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Author Topic: Is bit coin legal in the US?  (Read 50303 times)
43554
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June 30, 2010, 08:27:38 PM
 #1

Is running bit coin legal in the US?  In particular:

http://www.law.cornell.edu/uscode/html/uscode18/usc_sec_18_00001960----000-.html

quote:

TITLE 18 > PART I > CHAPTER 95 > § 1960
Prev | Next
§ 1960. Prohibition of unlicensed money transmitting businesses

(a) Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both.
(b) As used in this section—
(1) the term “unlicensed money transmitting business” means a money transmitting business which affects interstate or foreign commerce in any manner or degree and—
(A) is operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law, whether or not the defendant knew that the operation was required to be licensed or that the operation was so punishable;
(B) fails to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code, or regulations prescribed under such section; or
(C) otherwise involves the transportation or transmission of funds that are known to the defendant to have been derived from a criminal offense or are intended to be used to promote or support unlawful activity;
(2) the term “money transmitting” includes transferring funds on behalf of the public by any and all means including but not limited to transfers within this country or to locations abroad by wire, check, draft, facsimile, or courier; and
(3) the term “State” means any State of the United States, the District of Columbia, the Northern Mariana Islands, and any commonwealth, territory, or possession of the United States.
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June 30, 2010, 09:21:46 PM
 #2

I am not a lawyer.

But it looks to me like No, just running Bitcoin doesn't make you a "money transmitting business."  To be a "business" you have to be charging people for your service.

If you're running Bitcoin to buy or sell goods or services in exchange for bitcoins, I'd say you're not in the money transmitting business.

However, if I were to start a company in the business of buying and selling Bitcoins, or that was a Bitcoin payment processing intermediary that took a percentage of transactions between buyers and sellers, I'd talk to a lawyer and jump through all the legal hoops (looks like here in Massachusetts I'd need a license and would have to post a $50,000 bond).

Or to put it in more concrete terms:  I am not a money transmitting business when I use my credit card to pay for something from Amazon.com.
And Amazon.com is not a money transmitting business just because they accept payments.

However, Amazon Payments, Inc. (Amazon's Paypal competitor) is licensed as a money service business in a bunch of US states.

How often do you get the chance to work on a potentially world-changing project?
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July 01, 2010, 12:14:54 AM
 #3

So, does running the bc agent, and then selling your bc's on BCM illegal?
Or just, like madhatter's service, if he were in the states, unlicensed would be illegal?
I am not a lawyer.

But if you generated bitcoins and then sold them I'd think you'd only done something illegal when you fail to declare that income on your income tax return.  Just like if you grew tomatoes in your back yard and sold them to somebody.  You aren't likely to get into any trouble until you make a lot of money on tomatoes and then fail to report that income to the IRS (or you get shut down for farming in a residential zone or something).

I think that applies to what madhatter is doing (taking payment for bitcoins through the mail).  But again, I am not a lawyer.

How often do you get the chance to work on a potentially world-changing project?
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July 01, 2010, 01:26:17 AM
 #4

What if you based your operations in switzerland or some sovereign nation outside US jurisdiction?
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July 01, 2010, 07:32:08 AM
 #5

What if you based your operations in Switzerland or some sovereign nation outside US jurisdiction?

I had suggested this a long time ago in a previous post as an option to those who absolutely insisted on incorporating.

De facto statelessness works much, much better. Wink And you don't even have to move! Tongue

https://secure.wikimedia.org/wikipedia/en/wiki/Stateless_person
(This article is lacking information, there is more to it.)

As a 'de facto' stateless person you are removed from all statutory obligations. You are still in a "country" (the land), but you remove the applicability of the corporate powers.

Most (commonwealth) countries of the world exist in two forms. They become "one" under the law (and in the courts) through a legal principal called 'joinder'.

One part of a country under joinder is is the physical land, the other is a corporation. The physical lands are under the rule of the king/queen with whom I invest (and others, unknowingly) my sovereignty. This jurisdiction is 'de jure'.

The corporate entity (with the same name as the land(s), or usually very similar anyway) exists for commerce and statutes only. This jurisdiction is 'de facto'.

Definitions:

de facto in law, it is meant to mean "in practice but not necessarily ordained by law" or "in practice or actuality, but without being officially established".

De jure is an expression that means "concerning law".

By becoming de facto stateless, in essence, it renders the contracts (statutes/bylaws) null and void 'ab inito' and everything in court has to be dealt with under Common Law. (Also called the 'law of the land'. I'm sure you've heard that term before in various sworn oaths. It is called this for good reason. It is literally the customs of the people who live "on land". lol!)

Commerce with fiat currency is regulated in the 'de facto' arena by the use of statutes. Take a dollar bill into Common Law (de jure) and it is just piece of paper. Quite literally. It has the value of paper. Whatever a sheet of paper goes for in gold/silver/"insert barter item here" is what it is worth. In my opinion you can't even write on it, so I'd rather have blank paper.

More food for thought: Who actually owns the paper? Is your signature on it? Is there a copyright on it? When they demand payment in dollars are you just returning their property? Should you even take these demands personally? Wink

Gold/silver coins that are "minted" (I could go on and on about what minting really is and means in law) actually work in both jurisdictions. They have a legal face value (de facto), and a lawful real intrinsic value (Common Law / de jure jurisdiction). More examples of dual jurisdictional things (if you want to research more on your own) are: bills of exchange (precursors to the modern "check" or draft), bills, demands, and notices.

Anyway, I could drone on and on and upload document after document to prove all of this but I do have job and limited time. Maybe I should start a school and charge tuition in Bitcoins. Tongue
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July 01, 2010, 12:15:57 PM
 #6

National currencies are money. Bitcoins are not money. Bitcoins are digital property. Bitcoins are marketed as an electronic currency, but because their value is not tied to any national currency nor any physical commodity, it may or may not actually be an electronic currency. Buying and selling bitcoins is legal. Knowingly buying or selling bitcoins, or anything else for that matter, with or for illegally obtained money is laundering and is illegal. For more information about the Department of Justice's view on digital currencies in relation to money laundering, refer to this publicly available national threat assessment. Have a nice day!

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July 11, 2010, 12:52:40 PM
 #7

What if you based your operations in Switzerland or some sovereign nation outside US jurisdiction?

I had suggested this a long time ago in a previous post as an option to those who absolutely insisted on incorporating.

De facto statelessness works much, much better. Wink And you don't even have to move! Tongue

https://secure.wikimedia.org/wikipedia/en/wiki/Stateless_person
(This article is lacking information, there is more to it.)

As a 'de facto' stateless person you are removed from all statutory obligations. You are still in a "country" (the land), but you remove the applicability of the corporate powers.

Most (commonwealth) countries of the world exist in two forms. They become "one" under the law (and in the courts) through a legal principal called 'joinder'.

One part of a country under joinder is is the physical land, the other is a corporation. The physical lands are under the rule of the king/queen with whom I invest (and others, unknowingly) my sovereignty. This jurisdiction is 'de jure'.

The corporate entity (with the same name as the land(s), or usually very similar anyway) exists for commerce and statutes only. This jurisdiction is 'de facto'.

Definitions:

de facto in law, it is meant to mean "in practice but not necessarily ordained by law" or "in practice or actuality, but without being officially established".

De jure is an expression that means "concerning law".

By becoming de facto stateless, in essence, it renders the contracts (statutes/bylaws) null and void 'ab inito' and everything in court has to be dealt with under Common Law. (Also called the 'law of the land'. I'm sure you've heard that term before in various sworn oaths. It is called this for good reason. It is literally the customs of the people who live "on land". lol!)

Commerce with fiat currency is regulated in the 'de facto' arena by the use of statutes. Take a dollar bill into Common Law (de jure) and it is just piece of paper. Quite literally. It has the value of paper. Whatever a sheet of paper goes for in gold/silver/"insert barter item here" is what it is worth. In my opinion you can't even write on it, so I'd rather have blank paper.

More food for thought: Who actually owns the paper? Is your signature on it? Is there a copyright on it? When they demand payment in dollars are you just returning their property? Should you even take these demands personally? Wink

Gold/silver coins that are "minted" (I could go on and on about what minting really is and means in law) actually work in both jurisdictions. They have a legal face value (de facto), and a lawful real intrinsic value (Common Law / de jure jurisdiction). More examples of dual jurisdictional things (if you want to research more on your own) are: bills of exchange (precursors to the modern "check" or draft), bills, demands, and notices.

Anyway, I could drone on and on and upload document after document to prove all of this but I do have job and limited time. Maybe I should start a school and charge tuition in Bitcoins. Tongue


What is your opinion on the seastead project? http://seasteading.org/ .I have also  been following Robert Minard and the Freeman movement with particular interest.

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July 11, 2010, 08:06:32 PM
 #8

Seasteading isn't a new idea. However, that website is new and particularly interesting to me. Thanks! Smiley I'll check it out in more detail. It reminds me of the Freedom Ship. Too bad it couldn't raise enough capital. :/

Robert Menard's work is only the very tip of the iceberg. His works are a great starting place, however he doesn't have all of the answers. To gain a complete and concise understanding one must spend a lot of time researching law, history, and religion. Funny how all three are so intertwined. Tongue
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July 12, 2010, 09:29:26 AM
 #9

Seasteading isn't a new idea. However, that website is new and particularly interesting to me. Thanks! Smiley I'll check it out in more detail. It reminds me of the Freedom Ship. Too bad it couldn't raise enough capital. :/

Robert Menard's work is only the very tip of the iceberg. His works are a great starting place, however he doesn't have all of the answers. To gain a complete and concise understanding one must spend a lot of time researching law, history, and religion. Funny how all three are so intertwined. Tongue


My one reservation  is the involvement of the Thiel foundation.Peter Thiel is behind Paypal.I wonder why paypal rolls over so easily to the feds if he actually believes what the foundation is about.I wonder what his opinion would be on bitcoin.
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October 05, 2010, 07:46:30 PM
 #10

If this article is accurate (not a given, since the author linked 9/11 to the creation of In-Q-Tel in 1999) then Peter Thiel might be very interested and supportive of Bitcoin on multiple levels.

http://www.guardian.co.uk/technology/2008/jan/14/facebook
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October 05, 2010, 07:56:38 PM
 #11

Seasteading isn't a new idea. However, that website is new and particularly interesting to me. Thanks! Smiley I'll check it out in more detail. It reminds me of the Freedom Ship. Too bad it couldn't raise enough capital. :/

Robert Menard's work is only the very tip of the iceberg. His works are a great starting place, however he doesn't have all of the answers. To gain a complete and concise understanding one must spend a lot of time researching law, history, and religion. Funny how all three are so intertwined. Tongue


My one reservation  is the involvement of the Thiel foundation.Peter Thiel is behind Paypal.I wonder why paypal rolls over so easily to the feds if he actually believes what the foundation is about.


Peter Thiel founded Paypal, but he no longer owns it.  He founded it in an attempt to establish an online currency, but largely failed.  The things that PayPal does today has no reflection on Peter Thiel today any more than what we do reflects upon Satoshi, which is to say, none at all.

Quote

I wonder what his opinion would be on bitcoin.

That's a good question.  I wonder if he knows.  Hell, I wonder if he's on this forum.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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October 05, 2010, 07:57:15 PM
 #12

My one reservation  is the involvement of the Thiel foundation.Peter Thiel is behind Paypal.I wonder why paypal rolls over so easily to the feds if he actually believes what the foundation is about.I wonder what his opinion would be on bitcoin.

What evidence shows that Peter Thiel was involved in those decisions?  PT has not been Paypal management for a while.

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October 06, 2010, 05:47:44 AM
 #13

Quote
By using Facebook, you are consenting to have your personal data transferred to and processed in the United States ... We may be required to disclose user information pursuant to lawful requests, such as subpoenas or court orders, or in compliance with applicable laws. We do not reveal information until we have a good faith belief that an information request by law enforcement or private litigants meets applicable legal standards. Additionally, we may share account or other information when we believe it is necessary to comply with law, to protect our interests or property, to prevent fraud or other illegal activity perpetrated through the Facebook service or using the Facebook name, or to prevent imminent bodily harm. This may include sharing information with other companies, lawyers, agents or government agencies."


*pukes.
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October 06, 2010, 06:44:07 AM
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Quote
By using Facebook, you are consenting to have your personal data transferred to and processed in the United States ... We may be required to disclose user information pursuant to lawful requests, such as subpoenas or court orders, or in compliance with applicable laws. We do not reveal information until we have a good faith belief that an information request by law enforcement or private litigants meets applicable legal standards. Additionally, we may share account or other information when we believe it is necessary to comply with law, to protect our interests or property, to prevent fraud or other illegal activity perpetrated through the Facebook service or using the Facebook name, or to prevent imminent bodily harm. This may include sharing information with other companies, lawyers, agents or government agencies."


*pukes.

Meh... you don't want to know some new "European" rules that where forced upon Europe by the US government.
Doing bank transaction (within Europe)? => Your info goes to the states. Can be in bulk, the US will filter it out what they need. (This is already in action)
Want to travel to the states? => Hand over all your private data (including "what eat on board of the flight", your sexual life, credit card numbers and email addresses). And of course these data are to be shared with the US allies. Even our Dutch privacy law has already been changed to allow this.
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October 06, 2010, 07:47:23 AM
 #15

Quote
By using Facebook, you are consenting to have your personal data transferred to and processed in the United States ... We may be required to disclose user information pursuant to lawful requests, such as subpoenas or court orders, or in compliance with applicable laws. We do not reveal information until we have a good faith belief that an information request by law enforcement or private litigants meets applicable legal standards. Additionally, we may share account or other information when we believe it is necessary to comply with law, to protect our interests or property, to prevent fraud or other illegal activity perpetrated through the Facebook service or using the Facebook name, or to prevent imminent bodily harm. This may include sharing information with other companies, lawyers, agents or government agencies."


*pukes.

Meh... you don't want to know some new "European" rules that where forced upon Europe by the US government.
Doing bank transaction (within Europe)? => Your info goes to the states. Can be in bulk, the US will filter it out what they need. (This is already in action)
Want to travel to the states? => Hand over all your private data (including "what eat on board of the flight", your sexual life, credit card numbers and email addresses). And of course these data are to be shared with the US allies. Even our Dutch privacy law has already been changed to allow this.

Or fly to canada and sneak across the border.....
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October 06, 2010, 10:24:42 PM
 #16

I am not a lawyer.

But it looks to me like No, just running Bitcoin doesn't make you a "money transmitting business."  To be a "business" you have to be charging people for your service.

If you're running Bitcoin to buy or sell goods or services in exchange for bitcoins, I'd say you're not in the money transmitting business.

However, if I were to start a company in the business of buying and selling Bitcoins, or that was a Bitcoin payment processing intermediary that took a percentage of transactions between buyers and sellers, I'd talk to a lawyer and jump through all the legal hoops (looks like here in Massachusetts I'd need a license and would have to post a $50,000 bond).

Or to put it in more concrete terms:  I am not a money transmitting business when I use my credit card to pay for something from Amazon.com.
And Amazon.com is not a money transmitting business just because they accept payments.

However, Amazon Payments, Inc. (Amazon's Paypal competitor) is licensed as a money service business in a bunch of US states.


Bitcoin Market and MTGox might need to worry about this.

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|      FACEBOOK      |      SLACK      ▀▀▀▀      WHITEPAPER      ▀▀▀▀      TWITTER      |      TELEGRAM      |
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October 06, 2010, 10:31:56 PM
 #17

I am not a lawyer.

But it looks to me like No, just running Bitcoin doesn't make you a "money transmitting business."  To be a "business" you have to be charging people for your service.

If you're running Bitcoin to buy or sell goods or services in exchange for bitcoins, I'd say you're not in the money transmitting business.

However, if I were to start a company in the business of buying and selling Bitcoins, or that was a Bitcoin payment processing intermediary that took a percentage of transactions between buyers and sellers, I'd talk to a lawyer and jump through all the legal hoops (looks like here in Massachusetts I'd need a license and would have to post a $50,000 bond).

Or to put it in more concrete terms:  I am not a money transmitting business when I use my credit card to pay for something from Amazon.com.
And Amazon.com is not a money transmitting business just because they accept payments.

However, Amazon Payments, Inc. (Amazon's Paypal competitor) is licensed as a money service business in a bunch of US states.


Bitcoin Market and MTGox might need to worry about this.

Both BCM and MTGOX cost nothing to use.  MTGOX used to use a spread to make a small amount of money, but that went away, possibly to avoid being mistaken for a money services business.

Jeff Garzik, bitcoin core dev team and BitPay engineer; opinions are my own, not my employer.
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February 10, 2011, 08:22:41 PM
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BitCoin would have to be actual money first.

Just because someone says something is money or a coin does not make it so. So there is no way it is illegal under at least that Title 18 code because bitcoin is not money and so you are not in a money transmitting business.





Is running bit coin legal in the US?  In particular:

http://www.law.cornell.edu/uscode/html/uscode18/usc_sec_18_00001960----000-.html

quote:

TITLE 18 > PART I > CHAPTER 95 > § 1960
Prev | Next
§ 1960. Prohibition of unlicensed money transmitting businesses

(a) Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both.
(b) As used in this section—
(1) the term “unlicensed money transmitting business” means a money transmitting business which affects interstate or foreign commerce in any manner or degree and—
(A) is operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law, whether or not the defendant knew that the operation was required to be licensed or that the operation was so punishable;
(B) fails to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code, or regulations prescribed under such section; or
(C) otherwise involves the transportation or transmission of funds that are known to the defendant to have been derived from a criminal offense or are intended to be used to promote or support unlawful activity;
(2) the term “money transmitting” includes transferring funds on behalf of the public by any and all means including but not limited to transfers within this country or to locations abroad by wire, check, draft, facsimile, or courier; and
(3) the term “State” means any State of the United States, the District of Columbia, the Northern Mariana Islands, and any commonwealth, territory, or possession of the United States.

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February 10, 2011, 09:15:45 PM
 #19

http://www.law.cornell.edu/uscode/html/uscode18/usc_sec_18_00001960----000-.html
§ 1960. Prohibition of unlicensed money transmitting businesses
(a) Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both.

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February 10, 2011, 09:59:16 PM
 #20

http://www.law.cornell.edu/uscode/html/uscode18/usc_sec_18_00001960----000-.html
§ 1960. Prohibition of unlicensed money transmitting businesses
(a) Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both.

Land of the free, he he he.

Of course.

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February 10, 2011, 10:59:12 PM
 #21

How will MtGox make money?

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February 11, 2011, 12:04:00 PM
 #22

MTGOX cost nothing to use.  MTGOX used to use a ...

i thought they charge 0.65 % which was already ok, compared to other e-currencies.
when did they change the fees policy, please?

At the time jgarzik posted that comment (October last year), there was no charge for trades at MtGox. As ptmhd says, it's currently 0.65% which seems reasonable to me.
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February 11, 2011, 01:17:32 PM
 #23

BitCoin would have to be actual money first.

Just because someone says something is money or a coin does not make it so. So there is no way it is illegal under at least that Title 18 code because bitcoin is not money and so you are not in a money transmitting business.





Is running bit coin legal in the US?  In particular:

http://www.law.cornell.edu/uscode/html/uscode18/usc_sec_18_00001960----000-.html

quote:

TITLE 18 > PART I > CHAPTER 95 > § 1960
Prev | Next
§ 1960. Prohibition of unlicensed money transmitting businesses

(a) Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both.
(b) As used in this section—
(1) the term “unlicensed money transmitting business” means a money transmitting business which affects interstate or foreign commerce in any manner or degree and—
(A) is operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law, whether or not the defendant knew that the operation was required to be licensed or that the operation was so punishable;
(B) fails to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code, or regulations prescribed under such section; or
(C) otherwise involves the transportation or transmission of funds that are known to the defendant to have been derived from a criminal offense or are intended to be used to promote or support unlawful activity;
(2) the term “money transmitting” includes transferring funds on behalf of the public by any and all means including but not limited to transfers within this country or to locations abroad by wire, check, draft, facsimile, or courier; and
(3) the term “State” means any State of the United States, the District of Columbia, the Northern Mariana Islands, and any commonwealth, territory, or possession of the United States.




They dont follow their own laws. If they want to take you down they will find something. Tax evasion, frame you for drugs, terrorism or put child porn on your computer. The list of dirty tricks is endless.
Giulio Prisco
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February 11, 2011, 04:30:05 PM
 #24

Seasteading isn't a new idea. However, that website is new and particularly interesting to me. Thanks! Smiley I'll check it out in more detail. It reminds me of the Freedom Ship. Too bad it couldn't raise enough capital. :/

Robert Menard's work is only the very tip of the iceberg. His works are a great starting place, however he doesn't have all of the answers. To gain a complete and concise understanding one must spend a lot of time researching law, history, and religion. Funny how all three are so intertwined. Tongue


See http://seasteading.org/
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March 05, 2011, 07:08:33 AM
 #25

TITLE 18 > PART I > CHAPTER 95 > § 1960  - Wouldn't apply because BitCoin is not recognized as Money because:

The legal tender of the U.S. or of any foreign country, or any counterfeit thereof. 18 USC

Gold, silver, and some other less precious metals, in the progress of civilization and commerce, have become the common standards of value; in order to avoid the delay and inconvenience of regulating their weight and quality whenever passed, the governments of the civilized world have caused them to be manufactured in certain portions, and marked with a Stamp which attests their value; this is called money.For many purposes, bank notes, a check, and negotiable notes will be so considered. To support a count for money had and received, the receipt by the defendant of bank notes, promissory notes, credit in account, in the books of a third person, or any chattel, is sufficient and will be treated as money.The Constitution of the United States has vested in congress the power "to coin money, and regulate the value thereof." Art. I, s. 8.



BitCoin doesn't even have physical form. But technically we are globally trading un-couterfitable monopoly money. But Local Money is also being created in certain area like Massachusetts etc...  Which is fine, but it will not be treated as Money in a Federal Court, maybe the state court or local court.

The big thing here, is that if it works, even if they wanted to regulate it, they can't. It would sort of be like outlawing Air. Only way to stop it would be to turn of the net.

Net Worth = 0.10    Hah, "Net" worth Smiley
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March 08, 2011, 09:07:41 AM
 #26

I am not a lawyer.

But it looks to me like No, just running Bitcoin doesn't make you a "money transmitting business."  To be a "business" you have to be charging people for your service.

If you're running Bitcoin to buy or sell goods or services in exchange for bitcoins, I'd say you're not in the money transmitting business.

However, if I were to start a company in the business of buying and selling Bitcoins, or that was a Bitcoin payment processing intermediary that took a percentage of transactions between buyers and sellers, I'd talk to a lawyer and jump through all the legal hoops (looks like here in Massachusetts I'd need a license and would have to post a $50,000 bond).

Or to put it in more concrete terms:  I am not a money transmitting business when I use my credit card to pay for something from Amazon.com.
And Amazon.com is not a money transmitting business just because they accept payments.

However, Amazon Payments, Inc. (Amazon's Paypal competitor) is licensed as a money service business in a bunch of US states.


So, the site I have been working on is illegal?  Other than kidnapping, confiscation of my technological equipment (and anything else that is noticably deemed of value), fines, imprisonment, torture and possibly death, what is there I should be concerned about?


User 'The Madhatter' has blocked your personal message.

Hiya.  I just read your post at http://bitcointalk.org/index.php?topic=227.msg1908#msg1908 and found it very informative and well-written.  Is it possible I could interest you in writing for witcoin? ^_^
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March 09, 2011, 08:48:07 PM
 #27

MadHatter posted this in another thread.

Hello all,

I don't get a chance to login to the forum as often as I'd like to anymore. I am far to busy running my Bitcoin empire. Tongue

I have disabled forum PMs for the time being because the PM email notification doesn't seem to work.

For questions/support/etc please email me. My email address and PGP key can be found on the Bitcoin4Cash site.

Thanks! Smiley
The Madhatter

http://bitcointalk.org/index.php?topic=3921.msg55819#msg55819

My Canary: I will never ask for a loan or offer escrow services. If someone does with this account, consider it compromised.
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March 09, 2011, 09:32:19 PM
 #28

Here is a rather exhaustive analysis of the legality of private currencies in the U.S., by GWU law professor Lewis Solomon:

http://www.smallisbeautiful.org/local_currencies/Book.pdf

He focusses on community "scrip" currencies like Ithaca Hours, and concludes that they are probably legal. One caveat is that the book is from 1995, and of course financial regulations have changed since then. Still community currencies operate in the open, unmolested by the Feds.


Hal Finney
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May 01, 2011, 07:19:36 PM
 #29

I was wondering the legality of this myself, mostly due to the recent conviction of the Liberty Dollar creator for having an alternate money

http://www.citizen-times.com/article/20110319/NEWS01/110319006/Liberty-Dollar-creator-convicted-federal-court
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May 01, 2011, 07:29:21 PM
 #30

I was wondering the legality of this myself, mostly due to the recent conviction of the Liberty Dollar creator for having an alternate money

http://www.citizen-times.com/article/20110319/NEWS01/110319006/Liberty-Dollar-creator-convicted-federal-court

In the Liberty Dollar case, the strength of the feds' case was that by calling it a "dollar" and encouraging local merchants to use it and give it as change it amounted to counterfeiting.

I don't see how any plausible charge of counterfeiting can be levelled against any entity for the simple act of participating in the bitcoin network, processing bitcoin transactions, or converting between bitcoin and USD.

If there's any legal vulnerability, I suspect that it's either through money-transfer or securities regulations.  It's difficult to see how bitcoin meets neither a definition as money or a security.  If it's money then processing a block probably defines one as a money-transfer enterprise; if it's a security, then entities converting between bitcoin and USD are probably going to be considered securities broker/dealers.  E-wallet providers who allow customer-to-customer transactions probably qualify for US regulation under both tines of the fork.

(IANAL...)
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May 01, 2011, 07:50:47 PM
 #31

Quote
(1) the term “unlicensed money transmitting business” means a money transmitting business which affects interstate or foreign commerce in any manner or degree and—
(A) is operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law, whether or not the defendant knew that the operation was required to be licensed or that the operation was so punishable;
(B) fails to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code, or regulations prescribed under such section; or
(C) otherwise involves the transportation or transmission of funds that are known to the defendant to have been derived from a criminal offense or are intended to be used to promote or support unlawful activity;
(2) the term “money transmitting” includes transferring funds on behalf of the public by any and all means including but not limited to transfers within this country or to locations abroad by wire, check, draft, facsimile, or courier; and
(3) the term “State” means any State of the United States, the District of Columbia, the Northern Mariana Islands, and any commonwealth, territory, or possession of the United States.

So a Bitcoin miner would qualify, then.




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DENTACOIN




The New Global Currency
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steelhouse
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May 01, 2011, 08:00:19 PM
 #32

So a Bitcoin miner would qualify, then.
[/quote]

What about Gold or Topps Baseball Cards or Pokemon cards and their manufacturers.  Bitcoin mining is not really even mining it is distributing bitcoins already created.
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May 01, 2011, 08:02:53 PM
 #33

So a Bitcoin miner would qualify, then.
Bitcoin mining is not really even mining it is distributing bitcoins already created.
[/quote]

Exactly, that's the problem.



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DENTACOIN




The New Global Currency
FacebookSteemitMediumSlack







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SzeChun
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May 01, 2011, 08:03:44 PM
 #34

TITLE 18 > PART I > CHAPTER 95 > § 1960  - Wouldn't apply because BitCoin is not recognized as Money because:

The legal tender of the U.S. or of any foreign country, or any counterfeit thereof. 18 USC

Gold, silver, and some other less precious metals, in the progress of civilization and commerce, have become the common standards of value; in order to avoid the delay and inconvenience of regulating their weight and quality whenever passed, the governments of the civilized world have caused them to be manufactured in certain portions, and marked with a Stamp which attests their value; this is called money.For many purposes, bank notes, a check, and negotiable notes will be so considered. To support a count for money had and received, the receipt by the defendant of bank notes, promissory notes, credit in account, in the books of a third person, or any chattel, is sufficient and will be treated as money.The Constitution of the United States has vested in congress the power "to coin money, and regulate the value thereof." Art. I, s. 8.



BitCoin doesn't even have physical form. But technically we are globally trading un-couterfitable monopoly money. But Local Money is also being created in certain area like Massachusetts etc...  Which is fine, but it will not be treated as Money in a Federal Court, maybe the state court or local court.

The big thing here, is that if it works, even if they wanted to regulate it, they can't. It would sort of be like outlawing Air. Only way to stop it would be to turn of the net.


They dont need to regulate it, they're fine just taxing you on Bit Coins like they tax dollars.
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May 01, 2011, 08:03:51 PM
 #35

Don't worry so much about the legality; if you've not noticed already, you're living under a coporatocracy/financial dictatorship in the USA. Pretty much anything is made illegal or needs to be icenced by the government before you can engage in it.

The government then sells these licences to the corporations who themeselves rig the game through lobbying and writing the legislation.

More and more people are being branded "terrorists" - like the guy of the liberty dollar. He was engaged in non-crime and not harming anyone, all parties willingly used the currency and knew they were not Federal Reserve notes. The Feds can find a jury that will send a kitten to the electric chair - a terrorists kitten at that.

When the time comes, the Feds will find any pretext they like in order to shut down bitcoin. Used by Al-CIA-Duh, money laundering, drug money, terrorists, whatever. At this point the West is morally bankrupt and soon to be financially bankrupt too.

What happens when the crack down on it will be interesting, I predict it will morph over to other jurisdictions, afterall it's a very useful piece of software, even if you just use to manage a baby sitting network!
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May 02, 2011, 01:03:02 AM
 #36

Don't worry so much about the legality; if you've not noticed already, you're living under a coporatocracy/financial dictatorship in the USA. Pretty much anything is made illegal or needs to be icenced by the government before you can engage in it.

The government then sells these licences to the corporations who themeselves rig the game through lobbying and writing the legislation.

More and more people are being branded "terrorists" - like the guy of the liberty dollar. He was engaged in non-crime and not harming anyone, all parties willingly used the currency and knew they were not Federal Reserve notes. The Feds can find a jury that will send a kitten to the electric chair - a terrorists kitten at that.

When the time comes, the Feds will find any pretext they like in order to shut down bitcoin. Used by Al-CIA-Duh, money laundering, drug money, terrorists, whatever. At this point the West is morally bankrupt and soon to be financially bankrupt too.

What happens when the crack down on it will be interesting, I predict it will morph over to other jurisdictions, afterall it's a very useful piece of software, even if you just use to manage a baby sitting network!


If that is what the "West" is; I hate to think what the "East" is.

Net Worth = 0.10    Hah, "Net" worth Smiley
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May 02, 2011, 01:23:13 AM
 #37

If that is what the "West" is; I hate to think what the "East" is.

Like the above but worse, and without even pretending to have justice.

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May 02, 2011, 02:21:09 AM
 #38

Quote
(1) the term “unlicensed money transmitting business” means a money transmitting business which affects interstate or foreign commerce in any manner or degree and—
(A) is operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law, whether or not the defendant knew that the operation was required to be licensed or that the operation was so punishable;
(B) fails to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code, or regulations prescribed under such section; or
(C) otherwise involves the transportation or transmission of funds that are known to the defendant to have been derived from a criminal offense or are intended to be used to promote or support unlawful activity;
(2) the term “money transmitting” includes transferring funds on behalf of the public by any and all means including but not limited to transfers within this country or to locations abroad by wire, check, draft, facsimile, or courier; and
(3) the term “State” means any State of the United States, the District of Columbia, the Northern Mariana Islands, and any commonwealth, territory, or possession of the United States.

So a Bitcoin miner would qualify, then.



I disagree. The bitcoin mining is legal since they are dealing/transacting purely in bitcoins, an unregulated virtual commodity. Maybe the only part of the network, other than local bitcoin clients and wallets, that is currently indisputably legal.

The exchanges that exchange from fiat currencies into bitcoin are the gray area since they transact in the money of the state.

Personal transactions of small amounts of bitcoin involving state monies are legal in most places.

Merchants accepting bitcoin would do well to check their current, ever-changing laws regarding financial transactions, if they care what the state thinks about how they conduct their business.

statikeffeck
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May 06, 2011, 09:46:51 PM
 #39

When the time comes, the Feds will find any pretext they like in order to shut down bitcoin.

I'm not saying such a thing won't be attempted in the future, but I am curious as how such a thing could succeed, lacking any kind of central entity or server? I just learned about BitCoin but isn't it completely decentralized?

I suppose an order could be made at the ISP level to restrict/cancel any packets that resemble BitCoin packets.
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May 06, 2011, 09:49:17 PM
 #40

When the time comes, the Feds will find any pretext they like in order to shut down bitcoin.

I'm not saying such a thing won't be attempted in the future, but I am curious as how such a thing could succeed, lacking any kind of central entity or server? I just learned about BitCoin but isn't it completely decentralized?

I suppose an order could be made at the ISP level to restrict/cancel any packets that resemble BitCoin packets.

Have you heard about Tor?
statikeffeck
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May 07, 2011, 04:53:15 PM
 #41

Have you heard about Tor?

Sort of, which is why I suggested that forcibly shutting such a system down would be impracticable if not impossible.
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May 08, 2011, 06:36:16 PM
 #42

There's an interesting draft of a paper examining the US legality of Bitcoin at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857

The author is looking for feedback.
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May 08, 2011, 11:40:35 PM
 #43

You might have issues if you opened an exchange with branches in multiple states, and offered transfers between them.

Otherwise, unless you really do the research and know the meaning of literally every word, I'd take US code with a grain of salt.

Civil Liberty Through Complex Mathematics
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May 20, 2011, 05:23:34 AM
 #44

Bitcoin's legal status will be entirely dependent upon it's rate of adoption, and specifically how it effects the velocity of the USD.  The feds won't care too much about this until it starts interfering with the banking system.  At that point they will throw everything at bitcoin.  It won't just be the US either as every other central bank will not take too kindly to having a form of currency out of their domestic control.

That is exactly the problem, and the beauty, of bitcoin is that it aims for the very heart of the global financial system.  The only way governments have any control over their economy is through the banking system via the central banks.  If bitcoin takes off in any meaningful way it will be a direct threat to the very foundation of all governments, without control of the currency (and the economic power that comes with it) governments -all of them- have very little power.

The question of the legality of bitcoin at this point in time is moot.  The real question is how long it will take before simply having bitcoins will get you labeled a domestic terrorist.  That is the endgame.
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May 20, 2011, 06:02:44 AM
 #45

Have you heard about Tor?

Sort of, which is why I suggested that forcibly shutting such a system down would be impracticable if not impossible.
but manipulation/tampering for misuse purposes can discredit Tor quite quick.
let alone technical aspects[Tor unsuitable for real-use]
if you SERIOUSLY concerned - check I2P or similar systems/networks.
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May 28, 2011, 12:15:23 AM
 #46

I am not a lawyer.

But it looks to me like No, just running Bitcoin doesn't make you a "money transmitting business."  To be a "business" you have to be charging people for your service.

If you're running Bitcoin to buy or sell goods or services in exchange for bitcoins, I'd say you're not in the money transmitting business.

However, if I were to start a company in the business of buying and selling Bitcoins, or that was a Bitcoin payment processing intermediary that took a percentage of transactions between buyers and sellers, I'd talk to a lawyer and jump through all the legal hoops (looks like here in Massachusetts I'd need a license and would have to post a $50,000 bond).

Or to put it in more concrete terms:  I am not a money transmitting business when I use my credit card to pay for something from Amazon.com.
And Amazon.com is not a money transmitting business just because they accept payments.

However, Amazon Payments, Inc. (Amazon's Paypal competitor) is licensed as a money service business in a bunch of US states.

I now most people won't believe this but a STATE in the above legal quote does NOT include Florida Virginia etc because there are three different definitions of THE UNITED STATES and the law refers to one that means the US GOVT and all that it has jurisdiction over which is DC and some territories but NOT any of the FIFTY Sovereign states. Remember the states created the federal Govt which has now become a rogue bastard tyrant serving the elite bankster puppetmasters.
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May 28, 2011, 12:19:11 AM
 #47

See here
http://www.famguardian1.org/Subjects/Taxes/ChallJurisdiction/Definitions/freemaninvestigation.pdf
for proof about what I said about the law referring to states does NOT mean any of the fifty states.
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June 08, 2011, 06:21:42 AM
 #48

The government, our leaders more specifically, are going to do whatever they want to protect their interests, unless the supreme court says otherwise.

Those interests are not you and I.

Those interests are protecting the people that got them into office, and again, I do not mean the voters, in general.

Most are dupes, while some are adepts.

Those interests are the insidious influence indoctrinating our kids, poinsoning us, manipulating us, trying to strip us of our wealth, land, and creator-endowed rights (un-a-lien-able birth rights), in order to create a two-class world of subjects enslaved by debt, serv(ic)ing the rulers.

It will only end when the people of the world stand in unison, stating, "I HAVE HAD ENOUGH!"

You ever hear of how to cook a frog?

You see, to cook a good tasting frog, he needs to be alive when you cook him, much like a lobster, or else it wont taste as good, and if you put him in hot boiling water he splashes around and jumps out. However, if you put him in lukewarm water and turn the heat up slowly, he does not notice the difference until its to late and he passes out to be cooked good and proper.

That is the average world citizen... A frog in the pot slowly getting cooked through incrementalism and gradualism ... who doesnt even know its happening, and they usually malign or laughs at those that try to educate them.

So I dont really have much hope for the bitcoin or the citizens of the world in general.

but hey I hope I am wrong and I really like the bitcoins =)


"... He is no fool who parts with that which he cannot keep, when he is sure to be recompensed with that which he cannot lose ..."

"... history disseminated to the masses is written by those who win battles and wars and murder their heroes ..."


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June 08, 2011, 11:57:30 AM
 #49

Quote
“We are determined to meet these threats through infiltration, disruption and dismantling of organizations which seek to challenge the legitimacy of our democratic form of government,” Tompkins said.
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