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Author Topic: Why Homeland Security might be the best thing to happen to Bitcoin  (Read 4990 times)
esenminer
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May 15, 2013, 09:49:08 PM
 #41

The actual warrant has nothing to do with Bitcoin. I'm guessing that Dwolla would only transfer to US accounts. Mt Gox setup a company in the US with a US account and used that account to act an intermediary between Mt Gox and Dwolla. In doing so they broke money laundering rules because this transfer of money was at the request of a client - not simply money in exchange for goods.

Say you want to put 10k USD into mt gox. You put 10k into Dwolla, Dwolla transfers to Mutum Sigillum and the Mutum Sigillum transfers to Mt Gox in Japan - the last step breaks US laws since its transferring money at your request as so it (according to the affidavit) makes it a money services provider and as a money services provider it has to comply with FinSEC - for example it has a duty to report the transfer for amounts over $x. Why you're transferring the money into Mt Gox is not important it's the transfer of funds between the two companies which breaks the law.

This MS company is not a money transmitter. That claim is just ridiculous. Gox was just trying to accommodate its customers. If Dwolla didn't allow foreign companies to have accounts, then Gox set up a subsidiary in the US just to satisfy Dwolla. There's nothing wrong with MS then sending this money to its parent. MS doesn't send money to Gox "at customer request." It is owned by Gox. Where else would they send money? How many US companies send money abroad within their own corporate structure? Are they "money transmitter businesses" now too?

They know what Gox is and what it does. It's not a secret money transmitter trying to operate under the radar in the US. Give me a freaking break. You can't tell Gox to send USD to Aunt Mary in Idaho. What a joke.

I'm not sure the claim is ridiculous. From Dwolla's point of view it was transferring money to a US account, the Mutum Sigillum account. Everyday (or whatever the process was) a wire transfer of all the funds transferred into the Mutum Sigillum account would be transferred to Mt Gox account in Japan. Why was this money transferred? There is clearly a correlation between clients making Dwolla payments, payments into the Mutum Sigillum account and then payments into the Mt Gox account. In the warrant there is an example of somebody paying into the Dwolla account and having their money show up in Mt Gox. It's not hard to make the connection and see that Mutum Sigillum was transferring funds at the request of clients. It was doing this is a roundabout way though Dwolla but whether the law can be interpreted this way is up to a court and it seems that they have agreed that the law does apply in this case and that Mutum Sigillum was acting as a money transfer agent. It could turn out that in court Mutum Sigillum will win which will set a precedent for others to use this method but I doubt it. The smart thing would have been for Mutum Sigillum to be a Money Transfer Agent and follow any regulations / laws / procedures which required it - maybe it was too expensive to setup or maybe they believed this was legal I'm not sure.
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jgarzik
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May 15, 2013, 09:52:46 PM
 #42

There's an urban legend that one of the early miners (maybe Satoshi himself) bought a pizza for some crazy amount of BTC (1000?).  How's that for price theory?

Not urban legend, not Satoshi, and 10k not 1k: https://en.bitcoin.it/wiki/History#2010


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joesmoe2012
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May 15, 2013, 09:53:24 PM
 #43

There's an urban legend that one of the early miners (maybe Satoshi himself) bought a pizza for some crazy amount of BTC (1000?).  How's that for price theory?

Not urban legend, not Satoshi, and 10k not 1k: https://en.bitcoin.it/wiki/History#2010



Somebody also bought a porsche @ nearly $266.

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May 15, 2013, 09:55:48 PM
 #44

I'm alot more interested in Bitcoin on its own than I am in Bitcoin as a way to transfer and exchange other currencies. I wonder how things might have been different if Bitcoin had been introduced first as a game currency like Lindens. I've noticed that people really don't convert Lindens in their head, and most things in SL are priced in Lindens only. (not comparing Bitcoin to Lindens, just observing the different pattern of adoption).

Really? Because Lindens have a HUGE Linden to USD exchange market, and business owners that have to pay for their land plots and expenses in dollars pay very close attention to the Linden <=> USD exchange rate before setting the prices they are willing to sell stuff to. Were you around during the Linden crash, when the currency hyperinflated over the course of a week or two?

Yeah but the second life people said that any SLL purchased with BTC would be forfeited didn't they?


I left SL before I found Bitcoin, and haven't been back since, so I don't know about that. I doubt that can be enforced, anyway, since, at least within the game, SLL is traded person-to-person, too.

There's an urban legend that one of the early miners (maybe Satoshi himself) bought a pizza for some crazy amount of BTC (1000?).  How's that for price theory?

It was 2 pizzas for 10,000. And without an easy way to exchange BTC for fiat, thus allowing many more users and businesses to join, there's an extremely good chance that 10,000BTC would let you buy maybe 4 pizzas instead of 2 today. Being able to swap BTC for oter currencies is one of the features that gives it its value.

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May 15, 2013, 09:57:24 PM
 #45

I'm alot more interested in Bitcoin on its own than I am in Bitcoin as a way to transfer and exchange other currencies. I wonder how things might have been different if Bitcoin had been introduced first as a game currency like Lindens. I've noticed that people really don't convert Lindens in their head, and most things in SL are priced in Lindens only. (not comparing Bitcoin to Lindens, just observing the different pattern of adoption).

Really? Because Lindens have a HUGE Linden to USD exchange market, and business owners that have to pay for their land plots and expenses in dollars pay very close attention to the Linden <=> USD exchange rate before setting the prices they are willing to sell stuff to. Were you around during the Linden crash, when the currency hyperinflated over the course of a week or two?

Yeah but the second life people said that any SLL purchased with BTC would be forfeited didn't they?


I left SL before I found Bitcoin, and haven't been back since, so I don't know about that. I doubt that can be enforced, anyway, since, at least within the game, SLL is traded person-to-person, too.

There's an urban legend that one of the early miners (maybe Satoshi himself) bought a pizza for some crazy amount of BTC (1000?).  How's that for price theory?

It was 2 pizzas for 10,000. And without an easy way to exchange BTC for fiat, thus allowing many more users and businesses to join, there's an extremely good chance that 10,000BTC would let you buy maybe 4 pizzas instead of 2 today. Being able to swap BTC for oter currencies is one of the features that gives it its value.

They'd probably give me a pizza to get me to stop talking about bitcoins at this point.

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May 15, 2013, 10:13:20 PM
 #46

pay taxes in bitcoin

Parse error.

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BlueNote
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May 15, 2013, 10:42:54 PM
 #47


I'm not sure the claim is ridiculous. From Dwolla's point of view it was transferring money to a US account, the Mutum Sigillum account. Everyday (or whatever the process was) a wire transfer of all the funds transferred into the Mutum Sigillum account would be transferred to Mt Gox account in Japan. Why was this money transferred? There is clearly a correlation between clients making Dwolla payments, payments into the Mutum Sigillum account and then payments into the Mt Gox account. In the warrant there is an example of somebody paying into the Dwolla account and having their money show up in Mt Gox. It's not hard to make the connection and see that Mutum Sigillum was transferring funds at the request of clients. It was doing this is a roundabout way though Dwolla but whether the law can be interpreted this way is up to a court and it seems that they have agreed that the law does apply in this case and that Mutum Sigillum was acting as a money transfer agent. It could turn out that in court Mutum Sigillum will win which will set a precedent for others to use this method but I doubt it. The smart thing would have been for Mutum Sigillum to be a Money Transfer Agent and follow any regulations / laws / procedures which required it - maybe it was too expensive to setup or maybe they believed this was legal I'm not sure.

The claim is absolutely ridiculous. Western Union is a money transmitting business, not Gox or their subsidiary. For heaven's sake, a money transmitter sends money from person A in X town to person B in Y town. That's the purpose of such a business. Taking funds from customers and moving it to your corporate headquarters in another country is not a money service business.

Let's not drink the government Koolaid. Perhaps you can argue that Gox should have done whatever idiotic groveling action would have satisfied the bureaucrats beforehand, but don't claim that this action makes any kind of legal sense. It's plainly ludicrous and just an exercise in raw power.



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May 15, 2013, 10:57:07 PM
 #48

This could be the start of the most epic backfire ever. I agree that the US Govt just did crypto's a HUGE service today by validating to the world that Bitcoin IS money. I think the most simple solution is to give the US govt what it just asked for; lets all stop using their money, use ours only and we'll see where that gets them. What a bunch of incompetent boobs.
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May 15, 2013, 11:10:38 PM
 #49


I'm not sure the claim is ridiculous. From Dwolla's point of view it was transferring money to a US account, the Mutum Sigillum account. Everyday (or whatever the process was) a wire transfer of all the funds transferred into the Mutum Sigillum account would be transferred to Mt Gox account in Japan. Why was this money transferred? There is clearly a correlation between clients making Dwolla payments, payments into the Mutum Sigillum account and then payments into the Mt Gox account. In the warrant there is an example of somebody paying into the Dwolla account and having their money show up in Mt Gox. It's not hard to make the connection and see that Mutum Sigillum was transferring funds at the request of clients. It was doing this is a roundabout way though Dwolla but whether the law can be interpreted this way is up to a court and it seems that they have agreed that the law does apply in this case and that Mutum Sigillum was acting as a money transfer agent. It could turn out that in court Mutum Sigillum will win which will set a precedent for others to use this method but I doubt it. The smart thing would have been for Mutum Sigillum to be a Money Transfer Agent and follow any regulations / laws / procedures which required it - maybe it was too expensive to setup or maybe they believed this was legal I'm not sure.



The claim is absolutely ridiculous. Western Union is a money transmitting business, not Gox or their subsidiary. For heaven's sake, a money transmitter sends money from person A in X town to person B in Y town. That's the purpose of such a business. Taking funds from customers and moving it to your corporate headquarters in another country is not a money service business.

Let's not drink the government Koolaid. Perhaps you can argue that Gox should have done whatever idiotic groveling action would have satisfied the bureaucrats beforehand, but don't claim that this action makes any kind of legal sense. It's plainly ludicrous and just an exercise in raw power.




Agree completely. In this case dwolla was the msb right?

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May 15, 2013, 11:34:52 PM
 #50

The funny thing about all this is that this isn't really a thing that happened to bitcoin, it's a thing that happened to an exchange because its owner failed to comply (mistakenly or intentionally) to the pre-existing regulations of the district in which he opened a bank account.
BitDreams
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May 15, 2013, 11:35:55 PM
 #51

I was thinking similar things before I clicked on the thread. Thanks for saying it so well!
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May 16, 2013, 01:27:35 AM
 #52

I don't see why regulating exchanges would be a bad thing - for example the SEC regulates the stock markets in the US and most of the rules they enforce - like insider trading - are meant to protect investors not the exchange.

No victim = no crime. Who's the victim with regards to "insider trading"? Is Inside Trading Really a Crime?

The SEC destroys markets, it doesn't make them safer:

Madoff and the Failure of the SEC
The SEC Makes Wall Street More Fraudulent
The SEC Short Sells Us Down the River

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May 16, 2013, 01:34:10 AM
 #53

Remember the whole blockchain is right there for the IRS to read...

Exactly what information does the blockchain provide to the IRS that would implicate a person in tax fraud?

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May 16, 2013, 02:11:35 AM
 #54

In my opinion this is not an indicator that they are for or against Bitcoin, simply aware.
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May 16, 2013, 02:33:17 AM
 #55

...Can someone explain to me why everyone is so obsessed with trading against fiat?

Yes! It's called greed. (grin)

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May 16, 2013, 02:37:13 AM
 #56

There's an urban legend that one of the early miners (maybe Satoshi himself) bought a pizza for some crazy amount of BTC (1000?).  How's that for price theory?

Not urban legend, not Satoshi, and 10k not 1k: https://en.bitcoin.it/wiki/History#2010



Somebody also bought a porsche @ nearly $266.

Lol just posted in that topic
https://bitcointalk.org/index.php?topic=137.new#new
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May 16, 2013, 02:44:30 AM
 #57

Mark has had enough time to get his shit I'm order. There are no excuses aside from either pride or negligence.

Reminds me of the attitude BFL has.

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Rassah
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May 16, 2013, 03:06:49 AM
 #58

No victim = no crime. Who's the victim with regards to "insider trading"? Is Inside Trading Really a Crime?

If I sell you a piece of shit rust bucket of a car, and claim that it's a good car without any problems, I would be lying and committing fraud. Hell, even if it was legal, I would be lying, committing fraud, and being a general scumbag who should lose all trust for ever.
When you are insider trading, you are selling piece of shit stock to someone while telling them it's a good stock without any problems.

The article is pretty much all right, except they use a rise in share prices in their example. I wonder what their example would have been like if the trader at the bar overheard bad news?

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May 16, 2013, 03:30:38 AM
 #59

No victim = no crime. Who's the victim with regards to "insider trading"?

If I sell you a piece of shit rust bucket of a car, and claim that it's a good car without any problems, I would be lying and committing fraud. Hell, even if it was legal, I would be lying, committing fraud, and being a general scumbag who should lose all trust for ever.
When you are insider trading, you are selling piece of shit stock to someone while telling them it's a good stock without any problems.

It is even broader than that, because the stock might be better than the market is valuing it.

Basically there is an obligation upon issuers of publicly listed securities that news is disseminated to the market such that everyone can act upon it at the same time. Insider trading occurs where insiders act on news before it is public. Directors, for example, of company X, have a board meeting and decide to make an acquisition of company Y. While this is known to insiders these people might buy shares of company Y via personal accounts, before the news is made public in anticipation of a quick profit by selling afterwards.

The victim is the investing public, shareholders who own company Y shares and sell their shares in the period between the board meeting and news being made public. Some of them would have sold to the inside traders, and wouldn't have sold with the same knowledge.

I have seen the insider trading term thrown around regarding Bitcoin. However, it never applies to currencies.


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May 16, 2013, 03:35:28 AM
 #60

I don't see why regulating exchanges would be a bad thing - for example the SEC regulates the stock markets in the US and most of the rules they enforce - like insider trading - are meant to protect investors not the exchange.

No victim = no crime. Who's the victim with regards to "insider trading"? Is Inside Trading Really a Crime?

The SEC destroys markets, it doesn't make them safer:

Madoff and the Failure of the SEC
The SEC Makes Wall Street More Fraudulent
The SEC Short Sells Us Down the River


I'm not sure that insider trading is a victimless crime. Say you and some random person each buy 1000 shares at $5k in Corporation Y. Corporation Y has been pretty successful and shares rise to $10 / each. One day a close buddy of yours at Corporation Y calls you and tells you that in 2 weeks they are going to make a negative revelation which is going to send their stock price tumbling. You quick unload your 1000 shares for a cool $10k - not bad you made $5k. In 2 weeks the announcement is made, share prices tumble to $1k and some random person has lost $4k of value in their shares. I guess you could argue that the random investor hasn't lost any money until they sell their shares and whether or not you sold your shares has nothing to do with their actions - they could have also sold at any time - but I think it's clear that you had an unfair advantage over the random investor. Wouldn't you consider the random investor a victim here?  Wouldn't you be pissed if you were the random investor? This is why officers in a company are required to publicly disclose any share sales. I mean if everybody sees the CEO of Corporation Y unload their shares then it's a pretty big indicator some bad news is coming. These kinds of rules are needed in a trading market to keep the playing field level and somebody needs to enforce them. The SEC was only an example that I thought everyone would be familiar with - the point was that some rules and regulations should be in place in crypto-currency exchanges so investors are treated fairly and equally without any extra risk.

I find it strange that currently obtaining bitcoins by exchanging them for cash/credit is either a little convoluted or risky. If we want Bitcoin to be widely accepted and used then obtaining them should be simple and straightforward and exchanges where they are obtained from should be trustworthy and regulated so that people feel safe and secure in buying them.
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