2013-06-23 Forbes - Bitcoin Foundation Receives Cease And Desist Order From Ca

[marcus_of_augustus]

There is no question that US authorities are ramping up enforcement of existing law.

FinCEN has only recently released their interpretation of the law ... which is a questionable action at best and not tried in any court AFAIK. Law enforcement "rulings", "guidelines" and other edicts only carry as much weight as the guy on the street corner in sandwich boards, until they have legal precedence from court cases. Although over-reach and general throwing weight around of egotistical LE could ruin many lives until a real legal case is settled.

IMHO, USA is definitely going to be an unfriendly place to do bitcoin business. The banksters own the politicians and  the spooks have got the goods on everyone ... why the hell would an innovative monetary/finance system be allowed to flourish?

Lord Camden was the author of a principle that says anything the state (or a state agency) does must be expressly authorised in law - but an individual may do anything except that which is forbidden by law.

Is bitcoin transacting expressly forbidden by the law?

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[melvster]

It's just some idiot government critter thinking the foundation is something like "Bitcoin Corporation".

Correct.

It would be fun watching the foundation be disbanded anyway.

Most of the forum idiots here do not seem to realize that the Bitcoin Foundation is taking slings and arrows on behalf of others, fighting for bitcoin acceptance.

When you fight for bitcoin, people fight back.

It would be a loss for all if the Bitcoin Foundation goes away.

You cant possibly make that assertion in an unbiased way as the foundation pay the core development team.

There's pros and cons.  The US conference I thought was fantastic.

But the foundation introduces a central point of failure.

It's way to early to say whether it is a loss or a gain, especially if they are breaking the law.

[ktttn]

http://www.forbes.com/sites/jonmatonis/2013/06/23/bitcoin-foundation-receives-cease-and-desist-order-from-california/

Directly following last month’s Bitcoin 2013 conference event in San Jose, CA that brought good revenue into the state, California’s Department of Financial Institutions decided to issue a cease and desist warning to conference organizer Bitcoin Foundation for allegedly engaging in the business of money transmission without a license or proper authorization.

... Then, they fight us ...

They don't fight "us". They fight a despicable scam, in this case.

So if the foundation does file, pays the US$5K, and gets this license.  Do we all become "agents" or "affiliates" acting under this license?
http://www.leginfo.ca.gov/cgi-bin/displaycode?section=fin&group=01001-02000&file=2000-2003

Very interesting take on the situation.
I wonder how many members are not registered.
Only 14 companies appear to be listed on https://bitcoinfoundation.org/members.
I'm guessing theyre getting a crazy influx of donations atm.

[worldinacoin]

Bit Foundation is to promote the understanding of Bitcoin, what has it got to do with any transactions?

[jgarzik]

You cant possibly make that assertion in an unbiased way as the foundation pay the core development team.

The foundation pays Gavin.  That's it.  All other core devs are employed by other organizations, and (AFAIK) receive zero income from the Bitcoin Foundation.

[ktttn]

It's just some idiot government critter thinking the foundation is something like "Bitcoin Corporation".

Correct.

It would be fun watching the foundation be disbanded anyway.

Most of the forum idiots here do not seem to realize that the Bitcoin Foundation is taking slings and arrows on behalf of others, fighting for bitcoin acceptance.

When you fight for bitcoin, people fight back.

It would be a loss for all if the Bitcoin Foundation goes away.

You cant possibly make that assertion in an unbiased way as the foundation pay the core development team.

There's pros and cons.  The US conference I thought was fantastic.

But the foundation introduces a central point of failure.

It's way to early to say whether it is a loss or a gain, especially if they are breaking the law.

Failure?
From the foundation's site:

Our mission is to help people exchange resources and ideas more freely. We approach that mission with Bitcoin’s technology and community as our focus. There is tremendous potential in Bitcoin—from the opportunities it creates for entrepreneurs to the purchasing power it provides for citizens of countries large and small. Our goal is to help Bitcoin deliver on that potential. Bitcoin Foundation has chosen three primary objectives for fulfilling its mission. We believe that these activities will be of the greatest benefit to the Bitcoin community: Standardizing Bitcoin Standardizing Bitcoin As a non-political online money, Bitcoin is backed exclusively by code. This means that—ultimately—it is only as good as its software design. By funding the Bitcoin infrastructure, including a core development team, we can make Bitcoin more respected, trusted and useful to people worldwide. Protecting Bitcoin Protecting Bitcoin Cryptography is the key to Bitcoin’s success. It’s the reason that no one can double spend, counterfeit or steal Bitcoins. If Bitcoin is to be a viable money for both current users and future adopters, we need to maintain, improve and legally protect the integrity of the protocol. Promoting Bitcoin Promoting Bitcoin In the context of public misunderstandings, misinterpretations and misrepresentations, Bitcoin needs to be clearer about its purpose and technology. Allowing the community to speak through a single source will enable Bitcoin to improve its reputation.

[dave111223]

Wow someone in California has been misinformed...

This makes about as much sense as sending a letter to the Salvation Army telling them to disband their unauthorized military forces.

[nebulus]

Well, technically though the Foundation develops the software...

[ktttn]

Well, technically though the Foundation develops the software...

The Bitcoin Foundation does that.
The BitCoin Foundation does not exist.

Dat C.

Wow someone in California has been misinformed...

This makes about as much sense as sending a letter to the Salvation Army telling them to disband their unauthorized military forces.

Only if you sent the letter to the SalVation Army.

Ill be honest, they are really starting to clamp down hard in the U.S and is making me nervous.

With this exception of this California action, everything else in the US has been completely consistent with existing US law.

I am speaking of the recent developments with the IRS and FinCen along with this as well as the numerous services surrounding bitcoin that have gone down.

As am I.  Recent developments with the IRS and FinCEN are entirely consistent with US law as it has existed for years.  Ditto Mutum Sigillium seizure warrant. Tax and MSB implications were directly addressed years ago in my State of the Coin 2011 presentation, among others.  If you operate outside the law in your jurisdiction, the obvious result occurs... eventually.

Then I must be confused with the state of things then. I was under the impression that the recent IRS (or was it FinCen??) ruling/statement was that mining bitcoins will/may require an MSB/MT licensure.

I could be wrong and hope I am, I am not trolling I truly want to know.

Mining AND THEN SELLING for $ requires a license.

Edit: emphasis

[nebulus]

If you ever read that FinCen guidance document, the fact that Bitcoin Foundation develops the software that is used for "making" Bitcoin makes them an administrator of such currency and according to "law" administrators are a subject for money transmitter regulation.

I think people might be making a mistake saying that "State of California has made a mistake somehow".

[kjlimo]

Ill be honest, they are really starting to clamp down hard in the U.S and is making me nervous.

With this exception of this California action, everything else in the US has been completely consistent with existing US law.

I am speaking of the recent developments with the IRS and FinCen along with this as well as the numerous services surrounding bitcoin that have gone down.

As am I.  Recent developments with the IRS and FinCEN are entirely consistent with US law as it has existed for years.  Ditto Mutum Sigillium seizure warrant. Tax and MSB implications were directly addressed years ago in my State of the Coin 2011 presentation, among others.  If you operate outside the law in your jurisdiction, the obvious result occurs... eventually.

Then I must be confused with the state of things then. I was under the impression that the recent IRS (or was it FinCen??) ruling/statement was that mining bitcoins will/may require an MSB/MT licensure.

I could be wrong and hope I am, I am not trolling I truly want to know.

My understanding is that if you mine bitcoins and then "use" them to purchase goods, no license necessary.

If you mine, and then "sell" them for fiat currency, then you need to be registered as a MSB.  However, if you go to an exchange, then I think that puts the responsibility on the exchange.  At least, let's hope so

[kjlimo]

So this was posted more than 20 days after the notice was issued... has the foundation responded with their corrective actions yet?

[BTCLuke]

This tweet about California's action today was so perfect:

Sufficiently advanced incompetence is indistinguishable from malice.

[dave111223]

If you ever read that FinCen guidance document, the fact that Bitcoin Foundation develops the software that is used for "making" Bitcoin makes them an administrator of such currency and according to "law" administrators are a subject for money transmitter regulation.

I think people might be making a mistake saying that "State of California has made a mistake somehow".

So in order to create a pull request for Bitcoin-qt you now need to register as a money transmitter...?

Or if you send money to someone who has created any of the Bitcoin-qt code you also need to register as a money transmitter?

Come to think of it why didn't Github get a cease and desist letter for acting as a money transmitter?  Because obviously they are also money transmitters...   

[jgarzik]

Well, technically though the Foundation develops the software...

They assist in the development of software.  Plenty of code contributions come from non-BF devs too.

[ktttn]

If you ever read that FinCen guidance document, the fact that Bitcoin Foundation develops the software that is used for "making" Bitcoin makes them an administrator of such currency and according to "law" administrators are a subject for money transmitter regulation.

I think people might be making a mistake saying that "Stae of California has made a mistake somehow".

The Foundation is less about direct development and more about Public Relations and community building. The github group is more in line with what you describe.
The only administrators of the software and currency are the miners and nodes.

[nebulus]

I am aware of all the things people are saying. I'm just trying to say there are multiple ways to interpret the basis for the memo.

[dave111223]

I am aware of all the things people are saying. I'm just trying to say there are multiple ways to interpret the basis for the memo.

You mean if you have no clue how Bitcoin works, and you have no clue how open source development works....then this memo can be interpreted as having merit?

[burnside]

Ill be honest, they are really starting to clamp down hard in the U.S and is making me nervous.

With this exception of this California action, everything else in the US has been completely consistent with existing US law.

I am speaking of the recent developments with the IRS and FinCen along with this as well as the numerous services surrounding bitcoin that have gone down.

As am I.  Recent developments with the IRS and FinCEN are entirely consistent with US law as it has existed for years.  Ditto Mutum Sigillium seizure warrant. Tax and MSB implications were directly addressed years ago in my State of the Coin 2011 presentation, among others.  If you operate outside the law in your jurisdiction, the obvious result occurs... eventually.

Then I must be confused with the state of things then. I was under the impression that the recent IRS (or was it FinCen??) ruling/statement was that mining bitcoins will/may require an MSB/MT licensure.

I could be wrong and hope I am, I am not trolling I truly want to know.

My understanding is that if you mine bitcoins and then "use" them to purchase goods, no license necessary.

If you mine, and then "sell" them for fiat currency, then you need to be registered as a MSB.  However, if you go to an exchange, then I think that puts the responsibility on the exchange.  At least, let's hope so

I've done a bit of research and everywhere I see it defined, legal dictionary or otherwise, Currency (synonym: banknote) seems to directly state, or infer the backing or endorsement of a government.  As such, Bitcoin is a commodity, and until I can walk into Bank of America and trade it for USD, like I can with my Mexican Pesos, Canadian Twoonies, or my British Pounds, I'm not going to consider it any more a currency than Joe Redneck would, my Peer on the Jury.  

Try telling a farmer he has to register as an MSB/MT to sell the carrots (commodity) he grew. (mined)  Or try telling a rancher he has to register as an MSB/MT to sell the calf (commodity) his cow just birthed. (mined)  You have to be pretty confused to think that creating/growing/birthing/mining a commodity then selling it somehow equates to being in the business of Money transmission.  (Money with a capital M, per Joe Redneck, my peer on the Jury.)

Now exchanging it as your sole business, I think that's a different ballgame, but mining it seems pretty cut and dry to me.

What am I missing?  And why does everyone seem to want Bitcoin to be a currency when it's far better off legally with an official definition in the realm of general commodity?  (oil, cattle, tulip bulbs)  No country in the world is going to be particularly receptive legally or otherwise to direct competition with their local Currency.  (with a capital C)

Cheers.

[ktttn]

I am aware of all the things people are saying. I'm just trying to say there are multiple ways to interpret the basis for the memo.

You mean if you have no clue how Bitcoin works, and you have no clue how open source development works....then this memo can be interpreted as having merit?

One would also have to have no clue about how cease and desist orders, the USPS, bureaucratic govt in general, and social media, works to interpret it as such.