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Author Topic: Trading with Non-License Money Transmitters (aka lending BTC to ANYONE)  (Read 2895 times)
Viceroy
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May 25, 2013, 02:48:13 PM
 #1

I want to build a new exchange, just like Mt Gox only BETTER!
https://bitcointalk.org/index.php?topic=179147.0


But I cannot.  Do you know why?  Because there are rules and I cannot afford to meet the regulatory requirements required to operate as an exchange. 

I thought I found a loophole, what if I just "buy" bitcoin or what if I just "sell" bitcoin... then I'm cool and I'm not regulated right?  WRONG.

I wrote to my home state and asked the man in charge of regulating securities what his take is on bitcoin.  He said some interesting things that I had not even considered, he said bitcoin may be a commodity and as such any contract involving bitcoin would fall under his jurisdiction.  You know what that means?  It means you CANNOT LEND PEOPLE BITCOIN ON CONTRACT.  You can say 'who the hell care what some state regulator thinks' and you'd be a fool because they take people to jail for breaking securities laws.  There are similar banking laws in all 'western' countries.

Liberty Reserves shady founders were arrested yesterday for transmitting money without a license.  "They had transmitted at least $30 million to digital currency accounts worldwide since beginning operations in 2002."  There are non-licensed money transmitters around here who could do that much in a single year.

I am not here to call out all the non licensed transmitters, because the list would include EVERY known exchange and sales site but I am here to warn you that when you deal with non licensed money transmitters like 'mt gox' you are likely to find your money is stuck in some government investigation... you will never get it back.  Anyone holding Liberty Reserve just lost all their money.

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Deafboy
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May 25, 2013, 02:58:09 PM
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Quote
bitcoin MAY be a commodity.
You don't really need to ask a state. Anyone here can tell you what Bitcoin MIGHT be. And you may apply that on any jurisdiction Cheesy
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May 25, 2013, 03:06:32 PM
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Well I suppose the banks in cyprus had a license.
Any 'money' that is not in your immediate possession can at any time go byebye.
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May 25, 2013, 03:10:34 PM
 #4

There are exchanges that are actively operating but most of them are not based in US.
http://bitcoincharts.com/markets/

You would have to operate it in a more business friendly country and at the worst accept currencies other than USD.
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May 25, 2013, 03:13:28 PM
 #5

The problem is that people in the western world cannot deal safely with any non-licensed exchange or website.  The operators might be protected if they hide in a cave somewhere but the users are always at risk.

I fear a multi-national company is the only one with the power to become licensed.  (

Here's what happens when you trade without a license:

http://www.ticotimes.net/More-news/News-Briefs/Costa-Rican-arrested-in-Spain-for-alleged-financial-crimes_Friday-May-24-2013
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May 25, 2013, 11:48:41 PM
 #6

he said bitcoin may be a commodity

Is bitcoin a commodity?

Using the word "may be" means that person isn't even sure.

 - http://en.wikipedia.org/wiki/Everything_which_is_not_forbidden_is_allowed

Now if you notice, DHS didn't seize Mt. Gox's Dwolla funds until after FinCEN released its guidance.

If the State believes bitcoins are a commodity then let them declare it.  Until then, bitcoins are baseball cards.

 - http://blogdial.wordpress.com/2011/08/03/bitcoins-are-baseball-cards

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May 26, 2013, 12:04:18 AM
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Using the word "may be" means that person isn't even sure.

Yea I understand.  I do not want to pull the letter out here as it was an informal conversation which includes personal information about me and my activities.  In short I did not request the 'official' position of the state on the matter which requires a $5000 lawyer to pay a $50 fee to get an answer to a written question.  (Yes it costs $5000 to hire a securities lawyer to write a letter that you then pay the state another $50 to respond to).

But he made it very clear that in my state they consider a bitcoin a commodity and that contracts involving in might be regulated (depending on a variety of other factors).  He made clear that one thing that would cause issue is borrowing bitcoin and then paying back interest on it as if it were an investment.  He did not say anything about a money transmitters license as my state seems to be on the side of "it's a commodity not money" whereas FINCEN seems to be saying "it's money or money-like".

Crossing any of those lines can get you sent up the river.


Now if you notice, DHS didn't seize Mt. Gox's Dwolla funds until after FinCEN released its guidance.
There is a reason for that.  The reason is that FINCEN's guidance was specifically written to facilitate the investigation by DHS.  

Read this... it's an FBI leak...
http://btlj.org/2013/05/02/bitcoin-fbi-and-fincen-weigh-in/

source:
Berkeley Technology Law Journal
U.C. Berkeley School of Law
Student Center, Ste. 3
Berkeley, California 94720-7200
btlj@law.berkeley.edu
TradeFortress
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May 26, 2013, 12:17:51 AM
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I just saw your behavior in the Tangible Cryptography thread. Congratulations, you made it to my pretty exclusive ignore list.
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May 26, 2013, 12:18:39 AM
 #9

I'm honored.  One of the people most accused of being a scammer is ignoring me, hurray!
Like I said, ignore me at your peril.

edit
OMG I see why he's ignoring me...  he's the biggest bafoon of them all:
http://coinlenders.com/support#cdw

He actually offers exactly what I spoke of, he pays interest in bitcoin.

YOU ARE GOING TO JAIL TRADEFORTESS

Too bad you didn't hear me, fool.  Your fortress is going to be real if you keep hiding your head in the sand when someone points to the law.

 
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May 26, 2013, 12:31:57 AM
 #10

STATIST... get out of here go ask mommy may I trade bitcoins to the state... The main reason i sell is to grow a P2P network that cant be shut down.. trusted buyers and seller who trade in a reputation based market... not through state regulatory agencies and 3rd party institutions.
I think you are in the wrong place viceroy go work for the feds they love regulation

COBINHOOD – ZERO TRADING FEE CRYPTOCURRENCY EXCHANGE 
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Viceroy
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May 26, 2013, 12:33:20 AM
 #11

sublime declared treason in a pm to me, which I will not post here.  He is neither registered as an MSB or a money transmitter, just like tradefortress above.  I wonder how many other rule breakers will come and attack me as if I am the one in the wrong... let's see!!

Hey Sublime, do you pay taxes on those profits you earn in your boat business and one the side bitcoin exchange?  Just curious.
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May 26, 2013, 12:42:50 AM
 #12

I pay taxes on all the revenue I earn.. I dont care if others do or not, but I am not going to prison.

COBINHOOD – ZERO TRADING FEE CRYPTOCURRENCY EXCHANGE 
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sublime5447
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May 26, 2013, 12:46:35 AM
 #13

sublime declared treason in a pm to me, which I will not post here.

Anything that I say in public or private you can feel free to share with anyone you like.

My wife keeps impeccable records and the state receives every penny they are owed of course we reinvest most of our profits so have very little tax liability.. 

COBINHOOD – ZERO TRADING FEE CRYPTOCURRENCY EXCHANGE 
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Viceroy
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May 26, 2013, 01:26:40 AM
 #14

I pay taxes on all the revenue I earn.. I dont care if others do or not, but I am not going to prison.

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I knew there was some sense in there somewhere ;-)


And by the way, that new avatar picture is SO MUCH more beautiful than the last.  That croc one was eerie.  The viewer doesn't get the sense of laughter you likely intended.  In this image you appear so much more "real".
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May 26, 2013, 09:15:50 PM
 #15

sublime declared treason in a pm to me, which I will not post here.  He is neither registered as an MSB or a money transmitter, just like tradefortress above.  I wonder how many other rule breakers will come and attack me as if I am the one in the wrong... let's see!!

Hey Sublime, do you pay taxes on those profits you earn in your boat business and one the side bitcoin exchange?  Just curious.

You are in the wrong. Not that you are likely INCORRECT, but morally? Regulation, outside of the meaning of "like for like" or equal measure, is just plain immoral.

In my arrogant opinion, being called a criminal by the Imperial Court United States Government is a badge of honour.

Buy Bitcoins with Paypal, Credit card, or other methods. Send me a PM or a text to 208-451-2665.
Viceroy
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May 26, 2013, 09:20:11 PM
 #16

I empathize with your sentiment.  However those of us who have families and don't want to live on the run as a cowboy-outlaws should probably stick to the rules.  That said, I can tell you everything you need to know if you want to stand in the face of the regulators and stick out your tongue.
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May 26, 2013, 09:25:18 PM
 #17

I empathize with your sentiment.  However those of us who have families and don't want to live on the run as a cowboy-outlaws should probably stick to the rules.

*sigh* Where possible, and to the extent I must. I have a family. Were I a free man, rather than a subject of the Empire, I would be a lot better off both financially and personally. The "rules" are put in place to keep all of us producing for a class of "people" (using the word VERY loosely) who seem hell bent on destroying everything I value.

Eventually, all of us who wish to remain human are going to have to do more than bitch. I'm almost there.

In my youth, a lot of my friends went off to foreign lands, had a good time, but were eager to come home. In the last 15 years, about half of them left on vacation and never came back. The Empire is failing, badly. It's superficial entertainments (bread and circuses) have ceased to be enough. If you have ambition, you will be shut down. If you care about other people, you will be shut down. If you don't lick their fucking boots, you will be shut down.

It's time to leave. I just don't know where, yet. I am hoping that bitcoin will be part of my exit strategy, as until converted it cannot (yet) be considered income.

Buy Bitcoins with Paypal, Credit card, or other methods. Send me a PM or a text to 208-451-2665.
Viceroy
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May 26, 2013, 09:41:41 PM
 #18

Again, I feel you.  But I disagree with this:

"Were I a free man, rather than a subject of the Empire, I would be a lot better off both financially and personally."

I fear a mad max world.  

I realize there are many many things that could be better but I have faith in human kind that we will get there.  Here in Colorado we just legalized recreational cannabis for the first time in more than eighty years.  I hold that the future is ours to make as we see fit and old ways do die in favor of change.  I will not lick anybodies boot but I would gladly pay to be licensed as a money transmitter if that is what my state regulators decide I must do.

(I mine and buy bitcoin).
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May 26, 2013, 09:58:26 PM
 #19

Again, I feel you.  But I disagree with this:

"Were I a free man, rather than a subject of the Empire, I would be a lot better off both financially and personally."

I fear a mad max world.  

I realize there are many many things that could be better but I have faith in human kind that we will get there.  Here in Colorado we just legalized recreational cannabis for the first time in more than eighty years.  I hold that the future is ours to make as we see fit and old ways do die in favor of change.  I will not lick anybodies boot but I would gladly pay to be licensed as a money transmitter if that is what my state regulators decide I must do.

(I mine and buy bitcoin).

I think we've gone seriously off topic, but I would like to pursue this more. I'm out of time today, but I'll be back around. I am not opposed to licensing, per se, but I am opposed to the way it's done now. And I am SICK of the way our rulers use the money they steal via such schemes. Practically everything they do is either aimed at or the result of being to short sighted to avoid exactly that mad max scenario.

Buy Bitcoins with Paypal, Credit card, or other methods. Send me a PM or a text to 208-451-2665.
Viceroy
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May 26, 2013, 10:01:57 PM
 #20

Always a pleasure to have an intelligent conversation, thank you.
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