mail-archive.com/cryptography@metzdowd.com/msg09959.html

IIRC this is the first known post by "satoshi" (obviously "satoshi", either a single person or group, used the internet prior to this post.  This would be the first post under the satoshi psuedonym).

The same reason there are no stories about planes landing without issue.

Vice sells ads and nobody is in the new business anymore, they are in the ad business.

IF the electrical cost is higher than the value of the mined bitcoins why not just buy them instead?

One way to look at it is mining is buying coins with electricity (and ammortized hardware cost).

If right now you could buy one BTC for $800 or mine one for $900 why would you pick the later?  You want less BTC?  You are hoping to keep yourself from becoming too wealthy?

Gambling is bad, gambling with money you can't afford to lose is worse.

Get a part time minimum wage job preferably a really crappy one like flipping burgers.  The 600+ hours you will need to work will provide some negative reinforcement which should last the rest of your life.


(Before someone complains about being an ass, I worked crappy jobs through college, it sucked but it didn't kill me and it won't kill the OP either). 

Fight the good fight against the banks, I won't get in your way. 

It doesn't make the claim that MSBs can legally aid their clients in structuring to avoid mandatory reporting (among a host of other falsehoods) which is the post I was responding to.

Are you trying to point out hypocrisy in the system?  You don't honestly think I am defending the status quo.  The big difference between anyone related with Bitcoin and HSBC is "you" aren't to big to fail or jail.

Sometimes the real world sucks.   I think looking at what HSBC got away with and using it as a business plan is a good way to end up behind bars for a significant portion of your natural life (unless you just happen to have assets in the hundreds of billions of dollars range).

That was my point although horribly phrased.

An MSB is obligated to file a SAR when the transaction meets the criteria.
The MSB is prohibited to notify the client that a SAR has been filed.
Even when directly asked or subpoenaed an MSB is prohibited from indicating if a SAR has or has not been filed.

Which has nothing to do with the article.  NY has no plans to make Bitcoin legal tender and baring a war of revolution has no such authority to do so.  It is legal to accept the Euro for payment of goods and services in NY (or just about anywhere in the world).  The Euro is not legal tender in NY (or anywhere in the United States). Making something legal, or regulating the exchange of it, doesn't make it legal tender. NY also regulates the exchanging of dollars into alcoholic beverages.  Is alcohol also legal tender in NY?

See Coinage Act of 1965 (Section 31 U.S.C. 5103).

Why did you change the title from one which was correct to one which was total nonsense?

The article has nothing to do with legal tender.

Even if true, nobody has still claimed selling Bitcoins for cash is illegal.  Even in the "made up complaint" that was never stated.

Nobody has said selling Bitcoins for cash is illegal.  It might help if you stopped making stuff up and actually read the complaint.

Actually it is.  It is called structuring.  An MSB has certain requirements that don't exist for other businesses.   MSB are prohibited from advising their clients how to avoid reporting thresholds, they are prohibited from aiding their clients to structure transactions.  If a client does engage in structuring to avoid AML reporting, KYC requirements, or recordkeeping and the MSB becomes aware of that the MSB is required to treat all structured transactions as if they were a single transaction for various statutory obligations.  They are liable for failing to report transactions, failing to keep accurate books, and for even notifying clients that they have filed a report with FinCEN as required by law.

Everything you described would be a criminal act by an MSB, even if there was no underlying overt act.

My best advice is don't provide advice for things you have not done legal research on.  Someone may believe you and end up in prison as a result.

There is a huge difference between a financial institution (be it bank or MSB) UNKNOWINGLY processing transactions which are related to a criminal enterprise and doing so in compliance with its own internal AML policies and in accordance with the requirements set by FinCEN.  It is a completely different thing for an entity to KNOWINGLY engage in those transactions, violate its own internal AML policies, assist the criminal client with bypassing AML procedures, and failing to report those transactions to FinCEN.

The complaint doesn't allege the former, it alleges the latter.  For the record I am not saying Charlie is guilty of anything, the complaint is only that a complaint and the allegations until proven are just allegations.  It is up to a jury to decide if the state's ALLEGED charges have merit.  However lets at least start the discussion on what was ACTUALLY alleged and not some fantasy scenario where the prosecution is merely charging him for selling some coin in full compliance with his company's AML program that someone unknown to him later used them in a crime.  That is just 100% BS.