2013-06-23 Coindesk: CA issues cease-and-desist to Bitcoin Foundation

[jgarzik]

URL: http://www.coindesk.com/california-issues-cease-and-desist-letter-to-bitcoin-foundation/

Includes a couple quotes that other reporting doesn't.

[Stephen Gornick]

The letter, signed by Paul Clayton, senior counsel at the Department of Financial Institutions (California’s financial regulator), gave the Foundation 20 days to respond, although it was only received last week.

I wonder if it would have been more appropriate if Bitcoin Foundation had released this sooner (e.g., same day).  At a minimum, if someone at the Foundation learned of this order and then traded before the order was publicly released, that might be something another government agency might consider to be "insider trading".

[JohannSummers]

@JohannSummers we are preparing our reply. We only received the letter last week, despite it being dated much earlier. (https://twitter.com/virtuallylaw/status/349026617236004865)

Looks like California likes to hold on to their C&D letters for a few weeks before they send them.

[N12]

The letter, signed by Paul Clayton, senior counsel at the Department of Financial Institutions (California’s financial regulator), gave the Foundation 20 days to respond, although it was only received last week.

I wonder if it would have been more appropriate if Bitcoin Foundation had released this sooner (e.g., same day).  At a minimum, if someone at the Foundation learned of this order and then traded before the order was publicly released, that might be something another government agency might consider to be "insider trading".

Oh dear.

[Morblias]

@JohannSummers we are preparing our reply. We only received the letter last week, despite it being dated much earlier. (https://twitter.com/virtuallylaw/status/349026617236004865)

Looks like California likes to hold on to their C&D letters for a few weeks before they send them.

Page 2, "Please advise us in writing within twenty (20) days of the date of this letter as to what steps you have taken to comply with this order." So they date it May 30 then send it out 20 days after it was dated. What the hell...

[justusranvier]

Page 2, "Please advise us in writing within twenty (20) days of the date of this letter as to what steps you have taken to comply with this order." So they date it May 30 then send it out 20 days after it was dated. What the hell...

Governments operate on a, "heads I win, tails you lose" basis.

[solex]

The letter, signed by Paul Clayton, senior counsel at the Department of Financial Institutions (California’s financial regulator), gave the Foundation 20 days to respond, although it was only received last week.

I wonder if it would have been more appropriate if Bitcoin Foundation had released this sooner (e.g., same day).  At a minimum, if someone at the Foundation learned of this order and then traded before the order was publicly released, that might be something another government agency might consider to be "insider trading".

Insider trading laws do not apply to currencies.

[jgarzik]

The letter, signed by Paul Clayton, senior counsel at the Department of Financial Institutions (California’s financial regulator), gave the Foundation 20 days to respond, although it was only received last week.

I wonder if it would have been more appropriate if Bitcoin Foundation had released this sooner (e.g., same day).  At a minimum, if someone at the Foundation learned of this order and then traded before the order was publicly released, that might be something another government agency might consider to be "insider trading".

Insider trading laws do not apply to currencies.

Further, insider trading can be a good thing.  Read up on free markets   Any trading, "insider" or not, adds information to the market and assists in price discovery.

[NewLiberty]

Page 2, "Please advise us in writing within twenty (20) days of the date of this letter as to what steps you have taken to comply with this order." So they date it May 30 then send it out 20 days after it was dated. What the hell...

Governments operate on a, "heads I win, tails you lose" basis.

They should have PDF'd the envelope as well.  These come certified mail, so signature at receiving is required.

[N12]

Further, insider trading can be a good thing.  Read up on free markets   Any trading, "insider" or not, adds information to the market and assists in price discovery.

And yet, the moral and most efficient thing to do would be to release the information right before you act since otherwise it's not a level playing field for all market participants. Moreover, it would actually be in your interest to actively suppress the information until you have taken position. I don't think being an insider in the dev team or the foundation entitles one to an information asymmetry that you exploit for personal gain.

It's scary that an important person such as you would think that way, even if you didn't act on this particular case.

Transparency is good. It's a disappointment we didn't get to know it first hand.

[JohannSummers]

Blitz, see post by Stephen Gornick, (2nd from top). Looks like Jon Matonis announced it in Forbes less than a week after they got it, which seems like a reasonable amount of time to figure out the legal issues involved and formulate a proper response before going public with it.

[smoothie]

Obviously the state of California did not do its research to find out that the Bitcoin Foundation (a non-profit entity) is not a MSB and nor are they transferring funds to and from people, except maybe Gavin and the other girl (whats her name?).

[N12]

Thanks, didn't realize that, I was under the impression we got it from second hand. Everything's cool.