SEC Charges Bitcoin Savings and Trust (BTCST) as Ponzi Scheme

[matuszed]

https://www.sec.gov/servlet/Satellite/News/PressRelease/Detail/PressRelease/1370539730583#.Ue6zJo1WZ8F

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[burnside]

https://www.sec.gov/servlet/Satellite/News/PressRelease/Detail/PressRelease/1370539730583#.Ue6zJo1WZ8F

About time!

[iCEBREAKER]

Excuse me Mr. Pirate, the Bitcoin Police would like a word with you!

And don't forget to bring in your accomplice, Payb.tc.

[twentyseventy]

I figured this was going to show BTC in a somewhat negative light, but it seems that it's a good step towards mainstream adoption that the SEC regards virtual currencies as similar to fiat currency in a situation like this (though he did cash a good deal of it out to USD)

[vlaoou321]

Trendon？

[Peter Lambert]

https://www.sec.gov/servlet/Satellite/News/PressRelease/Detail/PressRelease/1370539730583#.Ue6zJo1WZ8F

About time!

What do you think about the chances they will charge everything on BTCT as illigal investment offerings?

[MSantori]

What do you think about the chances they will charge everything on BTCT as illigal investment offerings?

I think they are pretty good, actually.  From the attendant Investor Alert:

"the fraud may also involve an unregistered offering or trading platform"

and, here's the real kicker:

"Any investment in securities in the United states remains subject to the jurisdiction of the SEC regardless of whether the investment is made in U.S. dollars or a virtual currency. In particular, individuals selling investments are typically subject to federal or state licensing requirements."

I have, of course, counseled my clients on this point for some time.

Attention Unregistered Exchanges, Perpetual Mining Bonds (PMBs), REITs, and other members of the Bitcoin investment space: The SEC has explicitly indicated its intention to apply the already-existing laws to your security.  You may be selling securities in violation of the Securities Laws.

[btceic]

What do you think about the chances they will charge everything on BTCT as illigal investment offerings?

I think they are pretty good, actually.  From the attendant Investor Alert:

"the fraud may also involve an unregistered offering or trading platform"

and, here's the real kicker:

"Any investment in securities in the United states remains subject to the jurisdiction of the SEC regardless of whether the investment is made in U.S. dollars or a virtual currency. In particular, individuals selling investments are typically subject to federal or state licensing requirements."

I have, of course, counseled my clients on this point for some time.  Looks like I was right.

Attention Unregistered Exchanges, Perpetual Mining Bonds (PMBs), REITs, and other members of the Bitcoin investment space: The SEC has explicitly indicated its intention to apply the already-existing laws to your security.  You are selling securities in violation of the Securities Laws.  Come into compliance, and do it quickly.

any comment for those of us on the investor side of the equation? i.e. folks that are purchasing stocks, bonds, etc on these exchanges?

[matuszed]

What do you think about the chances they will charge everything on BTCT as illigal investment offerings?

I think they are pretty good, actually.  From the attendant Investor Alert:

"the fraud may also involve an unregistered offering or trading platform"

and, here's the real kicker:

"Any investment in securities in the United states remains subject to the jurisdiction of the SEC regardless of whether the investment is made in U.S. dollars or a virtual currency. In particular, individuals selling investments are typically subject to federal or state licensing requirements."

I have, of course, counseled my clients on this point for some time.  Looks like I was right.

Attention Unregistered Exchanges, Perpetual Mining Bonds (PMBs), REITs, and other members of the Bitcoin investment space: The SEC has explicitly indicated its intention to apply the already-existing laws to your security.  You are selling securities in violation of the Securities Laws.  Come into compliance, and do it quickly.

Yea the only thing I think that might be a saving grace is are any of these listed securities worth the SEC's time.

[mccoyspace]

Dear BTCT, Bitfunder, Mpex, icbit, et. al..... get ready for a visit from the SEC.

[rustyh17]

What do you think about the chances they will charge everything on BTCT as illigal investment offerings?

I think they are pretty good, actually.  From the attendant Investor Alert:

"the fraud may also involve an unregistered offering or trading platform"

and, here's the real kicker:

"Any investment in securities in the United states remains subject to the jurisdiction of the SEC regardless of whether the investment is made in U.S. dollars or a virtual currency. In particular, individuals selling investments are typically subject to federal or state licensing requirements."

I have, of course, counseled my clients on this point for some time.  Looks like I was right.

Attention Unregistered Exchanges, Perpetual Mining Bonds (PMBs), REITs, and other members of the Bitcoin investment space: The SEC has explicitly indicated its intention to apply the already-existing laws to your security.  You are selling securities in violation of the Securities Laws.  Come into compliance, and do it quickly.

Yea the only thing I think that might be a saving grace is are any of these listed securities worth the SEC's time.

Roughly speaking, how would an exchange "come into compliance" quickly?

[iCEBREAKER]

"Any investment in securities in the United states remains subject to the jurisdiction of the SEC regardless of whether the investment is made in U.S. dollars or a virtual currency. In particular, individuals selling investments are typically subject to federal or state licensing requirements."

I have, of course, counseled my clients on this point for some time.  Looks like I was right.

Attention Unregistered Exchanges, Perpetual Mining Bonds (PMBs), REITs, and other members of the Bitcoin investment space: The SEC has explicitly indicated its intention to apply the already-existing laws to your security.  You are selling securities in violation of the Securities Laws.  Come into compliance, and do it quickly.

Not everyone is as eager as you to lick the boots of the authoritarian state. 

Of course as a lawyer you depend on sniveling cowardice in the face of centralized coercion to make money, so no real surprise there.

Many bitcoiners, being agorists, are explicitly dedicated to using the free (so-called 'black') market to undermine and eventually overtake the oligarchs' crony pseudo-capitalist economic structures.

We will not comply.  We will live as free men and see who has a problem with that.  Then come the assassination markets...

[Mabsark]

What do you think about the chances they will charge everything on BTCT as illigal investment offerings?

I think they are pretty good, actually.  From the attendant Investor Alert:

"the fraud may also involve an unregistered offering or trading platform"

and, here's the real kicker:

"Any investment in securities in the United states remains subject to the jurisdiction of the SEC regardless of whether the investment is made in U.S. dollars or a virtual currency. In particular, individuals selling investments are typically subject to federal or state licensing requirements."

I have, of course, counseled my clients on this point for some time.  Looks like I was right.

Attention Unregistered Exchanges, Perpetual Mining Bonds (PMBs), REITs, and other members of the Bitcoin investment space: The SEC has explicitly indicated its intention to apply the already-existing laws to your security.  You are selling securities in violation of the Securities Laws.  Come into compliance, and do it quickly.

This may come as a surprise to you but US law is irrelevant outside the US and these exchanges are not US based.

[Mabsark]

What do you think about the chances they will charge everything on BTCT as illigal investment offerings?

I think they are pretty good, actually.  From the attendant Investor Alert:

"the fraud may also involve an unregistered offering or trading platform"

and, here's the real kicker:

"Any investment in securities in the United states remains subject to the jurisdiction of the SEC regardless of whether the investment is made in U.S. dollars or a virtual currency. In particular, individuals selling investments are typically subject to federal or state licensing requirements."

I have, of course, counseled my clients on this point for some time.  Looks like I was right.

Attention Unregistered Exchanges, Perpetual Mining Bonds (PMBs), REITs, and other members of the Bitcoin investment space: The SEC has explicitly indicated its intention to apply the already-existing laws to your security.  You are selling securities in violation of the Securities Laws.  Come into compliance, and do it quickly.

any comment for those of us on the investor side of the equation? i.e. folks that are purchasing stocks, bonds, etc on these exchanges?

I don't live in the US and I'm not using US based exchanges. What more is there to say?

[twentyseventy]

What do you think about the chances they will charge everything on BTCT as illigal investment offerings?

I think they are pretty good, actually.  From the attendant Investor Alert:

"the fraud may also involve an unregistered offering or trading platform"

and, here's the real kicker:

"Any investment in securities in the United states remains subject to the jurisdiction of the SEC regardless of whether the investment is made in U.S. dollars or a virtual currency. In particular, individuals selling investments are typically subject to federal or state licensing requirements."

I have, of course, counseled my clients on this point for some time.  Looks like I was right.

Attention Unregistered Exchanges, Perpetual Mining Bonds (PMBs), REITs, and other members of the Bitcoin investment space: The SEC has explicitly indicated its intention to apply the already-existing laws to your security.  You are selling securities in violation of the Securities Laws.  Come into compliance, and do it quickly.

Yea the only thing I think that might be a saving grace is are any of these listed securities worth the SEC's time.

Roughly speaking, how would an exchange "come into compliance" quickly?

I don't think "SEC" and "quick compliance" really go hand in hand.

[iCEBREAKER]

Roughly speaking, how would an exchange "come into compliance" quickly?

There is no clear path to compliance.  That would be too easy and not allow for maximum extraction of rent via duress under color of law.

"Come into compliance" is code for 'play ball or else.'

This is nothing less than an extortionist demand for the low friction Bitcoin economy to move backwards, and mimic the gross inefficiencies in the hyper-regulated dying world of fiat trash.

The putative regulatory agency in question, the SEC, has been deeply captured by the very entities it was supposed to be keeping under control.

Bitcoin and its efficient markets represent an existential threat to those rent-collecting entities.

"Give us silk-suited thugs of the lawyer mafia all your profits, or else we'll use our guns and tanks to hurt you" is the bottom line here.

The question is whether we accept these initiations of force like slaves, or retaliate in self-defense in the manner of Bitcoin-empowered sovereign individuals.

[matuszed]

Shouldn't the recent lift of the ban of general solicitation cover exchanges such as these to a degree?

[MSantori]

I've softened my post a bit with some stealth-editing.  The message remains the same, though: Unregistered exchanges servicing US customers are not flying under anybody's radar.  US entities issuing "securities" aren't either.  None of this is "virtual" from the SEC's perspective. An investment is an investment.  Denomination in BTC does not exempt it from such.

[greyhawk]

This may come as a surprise to you but US law is irrelevant outside the US and these exchanges are not US based.

Look at Liberty Reserve for how well that argument worked out for them.

[Mabsark]

I've softened my post a bit with some stealth-editing.  The message remains the same, though: Unregistered exchanges servicing US customers are not flying under anybody's radar.  US entities issuing "securities" aren't either.  None of this is "virtual" from the SEC's perspective. An investment is an investment.  Denomination in BTC does not exempt it from such.

Who exactly are these "Unregistered exchanges" and "US entities" you are talking about?

[Vbs]

http://www.businessinsider.com/sec-charges-texas-man-with-running-bitcoin-ponzi-scheme-2013-7

https://www.sec.gov/litigation/complaints/2013/comp-pr2013-132.pdf

[wachtwoord]

Dear BTCT, Bitfunder, Mpex, icbit, et. al..... get ready for a visit from the SEC.

BTCT is officially a play environment. MPex isn't in the US. I'm not sure about the others.

[Mabsark]

This may come as a surprise to you but US law is irrelevant outside the US and these exchanges are not US based.

Look at Liberty Reserve for how well that argument worked out for them.

What does that have to with the fact that the SEC has no jurisdiction outside the US? Liberty Reserve was taken down through collaboration, not the SEC forcing US law upon sovereign nations.

[iCEBREAKER]

I don't think "SEC" and "quick compliance" really go hand in hand.

Heh, it only took the SEC 20 years, multiple whistle blowers holding their hand and drawing them a picture, and a spectacular collapse/ensuing scandal to notice Bernie Madoff. 

OTOH the SEC will gut nobodies like us in a flash, if we act like free people and engage in mutually beneficial voluntary transactions without regard to their vast opaque, incomplete, and contradictory regulatory apparatus.

[crumbs]

http://www.businessinsider.com/sec-charges-texas-man-with-running-bitcoin-ponzi-scheme-2013-7

https://www.sec.gov/litigation/complaints/2013/comp-pr2013-132.pdf

Thanks.

[mrtchipr]

Does anyone know if there's a list of bitcoin businesses that are legally compliant to their respective locations?

I would hope at least CampBX, CoinBase, and BitInstance are...

[TaxReturn]

One day the SEC or some other US government apparatus will crack down on an exchange with the official reasoning that people (read: US citizens) were screwed out of their money, when in fact it will be that very crack down that's screwing people over.

I don't think being registered in Belize or some other gray spot on the map will help either, Liberty Reserve was not under US jurisdiction, that didn't stop the world police from doing what they do best: strong-arming others into complying with their vision of justice.

[nycgoat]

The Liberty Reserve investigation stemmed from here: http://www.wired.com/threatlevel/2013/07/open-market/

[Mabsark]

https://www.sec.gov/servlet/Satellite/News/PressRelease/Detail/PressRelease/1370539730583#.Ue6zJo1WZ8F

About time!

What do you think about the chances they will charge everything on BTCT as illigal investment offerings?

Are you confusing BTC-TC with BTCST?

[nycgoat]

The SEC acting outside of the US: http://www.forbes.com/sites/jordanmaglich/2013/02/15/breaking-sec-sues-traders-over-heinz-insider-trading-allegations-freezes-swiss-bank-account/

[matuszed]

The SEC acting outside of the US: http://www.forbes.com/sites/jordanmaglich/2013/02/15/breaking-sec-sues-traders-over-heinz-insider-trading-allegations-freezes-swiss-bank-account/

That was a trade on a US exchange....

[Peter Lambert]

https://www.sec.gov/servlet/Satellite/News/PressRelease/Detail/PressRelease/1370539730583#.Ue6zJo1WZ8F

About time!

What do you think about the chances they will charge everything on BTCT as illigal investment offerings?

Are you confusing BTC-TC with BTCST?

No, I realize the difference between BTC-TC and BTCST. If you would notice, the person I responded to is Burnside, who runs btct.co. I was therefore asking if he thought there is a possibility that his operation could face similar charges to what was described in the article.

[Technologov]

People: What I ask for is a petition to our Bitcoin stock exchanges to allow stocks download to our PCs.

Petition to Bitcoin stock exchanges:

I ask you to find a decentralized solution for investors to be able to store our stock shares offline, in case of catastrophe and if this site goes down.

One possibility: Investigate "colored BitcoinX" to download stock shares to our computers and store offline, like Bitcoins. It allows to "paint" fractional bitcoins into IOUs, stocks and financial assets and will write our asset possessions right into the block-chain.
Another option, is to develop a new block-chain for stocks and other assets.

This will greatly reduce shareholder risks, -and- allow investors to invest more money.
(The goal is to proof the exchanges vs. government regulatory attacks, hackers, and to keep our freedom)

-Technologov

[forensick]

People: What I ask for is a petition to our Bitcoin stock exchanges to allow stocks download to our PCs.

Petition to Bitcoin stock exchanges:

I ask you to find a decentralized solution for investors to be able to store our stock shares offline, in case of catastrophe and if this site goes down.

One possibility: Investigate "colored BitcoinX" to download stock shares to our computers and store offline, like Bitcoins. It allows to "paint" fractional bitcoins into IOUs, stocks and financial assets and will write our asset possessions right into the block-chain.
Another option, is to develop a new block-chain for stocks and other assets.

This will greatly reduce shareholder risks, -and- allow investors to invest more money.
(The goal is to proof the exchanges vs. government regulatory attacks, hackers, and to keep our freedom)

-Technologov

very good idea, espcially for those exchanges run by Americans

[Peter Lambert]

People: What I ask for is a petition to our Bitcoin stock exchanges to allow stocks download to our PCs.

Petition to Bitcoin stock exchanges:

I ask you to find a decentralized solution for investors to be able to store our stock shares offline, in case of catastrophe and if this site goes down.

One possibility: Investigate "colored BitcoinX" to download stock shares to our computers and store offline, like Bitcoins. It allows to "paint" fractional bitcoins into IOUs, stocks and financial assets and will write our asset possessions right into the block-chain.
Another option, is to develop a new block-chain for stocks and other assets.

This will greatly reduce shareholder risks, -and- allow investors to invest more money.
(The goal is to proof the exchanges vs. government regulatory attacks, hackers, and to keep our freedom)

-Technologov

If I understand correctly, mpex allows users to generate statements showing which shares they own, then if the exchange is shut down the user just has to show their gpg key to the asset issuer to verify they own those shares.

[ffssixtynine]

I've been reading up several documents on the SEC site. Here's the key wording I've found:

http://www.sec.gov/investor/alerts/ia_virtualcurrencies.pdf

Any investment in securities in
the United states remains subject to the jurisdiction
of the seC regardless of whether the investment is made
in U.s. dollars or a virtual currency. In particular,
individuals selling investments are typically subject
to federal or state licensing requirements

I've read over a lot of other material as well but I think (IANAL):

• If the exchange is in the US, it needs to comply with SEC regulation.
• If an offering is from a US company, it needs to be registered with the SEC or follow the Exception rules.
• There are no rules preventing US citizens from buying assets, shares, or anything similar from foreign exchanges
• BTCT and Bitfunder are on weak legal ground by trying to claim they aren't real investments. The core issue is that they pay dividends, i.e. real money based on buying a virtual asset of some kind. A crytpocurrency is real money as far as this is concerned. If they aren't selling securities of some kind, they're gambling. It's one or the other, and gambling is far more restrictive.
• As long as these exchanges are not based in the US, they only need to comply with the rules in the country of registration. These rules are likely to be less stringent than in the US but that doesn't mean they don't exist. A legal opinion is needed for e.g. operating out of Belize.
• As above, selling virtual assets in a company registered another country, such as Belize, may similarly need some form of local registration. A legal opinion is needed.

I could be wrong on any or all of the above. Please can a lawyer turn up

Edit: I'm sure those behind the exchanges have had a legal opinion, but we've seen this all go wrong before. Also, those selling 'investments' need to be aware too. Those based in Belize et al are probably fine. Those based in the US are definitely breaking the law unless already registered with the SEC.

Edit2: Ukyo says on IRC that Bitfunder is registered in a 3rd world country that has no securities division.

[btceic]

check out this douche: https://bitcointalk.org/index.php?topic=261350.0;topicseen

[kslaughter]

I've been reading up several documents on the SEC site. Here's the key wording I've found:

http://www.sec.gov/investor/alerts/ia_virtualcurrencies.pdf

Any investment in securities in
the United states remains subject to the jurisdiction
of the seC regardless of whether the investment is made
in U.s. dollars or a virtual currency. In particular,
individuals selling investments are typically subject
to federal or state licensing requirements

I've read over a lot of other material as well but I think (IANAL):

• If the exchange is in the US, it needs to comply with SEC regulation.
• If an offering is from a US company, it needs to be registered with the SEC or follow the Exception rules.
• There are no rules preventing US citizens from buying assets, shares, or anything similar from foreign exchanges
• BTCT and Bitfunder are on weak legal ground by trying to claim they aren't real investments. The core issue is that they pay dividends, i.e. real money based on buying a virtual asset of some kind. A crytpocurrency is real money as far as this is concerned. If they aren't selling securities of some kind, they're gambling. It's one or the other, and gambling is far more restrictive.
• As long as these exchanges are not based in the US, they only need to comply with the rules in the country of registration. These rules are likely to be less stringent than in the US but that doesn't mean they don't exist. A legal opinion is needed for e.g. operating out of Belize.
• As above, selling virtual assets in a company registered another country, such as Belize, may similarly need some form of local registration. A legal opinion is needed.

I could be wrong on any or all of the above. Please can a lawyer turn up

Edit: I'm sure those behind the exchanges have had a legal opinion, but we've seen this all go wrong before. Also, those selling 'investments' need to be aware too. Those based in Belize et al are probably fine. Those based in the US are definitely breaking the law unless already registered with the SEC.

Edit2: Ukyo says on IRC that Bitfunder is registered in a 3rd world country that has no securities division.

This all looks good for AMC as the stock exchanges are in another country and AMC is not a US company, it is a Belize company.

[ffssixtynine]

This all looks good for AMC as the stock exchanges are in another country and AMC is not a US company, it is a Belize company.

Not a legal opinion though. I'm working on that.

If I ran any of these investment schemes I'd require legal advice from a securities specialist lawyer immediately - though personally I'd have got all this beforehand - and I'd be posting the result in public to reassure investors.

If any companies are actually registered in the US and are not SEC registered (you can be pretty sure they're not), get your shares out immediately people. They're trading illegally and not in a way that will be ignored for long.

[2112]

A bit of advice for non-U.S. entities that have offered and dealt with the U.S. citizens:

Whatever you do make sure that you return to the investor at least the original nominal value of the investment. Or that you can return the original nominal value to all the investors.

As far as I know, in the history of S.E.C. there wasn't a case pursued or prosecuted that didn't involve at least a nominal loss of value (denominated in whatever units).

Please check out the recent case of SatoshiDice and its recent "sale to the undisclosed investors". It is a kind of "ultimate defense". Faced with limited resources S.E.C. (and others) will not spend the energy to pursue a case where there isn't a clear loss or wrongdoing to be shown.

If you are capable of returning the funds received from the U.S.-based investors you have nothing to worry besides a stern cease-and-desist letter from S.E.C. or your local government agency that cooperates with the S.E.C.

IANAL, but I ate many lunches with them.

[ffssixtynine]

A bit of advice for non-U.S. entities that have offered and dealt with the U.S. citizens:

Whatever you do make sure that you return to the investor at least the original nominal value of the investment. Or that you can return the original nominal value to all the investors.

As far as I know, in the history of S.E.C. there wasn't a case pursued or prosecuted that didn't involve at least a nominal loss of value (denominated in whatever units).

Please check out the recent case of SatoshiDice and its recent "sale to the undisclosed investors". It is a kind of "ultimate defense". Faced with limited resources S.E.C. (and others) will not spend the energy to pursue a case where there isn't a clear loss or wrongdoing to be shown.

If you are capable of returning the funds received from the U.S.-based investors you have nothing to worry besides a stern cease-and-desist letter from S.E.C. or your local government agency that cooperates with the S.E.C.

IANAL, but I ate many lunches with them.

So if there is a solid plan, not a ponzi plan, that's a good start.

However, all investments carry risks...?

Perhaps the safest option is to register with the SEC before doing an IPO, even if you are a foreign entity. If nothing else, you'll look much more professional and trustworthy.

I presume you can't really do much after the event.

[TraderTimm]

So I guess Erik Voorhees "IPO" and subsequent dump-o-matic plan put him in the eyes of the SEC eh?

Hope he doesn't have any plans for being in the USA anytime soon.

[stslimited]

Myself and my company "State Trading Society" do a lot of research on securities laws, and you guys are running around like headless chickens


the SEC does not even consider what currency is used, read the Securities act of 1933. It doesn't need to consider or not consider the merit of bitcoin, it considers the offer and sale of securities. This has nothing to do with acceptance or recognition of bitcoin by the federal government.

I've already brought this up with some of the US companies listed on the exchanges, its the US COMPANIES AND PERSONS issuing securities IN THE UNITED STATES that have a problem. Some literally have their address listed on the forums and the about pages of the exchanges. They can get their assets frozen any day. THOSE are the ones that need to register with the SEC or file for an exemption. Sitting idle is bad. The only saving grace is that the numbers are too small and hopefully the SEC will turn a blind out.

For the investors, the only thing you need to worry about is your shares going to zero once the SEC freezes and seizes all the assets one day.

[ffssixtynine]

the SEC does not even consider what currency is used, read the Securities act of 1933. It doesn't need to consider or not consider the merit of bitcoin, it considers the offer and sale of securities. This has nothing to do with acceptance or recognition of bitcoin by the federal government.

There are, ahem, some people who claim they aren't dealing in securities. Or real money.

I've already brought this up with some of the US companies listed on the exchanges, its the US COMPANIES AND PERSONS issuing securities IN THE UNITED STATES that have a problem. Some literally have their address listed on the forums and the about pages of the exchanges. They can get their assets frozen any day. THOSE are the ones that need to register with the SEC or file for an exemption. Sitting idle is bad. The only saving grace is that the numbers are too small and hopefully the SEC will turn a blind out.

Questions since you've researched this.

The SEC's rules are there to protect US investors. If a company is registered outside of the US and the securities are traded on foreign exchanges, what can they do?

What would happen if the people behind the foreign company were in the US? What would make the SEC come looking?

What would they do if that company was actively soliciting investments from the public in the US?

For the investors, the only thing you need to worry about is your shares going to zero once the SEC freezes and seizes all the assets one day.

Only thing! I wouldn't touch a US registered investment now.

[ffssixtynine]

Securities act of 1933

http://www.sec.gov/about/laws/sa33.pdf

(1) The term ‘‘security’’ means any note, stock, treasury
stock, security future, security-based swap, bond, debenture,
evidence of indebtedness, certificate of interest or participation
in any profit-sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or
other mineral rights, any put, call, straddle, option, or privilege
on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value
thereof), or any put, call, straddle, option, or privilege entered
into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly
known as a ‘‘security’’, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any
of the foregoing.

Edit: I don't see how BTCT's claim holds any water whatsoever, but it's not in the US. Those with stock on there, however...

[stslimited]

the SEC does not even consider what currency is used, read the Securities act of 1933. It doesn't need to consider or not consider the merit of bitcoin, it considers the offer and sale of securities. This has nothing to do with acceptance or recognition of bitcoin by the federal government.

There are, ahem, some people who claim they aren't dealing in securities. Or real money.

that never mattered.

http://www.sec.gov/about/laws/sa33.pdf

SEC. 2. (a) DEFINITIONS.—When used in this title, unless the
context otherwise requires—
(1) The term ‘‘security’’ means any note, stock, treasury
stock, security future, security-based swap, bond, debenture,
evidence of indebtedness, certificate of interest or participation
in any profit-sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or
other mineral rights, any put, call, straddle, option, or privilege
on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value
thereof), or any put, call, straddle, option, or privilege entered
into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly
known as a ‘‘security’’, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any
of the foregoing.

I've already brought this up with some of the US companies listed on the exchanges, its the US COMPANIES AND PERSONS issuing securities IN THE UNITED STATES that have a problem. Some literally have their address listed on the forums and the about pages of the exchanges. They can get their assets frozen any day. THOSE are the ones that need to register with the SEC or file for an exemption. Sitting idle is bad. The only saving grace is that the numbers are too small and hopefully the SEC will turn a blind out.

Questions since you've researched this.

The SEC's rules are there to protect US investors. If a company is registered outside of the US and the securities are traded on foreign exchanges, what can they do?

What would happen if the people behind the foreign company were in the US? What would make the SEC come looking?

What would they do if that company was actively soliciting investments from the public in the US?

For the investors, the only thing you need to worry about is your shares going to zero once the SEC freezes and seizes all the assets one day.

Only thing! I wouldn't touch a US registered investment now.

If a company is registered in the US (or a person in the US) has issued shares, it needs to find an exemption with the SEC. Its not just the SEC, its the state they are in too.

You don't have to take this one a case-by-base basis, the US Constitution gives the federal government power to "regulate interstate commerce", anything that *actually happens* on US soil and anything in the US that merely *affects* interstate commerce is enough for any federal agency or federal actor to apply its laws no matter where in the globe things are nominally existing.

The SEC generally establishes jurisdiction by pinpointing at least one state where an unregistered exchange took place. So look at BASIC-MINING for instance:

- address in some midwestern state
- lists on an exchange in Belize
- DIRECTLY EXCHANGED SHARES (most likely in America) TO SOMEONE FOR A BFL MINIRIG

you don't even need to do anything that obvious

[ffssixtynine]

the SEC does not even consider what currency is used, read the Securities act of 1933. It doesn't need to consider or not consider the merit of bitcoin, it considers the offer and sale of securities. This has nothing to do with acceptance or recognition of bitcoin by the federal government.

There are, ahem, some people who claim they aren't dealing in securities. Or real money.

that never mattered.

Which was my point, and snap You missed the sarcasm.

[ffssixtynine]

The SEC generally establishes jurisdiction by pinpointing at least one state where an unregistered exchange took place. So look at BASIC-MINING for instance:

- address in some midwestern state
- lists on an exchange in Belize
- DIRECTLY EXCHANGED SHARES (most likely in America) TO SOMEONE FOR A BFL MINIRIG

The problem here is what I alluded to though. They performed an exchange that could reasonably be assumed to be in the US because of their address, and that the exchange was direct.

If all their shares had been sold as e.g. assets on Bitfunder, it would be different.

Please correct me if I'm wrong. I'm totally prepared to be.

[2112]

So if there is a solid plan, not a ponzi plan, that's a good start.

However, all investments carry risks...?

Perhaps the safest option is to register with the SEC before doing an IPO, even if you are a foreign entity. If nothing else, you'll look much more professional and trustworthy.

I presume you can't really do much after the event.

For the first sentence, a definite yes.

For the third paragraph, a definite no. Registering with SEC is complex and expensive. Register properly with your local authorities and continue to fulfill your local obligations as contracted. Then you are in a "technical" violation not a "willful" violation and you are very unlikely to be prosecuted anywhere.

There are folks who offered securities according to the German law denominated in DEM, but accepting also CHF,ATS,GBP & USD. Apparently most sold for USD at spot price from the U.S. citizens. This was some insurance/annuity contract: lump-sum investment for the stream-of-payments in the future. SEC investigated together with German authorities but the investigation ended in "cease offering to the US citizens or register properly with the US authorities". They've choosen the first option, contine paying EUR converted to USD according to the original agreement, visited US & Hawaii for vacations multiple times and continue to own rental properties and bank accounts in the USA, no warrants or indicments for them are outstanding anywhere. The US citizens are no longer the profit centre, but the entire cost of the affair with the SEC was a couple of postal stamps.

For the second sentence, the risks are gray area. It all depends on the sales tactics used. There were various mining securities sold to the U.S. citizens (dig-the-earth mining, not Bitcoin mining). If sold with the accordance of the local law it all ended in a C&D letter. If sold on a sly as a tax-advantaged-shelter investments explicitly marketed to the US taxpayers that was a problematic situation (don't recall the details).

[2112]

So I guess Erik Voorhees "IPO" and subsequent dump-o-matic plan put him in the eyes of the SEC eh?

Hope he doesn't have any plans for being in the USA anytime soon.

Last I've heard Eric was staying in Manhattan, somewhere close to the BitInstant offices. He may have even purchased some real estate in the USA.

But his repurchase of the SatoshiDice shares with the "goodness of the heart" premium to match and slightly exceed the IPO price could definitely be his "get-out-of-jail" card, at least as far as the past actions are concerned.

I really didn't pay much attention to the SatoshiDice sage, but outwardly it does agree with the very professional legal advice that I've heard at lunches.

[ffssixtynine]

There are folks who offered securities according to the German law denominated in DEM, but accepting also CHF,ATS,GBP & USD. Apparently most sold for USD at spot price from the U.S. citizens. This was some insurance/annuity contract: lump-sum investment for the stream-of-payments in the future. SEC investigated together with German authorities but the investigation ended in "cease offering to the US citizens or register properly with the US authorities". They've choosen the first option, contine paying EUR converted to USD according to the original agreement, visited US & Hawaii for vacations multiple times and continue to own rental properties and bank accounts in the USA, no warrants or indicments for them are outstanding anywhere. The US citizens are no longer the profit centre, but the entire cost of the affair with the SEC was a couple of postal stamps.

When you say 'cease offering', what does that actually mean?

Block US IPs? Do KYC to establish person's address?

Or simply stop marketing at US citizens such as by offering USD as a payment option.

[Entropy-uc]

So I guess Erik Voorhees "IPO" and subsequent dump-o-matic plan put him in the eyes of the SEC eh?

Hope he doesn't have any plans for being in the USA anytime soon.

Last I've heard Eric was staying in Manhattan, somewhere close to the BitInstant offices. He may have even purchased some real estate in the USA.

But his repurchase of the SatoshiDice shares with the "goodness of the heart" premium to match and slightly exceed the IPO price could definitely be his "get-out-of-jail" card, at least as far as the past actions are concerned.

I really didn't pay much attention to the SatoshiDice sage, but outwardly it does agree with the very professional legal advice that I've heard at lunches.

It's interesting that you assume he sold the company back to himself.  I assume the same.  Is there actually any evidence of this?

Erik carries much more risk in operating a gambling site from New York state.  The folks that have carved out legal exceptions for gambling in the US are very jealous of their franchise, well connected politically, and they don't play nice.

[Cyberdyne]

https://www.sec.gov/litigation/complaints/2013/comp-pr2013-132.pdf

Is there a citation for this part?

24. In August 2012, as the scheme collapsed, Shavers made preferential redemptions to friends and longtime BTCST investors

I thought he didn't pay out anything at all.

[Logik]

So, where are the servers and founders of BitFunder and BTC-TC located?

GL evading the SEC by claiming registration in some random country. All that really matters are the physical location of the humans and servers involved, isn't it?

[burnside]

So, where are the servers and founders of BitFunder and BTC-TC located?

GL evading the SEC by claiming registration in some random country. All that really matters are the physical location of the humans and servers involved, isn't it?

There have been quite a few references and questions regarding BTC-TC, so I'll address things as best I can.

- One of the fun things that I'd like to know regarding the 1933 securities act is what their definition of profit is.  Since I've never cross-connected BTC and Fiat, I'm not sure where the connection gets made.  For all I know, a hole in sha256 will be discovered tomorrow and BTC will be shown to have zero value in terms of Fiat.  It seems like by the strict letter of the law, playing a game such as Monopoly is illegal, as the little paper moneys have SOME fiat value, no matter how finite.

- Location of the servers is an issue.  This is partly why we do the several times a day emails to issuers of the share lists.  Addressing the server location issue has been discussed and will be tackled as soon as I can garner some trustworthy help from someone that can bootstrap an installation from bare metal.  Biggest issue is that I simply cannot trust a random ISP's platform install.  I may even end up having to make the trip myself.

- Humans involved could be nabbed.  Three things about this:
    1) They'll nab anyone they want for anything they want.  We've all done something wrong.  (google "three felonies a day.")  There's so much vague crap on the books in the US that they can find something on anyone.
    2) Things changed very recently with the "Bitcoin is money" approach the feds have taken.  Prior to that our legal approach was that Bitcoin is WOW Gold or Linden Dollars and we were a game.  (Someone want to explain to me the difference?  Why is WOW Gold or Linden Dollars not on the SEC website?  Both have exchanges (eg: ebay) and investments going on.)  To what extent law breaking occurred depends on a whole lot of things.  Probably the easiest way around this is for BTC-TC to stop accepting traffic from US users.
    3) I've been looking for overseas investors to take over the majority stake.  My personal goal is to get to where I'm the "programmer for hire" and really nothing more.  This is why so much of the site is setup to be self sustaining. The site really won't miss me much with the exception of the issues I have been running.  Which brings me to:

- Exposure on LTC-MINING and LTC-MINING.LTC... Please sell me back your shares.    Both of these are in closure mode.

- Exposure on ASICMINER-PT... this one I'm not sure there's much exposure on... it'd be hard to pin any losses for example on the PT rather than the underlying issue.  Probably I'll have to close it to US participation though as well.

- It'd be interesting to try to pin down -exactly- what distinguishes a game from an investment.  To me it's always been about learning the trading ropes in an environment that didn't involve losing "real money".  That was why we started on Litecoin.  It was a convenient in-game currency.  To me it's as cut and dry as it is for WoW.  I have no problem telling the difference between the game world and the real world.  One I walk around in for real.  The other I have to sit at the computer and log in and interact through a computer.  Take this same argument to BTC-TC and I have to ask myself, can I interact with BTC-TC in the real world?  Or do I HAVE to sit down at a computer and log in to play?  The answer so far as I can tell is that no, I cannot use my bitcoin in the real world.  I cannot hold them, I cannot buy starbucks with them, I cannot trade them at any shop in town that I am aware of.  I cannot call my broker and buy them or buy anything tangible using them.  For me and 99.9% of americans they're still an imaginary experiment.

I get back to wondering why all of a sudden the SEC/FinCEN decided out of the blue to recognize them.  The only thing I can come up with is so that they can prevent them from ever becoming "real".  To prevent people from using them they have to make examples out of people and to make examples out of people they have to first recognize them.  A bit of a catch-22 for sure.

I'm also still wrapping my brain around why all of a sudden Bitcoin is money to the US when so many prior incarnations of similar things are not money.  The Feds have argued for a century that the only real money is the money they (or another government) print.  Time and again rather than allowing commodities that act like money to exist, they have shut them down and denied that they ever were "money" or "currency".  It's definitely caught me somewhat by surprise and the site needs to make some changes to co-exist in this new world order.

In any case, there are definitely things that need to be improved for the site.  I hate to say this, but barring some kind of loophole, it may come down to excluding US citizens from playing the game.   

[TaxReturn]

I'm also still wrapping my brain around why all of a sudden Bitcoin is money to the US when so many prior incarnations of similar things are not money.  The Feds have argued for a century that the only real money is the money they (or another government) print.  Time and again rather than allowing commodities that act like money to exist, they have shut them down and denied that they ever were "money" or "currency".  It's definitely caught me somewhat by surprise and the site needs to make some changes to co-exist in this new world order.

Because bitcoin is highly disruptive where all former incarnations of money-like tools were merely evolutionary at best. And unlike its predecessors, which they could kill without even acknowledging their value, bitcoin can't be shut down, they know that all too well. The only way to enforce their regulations on bitcoin is to acknowledge it as real and thus a real threat to their system. That way they can attack the bridges between fiat and bitcoin and make it as hard as possible to use. I think, for the first time ever, they are truly afraid of a competing system and they will do their utmost to keep it down.

[🏰 TradeFortress 🏰]

Actually FinCen have mentioned virtual currencies with central administrators (eg WoW) gold in their guidances.

[ffssixtynine]

If you run a trading platform or issue securities from any location, right now you should be getting good legal advice and acting on it ASAP.

Relying on any forum posts is daft, relying on your own intuition or knowledge is similarly so.

I'm glad I'm not in your position right now.

[ffssixtynine]

I've softened my post a bit with some stealth-editing.  The message remains the same, though: Unregistered exchanges servicing US customers are not flying under anybody's radar.  US entities issuing "securities" aren't either.  None of this is "virtual" from the SEC's perspective. An investment is an investment.  Denomination in BTC does not exempt it from such.

What defines a US entity?

[edd]

The Bitcoin Foundation's blog post in response to the charges: https://bitcoinfoundation.org/blog/?p=236

[adameb]

Reading through the complaint and details available, it doesn't sound like there's a pending bitcoin exchange witch hunt forthcoming.  There were obviously a lot of people going to the police or talking to attorneys following the collapse, and since the crime was of a ponzi-scheme manner, it needed to be addressed by the SEC.

[burnside]

Reading through the complaint and details available, it doesn't sound like there's a pending bitcoin exchange witch hunt forthcoming.  There were obviously a lot of people going to the police or talking to attorneys following the collapse, and since the crime was of a ponzi-scheme manner, it needed to be addressed by the SEC.

Every one you take down another 3 are going to pop up internationally.  Much like they've been forced to change past practice for Bitcoin, I would not be surprised to find that they are going to have to change tactics for securities.  We already know that they are going to have to change somewhat because of the recent crowd funding legislation.  Though big surprise they've been dragging their feet on the implementation.

Nonetheless, I do intend to fully comply with US Law, so if they're going to recognize Bitcoin as a full-on currency we're going to have to implement some way to validate accredited investors from the US.

Even with that, I still think it's better to think of the exchange as a game.  Most of what is traded as bitcoin startups is extremely high risk and it still reduces liability should anyone decide it's the exchanges fault they lost money making unwise trades.

Cheers.

[adub]

Nonetheless, I do intend to fully comply with US Law, so if they're going to recognize Bitcoin as a full-on currency we're going to have to implement some way to validate accredited investors from the US.

+1

[NewLiberty]

Actually FinCen have mentioned virtual currencies with central administrators (eg WoW) gold in their guidances.

In the US, WoW gold is money, but real gold isn't?
https://www.youtube.com/watch?v=OghDOApA-1k

[prophetx]

it is going to get interesting.  looking at the macro picture, this in reality is bad news for US growth.

from a commerce and growth perspective, the current US legal system is really holding back a lot on innovation in how business is done, so that the Federal govt can maintain relevance in a world where it will become less relevant.

luckily I am no longer living in the US. the EU countries for now seem to be much more accommodating to these businesses.

frankly the technology is there, any company can create their own "coin", premine it, and release it to the public in exchange for BTC or any other coin to raise funds.  someone needs to design an apparatus that joins this with something like a bitmessage clone which would then allow for voting on shareholder issues tying the bitmessage address with the coin address and a mechanism for rolling up all the votes to ownership addresses, etc. anyway I digress...

[Ozymandias]

Reading through the complaint and details available, it doesn't sound like there's a pending bitcoin exchange witch hunt forthcoming.  There were obviously a lot of people going to the police or talking to attorneys following the collapse, and since the crime was of a ponzi-scheme manner, it needed to be addressed by the SEC.

Every one you take down another 3 are going to pop up internationally.  Much like they've been forced to change past practice for Bitcoin, I would not be surprised to find that they are going to have to change tactics for securities.  We already know that they are going to have to change somewhat because of the recent crowd funding legislation.  Though big surprise they've been dragging their feet on the implementation.

Nonetheless, I do intend to fully comply with US Law, so if they're going to recognize Bitcoin as a full-on currency we're going to have to implement some way to validate accredited investors from the US.

Even with that, I still think it's better to think of the exchange as a game.  Most of what is traded as bitcoin startups is extremely high risk and it still reduces liability should anyone decide it's the exchanges fault they lost money making unwise trades.

Cheers.

Theoretically speaking, what if some naughty person from the US wishing to continue trading on btct used TOR to access the site? Would you block all of the TOR exit nodes as well as US-based traffic? Also, if you do ultimately decide to close down the exchange to US customers, what kind of warning time frame should we expect, a day? a week? a month?

[prophetx]

Reading through the complaint and details available, it doesn't sound like there's a pending bitcoin exchange witch hunt forthcoming.  There were obviously a lot of people going to the police or talking to attorneys following the collapse, and since the crime was of a ponzi-scheme manner, it needed to be addressed by the SEC.

Every one you take down another 3 are going to pop up internationally.  Much like they've been forced to change past practice for Bitcoin, I would not be surprised to find that they are going to have to change tactics for securities.  We already know that they are going to have to change somewhat because of the recent crowd funding legislation.  Though big surprise they've been dragging their feet on the implementation.

Nonetheless, I do intend to fully comply with US Law, so if they're going to recognize Bitcoin as a full-on currency we're going to have to implement some way to validate accredited investors from the US.

Even with that, I still think it's better to think of the exchange as a game.  Most of what is traded as bitcoin startups is extremely high risk and it still reduces liability should anyone decide it's the exchanges fault they lost money making unwise trades.

Cheers.

Theoretically speaking, what if some naughty person from the US wishing to continue trading on btct used TOR to access the site? Would you block all of the TOR exit nodes as well as US-based traffic? Also, if you do ultimately decide to close down the exchange to US customers, what kind of warning time frame should we expect, a day? a week? a month?

one need only apply the same standards as porn sites use

are you a US resident or citizen? click here ... redirect to google.com

[ffssixtynine]

Theoretically speaking, what if some naughty person from the US wishing to continue trading on btct used TOR to access the site? Would you block all of the TOR exit nodes as well as US-based traffic? Also, if you do ultimately decide to close down the exchange to US customers, what kind of warning time frame should we expect, a day? a week? a month?

No, it'll be like with gambling lock outs. If BTCT blocks US traffic then they have taken all reasonable precautions.

Big companies may sometimes block some of the better known proxies but I can't see that BTCT would have that issue. Same goes for TOR.

If I were Burnside, which thankfully I'm not today:

I'd lock US users from buying -immediately- but allow them to sell stock for 7 days.

No more registrations from the US.

Lock out all US log ins from 7 days time other than to empty their wallet. Burnside could allow users to request liquidation of their stock at market rate from this point, but no trading whatsoever.

That means that in a week's time he would not be exposed.

[twentyseventy]

No, it'll be like with gambling lock outs. If BTCT blocks US traffic then they have taken all reasonable precautions.

Big companies may sometimes block some of the better known proxies but I can't see that BTCT would have that issue. Same goes for TOR.

If I were Burnside, which thankfully I'm not today:

I'd lock US users from buying -immediately- but allow them to sell stock for 7 days.

No more registrations from the US.

Lock out all US log ins from 7 days time other than to empty their wallet. Burnside could allow users to request liquidation of their stock at market rate from this point, but no trading whatsoever.

That means that in a week's time he would not be exposed.

The word 'overreaction' doesn't even begin to describe your plan for burnside. Forcing US buyers to sell (your first point) would immediately significantly devalue many, if not all, of the securities on BTC-TC. Bids would be filled down to zero on everything.

In your third point, you somehow believe that Burnside can 'request liquidation of their stock at market rate' - from whom? The fund issuer?

I agree that exchange operators should be cognizant of future legal complications, but an immediate liquidation of all securities for US-based traders is laughable.

[burnside]

Theoretically speaking, what if some naughty person from the US wishing to continue trading on btct used TOR to access the site? Would you block all of the TOR exit nodes as well as US-based traffic? Also, if you do ultimately decide to close down the exchange to US customers, what kind of warning time frame should we expect, a day? a week? a month?

No, it'll be like with gambling lock outs. If BTCT blocks US traffic then they have taken all reasonable precautions.

Big companies may sometimes block some of the better known proxies but I can't see that BTCT would have that issue. Same goes for TOR.

If I were Burnside, which thankfully I'm not today:

I'd lock US users from buying -immediately- but allow them to sell stock for 7 days.

No more registrations from the US.

Lock out all US log ins from 7 days time other than to empty their wallet. Burnside could allow users to request liquidation of their stock at market rate from this point, but no trading whatsoever.

That means that in a week's time he would not be exposed.

Probably something similar to this, but with a couple of changes.

- I'd do it over 30 days.  (for 30 days you could buy and sell)
- US (non-issuer) accounts would always be able to sell after that.  The block would be on buying.  This way we don't screw anyone over.
- I'd have an override in the accounts section saying "I do solemnly swear that I am not a resident of the US" for people that get mistakenly detected as being US residents or who pass their traffic through US tor nodes or proxies.  (Why you'd do that is beyond me... just makes you an NSA target.)  You'd have to e-sign to get the block lifted from your account.

This is by no means set it stone, don't get too jumpy yet if you're in the US.    I've been discussing things with Ukyo, as he's been working on some legal approaches to liberating Bitcoin exchanges and I want to make sure we don't harm anyone unnecessarily as we bring things into compliance.

[Ozymandias]

Theoretically speaking, what if some naughty person from the US wishing to continue trading on btct used TOR to access the site? Would you block all of the TOR exit nodes as well as US-based traffic? Also, if you do ultimately decide to close down the exchange to US customers, what kind of warning time frame should we expect, a day? a week? a month?

No, it'll be like with gambling lock outs. If BTCT blocks US traffic then they have taken all reasonable precautions.

Big companies may sometimes block some of the better known proxies but I can't see that BTCT would have that issue. Same goes for TOR.

If I were Burnside, which thankfully I'm not today:

I'd lock US users from buying -immediately- but allow them to sell stock for 7 days.

No more registrations from the US.

Lock out all US log ins from 7 days time other than to empty their wallet. Burnside could allow users to request liquidation of their stock at market rate from this point, but no trading whatsoever.

That means that in a week's time he would not be exposed.

Probably something similar to this, but with a couple of changes.

- I'd do it over 30 days.  (for 30 days you could buy and sell)
- US (non-issuer) accounts would always be able to sell after that.  The block would be on buying.  This way we don't screw anyone over.
- I'd have an override in the accounts section saying "I do solemnly swear that I am not a resident of the US" for people that get mistakenly detected as being US residents or who pass their traffic through US tor nodes or proxies.  (Why you'd do that is beyond me... just makes you an NSA target.)  You'd have to e-sign to get the block lifted from your account.

This is by no means set it stone, don't get too jumpy yet if you're in the US.    I've been discussing things with Ukyo, as he's been working on some legal approaches to liberating Bitcoin exchanges and I want to make sure we don't harm anyone unnecessarily as we bring things into compliance.

That's a relief, I've still got about 3 weeks left on my pin reset so a month warning is more than enough. Thanks burnside!

[ffssixtynine]

The word 'overreaction' doesn't even begin to describe your plan for burnside. Forcing US buyers to sell (your first point) would immediately significantly devalue many, if not all, of the securities on BTC-TC. Bids would be filled down to zero on everything.

In your third point, you somehow believe that Burnside can 'request liquidation of their stock at market rate' - from whom? The fund issuer?

I agree that exchange operators should be cognizant of future legal complications, but an immediate liquidation of all securities for US-based traders is laughable.

I said what I'd do and I'm not burnside. Whatever I did would be based on legal advice, first and foremost.

It'd be easy to switch 7 for 28 days to avoid a really crappy market effect as long as that was sufficient to avoid being at risk.

Liquidation at market rate - various options for that, I don't mean they get a fixed rate, I mean a way for them to sell their stock without being in a position to actually trade. I should have been more clear, I apologise.

Burnside publishes who has what stock I believe (correct me if I'm wrong) so there would be other ways to deal with stock. There isn't a good answer here.

In reality, however, he is probably in a precarious position right now and complying with the law is more important than anything else. Your 'market' is not the most important thing and there would still be arbitrage between there and other places where appropriate.

If his servers get shut down, and he sounded concerned about that, then isn't it going to be like a certain previous event, but one which could be avoided if US users are removed from the system?

[ffssixtynine]

Probably something similar to this, but with a couple of changes.

- I'd do it over 30 days.  (for 30 days you could buy and sell)
- US (non-issuer) accounts would always be able to sell after that.  The block would be on buying.  This way we don't screw anyone over.
- I'd have an override in the accounts section saying "I do solemnly swear that I am not a resident of the US" for people that get mistakenly detected as being US residents or who pass their traffic through US tor nodes or proxies.  (Why you'd do that is beyond me... just makes you an NSA target.)  You'd have to e-sign to get the block lifted from your account.

This is by no means set it stone, don't get too jumpy yet if you're in the US.    I've been discussing things with Ukyo, as he's been working on some legal approaches to liberating Bitcoin exchanges and I want to make sure we don't harm anyone unnecessarily as we bring things into compliance.

+1

Glad to hear you've been talking to Ukyo. I suspect it may be that you need to make these changes temporarily

Please tell me you have a lawyer giving you advice directly though, for your own sake.

[creativex]

Hey thanks for your loyalty US guys...here's a gourmet sh1t sandwich for your troubles.

This conversation alone has cost me hundreds thousands of btc just in the last few hours. People are selling like lemmings and I'm not even sure they're the ones making the mistake.

Seems likely Trendon gets off easy. Sure he'll end up in jail where he belongs, but us responsible and reliable asset issuers are risking similar consequences and at this rate I'll be in the poor house by tomorrow.

[DeathAndTaxes]

Please understand that US securities law is very complex:
http://www.sec.gov/divisions/corpfin/internatl/foreign-private-issuers-overview.shtml

simply being a foreign entity alone is insufficient to be excluded from US regulations.

Being a foreign entity owned exclusively by foreigners (non-US residents or citizens), which holds no assets in the US and has never had a trade occur in the United States, has no US directors/officers, and isn't listed on any US exchange would be put the entity totally outside US regulatory system.

For entities not meeting that criteria a lot depends on the details of the company, its owners, its assets, its structure, and its offering.  You are going to need good legal counsel to know if/when/where you cross the line.  The recommendation for seeking counsel is a good idea.  Given that no "Bitcoin stock exchange" has an provision to limit/exclude US residents/citizens any listed asset is at least within the US regulatory regime.  An exemption may apply but it is asininely stupid to say "I am not a US company therefore I am exempt".

[mrtchipr]

Hey thanks for your loyalty US guys...here's a gourmet sh1t sandwich for your troubles.

This conversation alone has cost me hundreds thousands of btc just in the last few hours. People are selling like lemmings and I'm not even sure they're the ones making the mistake.

Which stocks are being dropped exactly?

[burnside]

+1

Glad to hear you've been talking to Ukyo. I suspect it may be that you need to make these changes temporarily

Please tell me you have a lawyer giving you advice directly though, for your own sake.

We had a lawyer on tap when the site was setup a year or so ago.

More recently I've been in contact with potential representation but I have not retained them at the moment.

What is it that they say in the UK?  "Keep calm, carry on"?

[DeathAndTaxes]

I've softened my post a bit with some stealth-editing.  The message remains the same, though: Unregistered exchanges servicing US customers are not flying under anybody's radar.  US entities issuing "securities" aren't either.  None of this is "virtual" from the SEC's perspective. An investment is an investment.  Denomination in BTC does not exempt it from such.

What defines a US entity?

It depends on the entity.

For legal constructs (partnerships, corporations, LLCs) it is one which is incorporated in the United States (specifically in one of the States).
For individuals it is US residents (regardless of their citizenship) and US citizens living abroad*
For business entities owned by a single person (sole propreitorships) it depends on the owner's citizenship and residence.

For unincorporated businesses it gets a little more complex because they have no legal basis.  Simply put many of the "companies" listed on Bitcoin exchanges don't exist under the law.  Likely the SEC would use similar rules as those used to identify foreign private issuers:
http://www.sec.gov/divisions/corpfin/internatl/foreign-private-issuers-overview.shtml

The US or foreign status of the entity would depend on material facts (ownership, location of assets, citizenship of directors/officers, listing on US exchanges, etc)



* (Yes I get the unfair treatment relative to other nations but it is what it is)

[ffssixtynine]

We had a lawyer on tap when the site was setup a year or so ago.

More recently I've been in contact with potential representation but I have not retained them at the moment.

What is it that they say in the UK?  "Keep calm, carry on"?

Well good luck fella. You've actually done a good job responding which is more than some. If BTCT could be more formalised/safer it'd be great.

[creativex]

Hey thanks for your loyalty US guys...here's a gourmet sh1t sandwich for your troubles.

This conversation alone has cost me hundreds thousands of btc just in the last few hours. People are selling like lemmings and I'm not even sure they're the ones making the mistake.

Which stocks are being dropped exactly?

The ones headed up by Americans with big red down arrows next to them and 9x.xx% sell traffic.

http://coinflow.co/chart/BASIC-MINING
http://coinflow.co/chart/COGNITIVE

These two for instance ^^. ...you know the two largest stocks that are native to btct.co.

[knybe]

"Keep calm, carry on"?

+1

[knybe]

Hey thanks for your loyalty US guys...here's a gourmet sh1t sandwich for your troubles.

This conversation alone has cost me hundreds thousands of btc just in the last few hours. People are selling like lemmings and I'm not even sure they're the ones making the mistake.

Which stocks are being dropped exactly?

The ones headed up by Americans with big red down arrows next to them and 9x.xx% sell traffic.

http://coinflow.co/chart/BASIC-MINING
http://coinflow.co/chart/COGNITIVE

These two for instance ^^. ...you know the two largest stocks that are native to btct.co.

yeah but what's really going here?

[FloatesMcgoates]

Hey thanks for your loyalty US guys...here's a gourmet sh1t sandwich for your troubles.

This conversation alone has cost me hundreds thousands of btc just in the last few hours. People are selling like lemmings and I'm not even sure they're the ones making the mistake.

Which stocks are being dropped exactly?

The ones headed up by Americans with big red down arrows next to them and 9x.xx% sell traffic.

http://coinflow.co/chart/BASIC-MINING
http://coinflow.co/chart/COGNITIVE

These two for instance ^^. ...you know the two largest stocks that are native to btct.co.

yeah but what's really going here?

Are you even reading the thread? Burnside just said he might close BTCT to the United States and these securities only trade on BTCT

[Pale Phoenix]

There is no need to panic.

The SEC is not going to pursue some guy mining coins in his garage and, barring fraud, the chance that they will pursue an exchange, or anyone at all, is very small.

Exposure to Regulation D is not new, it's been there all along, and anyone paying attention has known that. But the regulations around crowdfunding will soon change, and it's extremely unlikely that any sort of enforcement will happen before they are sorted out. Not to mention, without evidence of fraud, any enforcement is likely to come in the form of a cease and desist letter, not criminal charges.

Burnside, I'd urge you to stop speculating in public about what you may or may not do, as you are needlessly spooking the markets. Take some time to think about reducing your risk, get some advice, and come up with a plan that can be implemented over time without permanently damaging the exchange.

May cooler heads prevail!

[iCEBREAKER]

All exchanges should move to .onion/.bit domains, or block US IP addresses.

Get a proxy (or seven) or do something about the out-of-control Federal government.

[FloatesMcgoates]

There is no need to panic.

The SEC is not going to pursue some guy mining coins in his garage and, barring fraud, the chance that they will pursue an exchange, or anyone at all, is very small.

Exposure to Regulation D is not new, it's been there all along, and anyone paying attention has known that. But the regulations around crowdfunding will soon change, and it's extremely unlikely that any sort of enforcement will happen before they are sorted out. Not to mention, without evidence of fraud, any enforcement is likely to come in the form of a cease and desist letter, not criminal charges.

Burnside, I'd urge you to stop speculating in public about what you may or may not do, as you are needlessly spooking the markets. Take some time to think about reducing your risk, get some advice, and come up with a plan that can be implemented over time without permanently damaging the exchange.

May cooler heads prevail!

The risk posed by the SEC is just one out of many, the realer one being the risk that burnside acts preemptively against the SEC by closing the exchange off to American customers.

[knybe]

Hey thanks for your loyalty US guys...here's a gourmet sh1t sandwich for your troubles.

This conversation alone has cost me hundreds thousands of btc just in the last few hours. People are selling like lemmings and I'm not even sure they're the ones making the mistake.

Which stocks are being dropped exactly?

The ones headed up by Americans with big red down arrows next to them and 9x.xx% sell traffic.

http://coinflow.co/chart/BASIC-MINING
http://coinflow.co/chart/COGNITIVE

These two for instance ^^. ...you know the two largest stocks that are native to btct.co.

yeah but what's really going here?

Are you even reading the thread? Burnside just said he might close BTCT to the United States and these securities only trade on BTCT

doofus, I'm talking about COGNITIVE and BASCMINING!

EDIT: Yes these stocks only trade on BTC-TC, but BitFunder falls under the same problems.

[Pale Phoenix]

If I were Burnside, which thankfully I'm not today:

I'd lock US users from buying -immediately- but allow them to sell stock for 7 days.

No more registrations from the US.

Lock out all US log ins from 7 days time other than to empty their wallet. Burnside could allow users to request liquidation of their stock at market rate from this point, but no trading whatsoever.

That means that in a week's time he would not be exposed.

I thought from your previous posts that you were an experienced, level headed business person, but the above suggests otherwise. It's an incredibly irresponsible, reactionary, stream of nonsense.

[FloatesMcgoates]

Hey thanks for your loyalty US guys...here's a gourmet sh1t sandwich for your troubles.

This conversation alone has cost me hundreds thousands of btc just in the last few hours. People are selling like lemmings and I'm not even sure they're the ones making the mistake.

Which stocks are being dropped exactly?

The ones headed up by Americans with big red down arrows next to them and 9x.xx% sell traffic.

http://coinflow.co/chart/BASIC-MINING
http://coinflow.co/chart/COGNITIVE

These two for instance ^^. ...you know the two largest stocks that are native to btct.co.

yeah but what's really going here?

Are you even reading the thread? Burnside just said he might close BTCT to the United States and these securities only trade on BTCT

doofus, I'm talking about COGNITIVE and BASCMINING!

step off.

Cognitive and "bascmining" only trade on BTCT

[adameb]

There is no need to panic.

The SEC is not going to pursue some guy mining coins in his garage and, barring fraud, the chance that they will pursue an exchange, or anyone at all, is very small.

Exposure to Regulation D is not new, it's been there all along, and anyone paying attention has known that. But the regulations around crowdfunding will soon change, and it's extremely unlikely that any sort of enforcement will happen before they are sorted out. Not to mention, without evidence of fraud, any enforcement is likely to come in the form of a cease and desist letter, not criminal charges.

Burnside, I'd urge you to stop speculating in public about what you may or may not do, as you are needlessly spooking the markets. Take some time to think about reducing your risk, get some advice, and come up with a plan that can be implemented over time without permanently damaging the exchange.

May cooler heads prevail!

Exactly.  Again, what's going on with pirate is simply the proper procedure for the charging of Pirate, as his crime/Ponzi scheme falls under SEC established laws.  It in no way suggests that there will be a subsequent case towards a bitcoin mining pool in the US, or someone kicking in money to support it (unless someone had monumental evidence proving that the pool was a ponzi scheme).  If Garr and Creativex are open and honest with their earnings and business (for Cog and bASIC), then everyone will be happy. 

[Pale Phoenix]

The risk posed by the SEC is just one out of many, the realer one being the risk that burnside acts preemptively against the SEC by closing the exchange off to American customers.

Yes, that was my point exactly. In fact, overreaction that is the biggest risk in all of this.

[afrotec]

So basically, BTCT assets are on sale today?  

[AngelSky]

Burnside, I'd urge you to stop speculating in public about what you may or may not do, as you are needlessly spooking the markets. Take some time to think about reducing your risk, get some advice, and come up with a plan that can be implemented over time without permanently damaging the exchange.

Smartest message here.

[AngelSky]

So basically, BTCT assets are on sale today?  

almost free now

[kleeck]

Hey thanks for your loyalty US guys...here's a gourmet sh1t sandwich for your troubles.

This conversation alone has cost me hundreds thousands of btc just in the last few hours. People are selling like lemmings and I'm not even sure they're the ones making the mistake.

Which stocks are being dropped exactly?

BASIC-MINING: https://btct.co/security/BASIC-MINING

It was an obvious panic sell. I wouldn't expect the owner of a security to get in such a huff over market movement... Maybe you're in the wrong line of work creativex.  

[velacreations]

So basically, BTCT assets are on sale today?  

get 'em while they're cheap, before anyone comes to their senses and realizes this is a non-issue.

[ajk]

It was an obvious panic sell. I wouldn't expect the owner of a security to get in such a huff over market movement... Maybe you're in the wrong line of work creativex.  

This comment is so obnoxiously stupid I dont even know where to begin, the man is running an operation and because Burnside dropped a bomb his companies stake dropped 500% + and your telling the guy hes not in the right business ?

Have you ever lost a massive amount of money in a TINY span of time? because it feels like shit and the way he acted is completely understandable

Burnside had no reason to say what he did about blocking US customers considering it was all SPECULATIVE, he said himself he has no idea what the future implications are,

your a donkey bro seriously you should reconsider talking

[knybe]

I'm glad to see bASIC and COGNITIVE slowly regaining...

All this lip flapping is pissing me off.

[kleeck]

It was an obvious panic sell. I wouldn't expect the owner of a security to get in such a huff over market movement... Maybe you're in the wrong line of work creativex.  

This comment is so obnoxiously stupid I dont even know where to begin, the man is running an operation and because Burnside dropped a bomb his companies stake dropped 500% + and your telling the guy hes not in the right business ?

Have you ever lost a massive amount of money in a TINY span of time? because it feels like shit and the way he acted is completely understandable

Burnside had no reason to say what he did about blocking US customers considering it was all SPECULATIVE, he said himself he has no idea what the future implications are,

your a donkey bro seriously you should reconsider talking

Markets move, "bro". News moves things up and down. If you run a security you HAVE to be able to handle that without lashing out at everyone who drops some news that might scare an investor. It is obnoxious to have to read an asshat complain about the market behaving as it chooses. It's even more obnoxious that this individual runs a damn security! It's immature and laughable.

Also, I'd like to point out that between my "obnoxiously stupid" AKA "right on the money" post BASIC-MINING has rebounded from the panic sell (down to .13!) back up to .4525 (+.0525 from pre-panic!). I'm sure I'll see creativex back here thanking Burnside for the boost in value, right? Right?  

[velacreations]

Openly speculating about closing off your exchange to U.S. citizens is a big deal for securities that use that exchange exclusively.

no one forced them to sell.  Not everyone is in the US, and no actual policy was made, so if they are freaking it, it is because of their own speculation.

[velacreations]

Also, I'd like to point out that between my "obnoxiously stupid" AKA "right on the money" post BASIC-MINING has rebounded from the panic sell (down to .13!) back up to .4525 (+.0525 from pre-panic!). I'm sure I'll see creativex back here thanking Burnside for the boost in value, right? Right?  

Man, that would have been great to buy at that low, right?

[canth]

+1 on the keeping calm. This is a discussion about how to respond and stay ahead of regulatory concerns.

As far as the market dips, take a look at the volume. Literally a few dozen BTC were traded at far below market values. That's not a massive selloff - just a few small investors panicking. We're not in some crisis situation so there's no need to act like things are on fire.

I for one appreciate the open discourse, Burnside.

[velacreations]

+1 on the keeping calm. This is a discussion about how to respond and stay ahead of regulatory concerns.

As far as the market dips, take a look at the volume. Literally a few dozen BTC were traded at far below market values. That's not a massive selloff - just a few small investors panicking. We're not in some crisis situation so there's no need to act like things are on fire.

I for one appreciate the open discourse, Burnside.

I appreciate the dip in prices, too.

[kleeck]

Also, I'd like to point out that between my "obnoxiously stupid" AKA "right on the money" post BASIC-MINING has rebounded from the panic sell (down to .13!) back up to .4525 (+.0525 from pre-panic!). I'm sure I'll see creativex back here thanking Burnside for the boost in value, right? Right?  

Man, that would have been great to buy at that low, right?

No joke. I almost owned some BASIC.

Almost.

[ajk]

wow

Markets move, "bro". News moves things up and down. If you run a security you HAVE to be able to handle that without lashing out at everyone who drops some news that might scare an investor. It is obnoxious to have to read an asshat complain about the market behaving as it chooses. It's even more obnoxious that this individual runs a damn security! It's immature and laughable.

Also, I'd like to point out that between my "obnoxiously stupid" AKA "right on the money" post BASIC-MINING has rebounded from the panic sell (down to .13!) back up to .4525 (+.0525 from pre-panic!). I'm sure I'll see creativex back here thanking Burnside for the boost in value, right? Right? 

Wow. Markets Move thats great you sound like you know what your talking about when it comes to trading, there is a difference between news and dropping speculation if Burnside had definite answers about what he was doing without having to say, " I need to contact lawyers" then it would be a different story

also Wow, rebound? the guys share price was much higher than .45 previous to all the unnecessarily CAUSED PANIC, this was not news this was induced

you are so smart 

[canth]

Heh. It really sounds like you followed the advice in your signature and ended up being the fool. Maybe a better quote to follow would be something from Mr Buffett:

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

[redbeans2012]

I don't blame people for selling their securities so they can keep their hands on bitcoins.   Lots of us remember the GLBSE and it sucks having everything in limbo when things get shut down. 

[ajk]

everyone knows that one nor do I think it is good, it doesnt suit my style of trading hence why I have the quote listed

Ya man definitely I would love to capitalize off the situation (being absolutely sarcastic) for the whole like 20 BTC you can buy without blasting the share price, the market is extremely non liquid for both cog and bASIC

if kleek or whatever said something useful without bashing creavtix for doing his job and doing nothing wrong but speaking out when Burnside dropped "news" he could have kept behind closed doors til he knew more then I wouldnt have said anything, Burnside should realize the power he has considering he is the owner of BTCT but obviously didnt think about the effect of the weight of his words (or did he?)

either way the situation could have been handled better by Burnside and kleek can enjoy expressing his opinion while I express mine

[tinus42]

luckily I am no longer living in the US. the EU countries for now seem to be much more accommodating to these businesses.

Depends where you live. The Netherlands is very subservient to multinational business interests. They close down "pirate sites" for Hollywood's sake but allow predatory practices by banks and multinationals and offer them cheap tax incentives.

[burnside]

Wow. Markets Move thats great you sound like you know what your talking about when it comes to trading, there is a difference between news and dropping speculation if Burnside had definite answers about what he was doing without having to say, " I need to contact lawyers" then it would be a different story

also Wow, rebound? the guys share price was much higher than .45 previous to all the unnecessarily CAUSED PANIC, this was not news this was induced

you are so smart 

BTC-TC is first and foremost a community exchange.  Open discourse is going to happen and I primarily respond when and where necessary to reduce the speculation, not increase it.  You have to understand that the strength of BTC-TC is largely within this process... that is, we discuss things and generate ideas BEFORE taking action.  It's easy for one man to make huge mistakes acting entirely of his own accord.  Open discussion with a group of level-headed individuals is worth it's weight in gold.

Also, If I recall correctly, I suggested that rather than doing anything knee-jerk we would explore our options and do everything we could to act responsibly.  Imagine what the next few days would have been like if I had not responded at all to the post suggesting that we need to shut the door "immediately".

There is no need to panic.

The SEC is not going to pursue some guy mining coins in his garage and, barring fraud, the chance that they will pursue an exchange, or anyone at all, is very small.

Exposure to Regulation D is not new, it's been there all along, and anyone paying attention has known that. But the regulations around crowdfunding will soon change, and it's extremely unlikely that any sort of enforcement will happen before they are sorted out. Not to mention, without evidence of fraud, any enforcement is likely to come in the form of a cease and desist letter, not criminal charges.

Burnside, I'd urge you to stop speculating in public about what you may or may not do, as you are needlessly spooking the markets. Take some time to think about reducing your risk, get some advice, and come up with a plan that can be implemented over time without permanently damaging the exchange.

May cooler heads prevail!

Thank you, very good post.

[ajk]

Why are you asking the BTC community who here has any real advice to give that can actually be taken with credit and not a grain of salt

im just saying that the situation could have been handled better with people who have more knowledge on the subject than a bunch of speculative investors

[burnside]

Why are you asking the BTC community who here has any real advice to give that can actually be taken with credit and not a grain of salt

im just saying that the situation could have been handled better with people who have more knowledge on the subject than a bunch of speculative investors

Eh, there's more here than meets the eye if you know where to look.

And where do you suggest we go to find the people who have more knowledge on the subject?  A person could spend weeks interviewing local lawyers and not find one who'd heard of Bitcoin, let alone has practiced law around it.  Even then, you almost need a team of lawyers, as we're all human and there's a risk of missing something important.

Still, I do see your point and will try to be more careful going forward.

[kleeck]

Why are you asking the BTC community who here has any real advice to give that can actually be taken with credit and not a grain of salt

im just saying that the situation could have been handled better with people who have more knowledge on the subject than a bunch of speculative investors

No, you're whining, plain and simple. It's outrageous that you would come onto a forum made for discussing securities and events around securities and ridicule someone who is discussing a major event that has a direct impact on BTC securities. You're a joke and you're annoying.

Continuing to say the same thing over and over will not change that.

To cheap shares! 

[ajk]

Eh, there's more here than meets the eye if you know where to look.

And where do you suggest we go to find the people who have more knowledge on the subject?  A person could spend weeks interviewing local lawyers and not find one who'd heard of Bitcoin, let alone has practiced law around it.  Even then, you almost need a team of lawyers, as we're all human and there's a risk of missing something important.

Still, I do see your point and will try to be more careful going forward.

Ive no clue but it also isnt my responsibility since I do not operate or own an exchange, obviously this wasnt a foreseeable circumstance hence why we are in the current situation trying to pick apart the pieces, I appreciate you taking the time to respond and that things will be handled with better care,

Really hope the exchange doesnt have to do anything and can continue as is but that is just hope

[Mabsark]

Wow. Markets Move thats great you sound like you know what your talking about when it comes to trading, there is a difference between news and dropping speculation if Burnside had definite answers about what he was doing without having to say, " I need to contact lawyers" then it would be a different story

also Wow, rebound? the guys share price was much higher than .45 previous to all the unnecessarily CAUSED PANIC, this was not news this was induced

you are so smart 

BTC-TC is first and foremost a community exchange.  Open discourse is going to happen and I primarily respond when and where necessary to reduce the speculation, not increase it.  You have to understand that the strength of BTC-TC is largely within this process... that is, we discuss things and generate ideas BEFORE taking action.  It's easy for one man to make huge mistakes acting entirely of his own accord.  Open discussion with a group of level-headed individuals is worth it's weight in gold.

Also, If I recall correctly, I suggested that rather than doing anything knee-jerk we would explore our options and do everything we could to act responsibly.  Imagine what the next few days would have been like if I had not responded at all to the post suggesting that we need to shut the door "immediately".

There is no need to panic.

The SEC is not going to pursue some guy mining coins in his garage and, barring fraud, the chance that they will pursue an exchange, or anyone at all, is very small.

Exposure to Regulation D is not new, it's been there all along, and anyone paying attention has known that. But the regulations around crowdfunding will soon change, and it's extremely unlikely that any sort of enforcement will happen before they are sorted out. Not to mention, without evidence of fraud, any enforcement is likely to come in the form of a cease and desist letter, not criminal charges.

Burnside, I'd urge you to stop speculating in public about what you may or may not do, as you are needlessly spooking the markets. Take some time to think about reducing your risk, get some advice, and come up with a plan that can be implemented over time without permanently damaging the exchange.

May cooler heads prevail!

Thank you, very good post.

Your response basically said that you would most likely block US citizens from using the site. Because of your statement, a load of US citizens  sold their shares in a panic. Your statement was directly responsible for that.

Unless you make some sort of statement to reassure US users instead of scaring the shit out of them, you may as well kiss your site goodbye.

[ajk]

No, you're whining, plain and simple. It's outrageous that you would come onto a forum made for discussing securities and events around securities and ridicule someone who is discussing a major event that has a direct impact on BTC securities. You're a joke and you're annoying.

Continuing to say the same thing over and over will not change that.

To cheap shares! 

Alright cockblock. enjoy making your pennies off the ill liquid securities instead of investing in them when no one else was, gonna pop my ignore cherry after this so congratulations to you,

heres why I even said anything to you, You shat on Creavtix who doesnt deserve it considering he had just lost money, you essentially were kicking a man when hes down and I do not appreciate that hence why I spoke up,

You are cool. Goodbye

[SoylentCreek]

My official gameplan for this evening:

[redbeans2012]

Your response basically said that you would most likely block US citizens from using the site. Because of your statement, a load of US citizens  sold their shares in a panic. Your statement was directly responsible for that.

Unless you make some sort of statement to reassure US users instead of scaring the shit out of them, you may as well kiss your site goodbye.

+1

[burnside]

Your response basically said that you would most likely block US citizens from using the site. Because of your statement, a load of US citizens  sold their shares in a panic. Your statement was directly responsible for that.

Unless you make some sort of statement to reassure US users instead of scaring the shit out of them, you may as well kiss your site goodbye.

Maybe I could have been clearer, but maybe you just missed this:

- I'd do it over 30 days.  (for 30 days you could buy and sell)
- US (non-issuer) accounts would always be able to sell after that.  The block would be on buying.  This way we don't screw anyone over.
- I'd have an override in the accounts section saying "I do solemnly swear that I am not a resident of the US" for people that get mistakenly detected as being US residents or who pass their traffic through US tor nodes or proxies.  (Why you'd do that is beyond me... just makes you an NSA target.)  You'd have to e-sign to get the block lifted from your account.

This is by no means set it stone, don't get too jumpy yet if you're in the US.    I've been discussing things with Ukyo, as he's been working on some legal approaches to liberating Bitcoin exchanges and I want to make sure we don't harm anyone unnecessarily as we bring things into compliance.

If you read that and jumped off a bridge then I'm going to have to call it natural selection.

[ar9]

Wow.

Burnside...
Not a cool thing to do as a site operator.

[burnside]

Wow.

Burnside...
Not a cool thing to do as a site operator.

I'm gonna take a break for a few hours.

I suggest everyone chills a bit. 

[velacreations]

yeah, he didn't say that, so stop acting like you had a valid reason to panic when someone is just discussing a HYPOTHETICAL

And, IMO, this whole discussion is completely overreacting to something that is unlikely to happen, ie. the SEC taking notice of bitcoin exchanges.

But, thanks for the panic, I do appreciate cheap share prices, guys!  

[ffssixtynine]

I thought from your previous posts that you were an experienced, level headed business person, but the above suggests otherwise. It's an incredibly irresponsible, reactionary, stream of nonsense.

I posted that *after* engaging a lawyer to discuss SEC exposure to exchanges, funds, and how to mitigate the risk. I don't have a fund but I am worried about my money being in exchanges and assets/shares, and I was vaguely considering a fund.

Everything else I posted was before.

It is also based on the assumption of Burnside's personal or server exposure in the US (based on his own concerns expressed here).

If he doesn't, the situ is rather different and risks much lower as the US couldn't really touch him.

[btcdrak]

@burnside - please put this all in perspective. The SEC has rightly charged a fraudster. That's a good thing. You are not a fraudster nor do you have the intent. You are not in their gun sights. As for the whole US thing - it's simple, just do what S.DICE. You should relocate your server ANYWAY, just like any gambling sites.

You DO need to create confidence because there is clearly evidence of panic on BTC-TC atm. So please release a statement soon and don't paint doom. I would gladly take over your site, I am not afraid to run a system like that nor get involved with all the legal stuff (and I can code to boot).

[AngelSky]

Eh, there's more here than meets the eye if you know where to look.

And where do you suggest we go to find the people who have more knowledge on the subject?  A person could spend weeks interviewing local lawyers and not find one who'd heard of Bitcoin, let alone has practiced law around it.  Even then, you almost need a team of lawyers, as we're all human and there's a risk of missing something important.

Still, I do see your point and will try to be more careful going forward.

You're actually running a business (a big one in the btc world) and your questions/messages are read here. I understand that you need to communicate with the bitcoin community about what's comming next and get advices, but maybe you can do that in a more PR way like any other prof. business. Your words have a weight because people have BTCs on your website, and some of them have a lot.

Please, next time you communicate, think about the impact your words will have.

Patrick

EDIT: even if I agree with you about the "natural selection"

[Pale Phoenix]

Burnside has said that he's going to take a step back, get advice, and evaluate the situation. He's not making any changes or planning to block US users at this time, so perhaps we can just leave it at that for now. Stocks seem to be in recovery mode... everything will be fine.

[🏰 TradeFortress 🏰]

yeah, he didn't say that, so stop acting like you had a valid reason to panic when someone is just discussing a HYPOTHETICAL

And, IMO, this whole discussion is completely overreacting to something that is unlikely to happen, ie. the SEC taking notice of bitcoin exchanges.

But, thanks for the panic, I do appreciate cheap share prices, guys!  

You are delusional if you don't think the SEC is reading this thread right now.

They regulate securities exchanges.

[KCBitcoin]

Burnside has said that he's going to take a step back, get advice, and evaluate the situation. He's not making any changes or planning to block US users at this time, so perhaps we can just leave it at that for now. Stocks seem to be in recovery mode... everything will be fine.

+1

[usagi]

Burnside has said that he's going to take a step back, get advice, and evaluate the situation. He's not making any changes or planning to block US users at this time, so perhaps we can just leave it at that for now. Stocks seem to be in recovery mode... everything will be fine.

http://www.quickmeme.com/meme/3vadh5/

[freedomno1]

Move the servers to Canada Eh

[stslimited]

a foreign exchange has no liability with the SEC, its the companies listed on them. ISSUING securities is what the SEC watches

that being said, I've warned US issuers (BASIC-MINING) about this issue weeks and months ago.

Keep the exchange open, or you'll lose all your market share to someone that understands this stuff (me.)

Oh your computers are on a cloud server in the US? Stop your FUD and tell me exactly what part of the securities act of 1933 and securities exchange act of 1934 you are concerned about.

[superduh]

yeah, he didn't say that, so stop acting like you had a valid reason to panic when someone is just discussing a HYPOTHETICAL

And, IMO, this whole discussion is completely overreacting to something that is unlikely to happen, ie. the SEC taking notice of bitcoin exchanges.

But, thanks for the panic, I do appreciate cheap share prices, guys!  

You are delusional if you don't think the SEC is reading this thread right now.

They regulate securities exchanges.

Security exchanges operating in the USA. this is 100% out of their jurisdiction. however, i fully support SEC going after FRAUDSTERS. scammers and fraudsters and certain manipulators and ponzi people should all be behind bars regardless of what country they reside in and what organization puts them behind bars.

[dexX7]

If I recall correctly, the SEC was almost instantly involved in this since the pirateat40 thing blew up.

http://blogs.telegraph.co.uk/technology/willardfoxton2/100007836/bitcoin-pirate-scandal-sec-steps-in-amid-allegations-that-the-whole-thing-was-a-ponzi-scheme/

http://www.bitcointrading.com/forum/talk-bitcoin/sec-investigating-btcst-pirateat40/

They were going after him in 2012. And now, after a year, they address this incident again. Unexpected? Not really.

I'm not in the position to say "calm down, guys", but at least I can say: "don't overreact, please".

[onecent]

People: What I ask for is a petition to our Bitcoin stock exchanges to allow stocks download to our PCs.

Petition to Bitcoin stock exchanges:

I ask you to find a decentralized solution for investors to be able to store our stock shares offline, in case of catastrophe and if this site goes down.

One possibility: Investigate "colored BitcoinX" to download stock shares to our computers and store offline, like Bitcoins. It allows to "paint" fractional bitcoins into IOUs, stocks and financial assets and will write our asset possessions right into the block-chain.
Another option, is to develop a new block-chain for stocks and other assets.

This will greatly reduce shareholder risks, -and- allow investors to invest more money.
(The goal is to proof the exchanges vs. government regulatory attacks, hackers, and to keep our freedom)

-Technologov

very good idea, espcially for those exchanges run by Americans

nice idea, everything related to btc should be decentralize, if the stock exchange and currency exchange are running as a client on computers or cellphones, there is no way the gov has the chance to shut them down

[Exocyst]

nice idea, everything related to btc should be decentralize, if the stock exchange and currency exchange are running as a client on computers or cellphones, there is no way the gov has the chance to shut them down

Your idea is nice as well but there are practical/technical concerns to be addressed:

• Who pays for the development of said decentralized securities exchange?
• Who moderates offerings to reduce likely scams? (A proof of stake voting system might work but is subject to manipulation)
• How are transactions secured? (Are we looking at yet another alt-coin?)
• How do you handle rapid order creation/destruction/fulfillment?
• How do you facilitate rapid order fulfillment when transactions consist of entities with different temporal constraints? (in other words, how do you create a p2p marketplace where users can trade BTC for securities when BTC can only be securely transferred over a period of 30—60 min depending on your risk tolerance?)

I am wholeheartedly behind the creation of said decentralized securities exchange but there are serious technical hurdles to be overcome.

[dance4x]

Couldn't Open Transactions be used for issuing assets in the future?

[MonkeyMarcel]

There is no need to panic.

The SEC is not going to pursue some guy mining coins in his garage and, barring fraud, the chance that they will pursue an exchange, or anyone at all, is very small.

Exposure to Regulation D is not new, it's been there all along, and anyone paying attention has known that. But the regulations around crowdfunding will soon change, and it's extremely unlikely that any sort of enforcement will happen before they are sorted out. Not to mention, without evidence of fraud, any enforcement is likely to come in the form of a cease and desist letter, not criminal charges.

Burnside, I'd urge you to stop speculating in public about what you may or may not do, as you are needlessly spooking the markets. Take some time to think about reducing your risk, get some advice, and come up with a plan that can be implemented over time without permanently damaging the exchange.

May cooler heads prevail!

What a boss reply.

[lunarboy]

Couldn't Open Transactions be used for issuing assets in the future?

I think Open transactions can't get here soon enough.
decentralise the BTC exchanges and decentralise all BTC denominated assets.

Game over jurisdiction.

[Lohoris]

The answer so far as I can tell is that no, I cannot use my bitcoin in the real world.  I cannot hold them, I cannot buy starbucks with them, I cannot trade them at any shop in town that I am aware of.  I cannot call my broker and buy them or buy anything tangible using them.  For me and 99.9% of americans they're still an imaginary experiment.

This line of reasoning is quite weak, since it's easy to exchange them for USD and then spend the USD.
You can also use them directly to buy prepaid credit cards...

[foxykah]

Couldn't Open Transactions be used for issuing assets in the future?

I think Open transactions can't get here soon enough.
decentralise the BTC exchanges and decentralise all BTC denominated assets.

Game over jurisdiction.

+1, but the implementation of this decentralisation is way beyond our capacities, the creation of such a system would rival that of the BTC system in terms of complexity.

[GeoRW]

Don't panic guys. Just invest what you can lose

[MonkeyMarcel]

Couldn't Open Transactions be used for issuing assets in the future?

I think Open transactions can't get here soon enough.
decentralise the BTC exchanges and decentralise all BTC denominated assets.

Game over jurisdiction.

+1, but the implementation of this decentralisation is way beyond our capacities, the creation of such a system would rival that of the BTC system in terms of complexity.

I just read up on Open Transactions for the first time... Holy shit. Mind blown. To other "OT" noobs, do yourself a favour and read up on this.

[crumbs]

The answer so far as I can tell is that no, I cannot use my bitcoin in the real world.  I cannot hold them, I cannot buy starbucks with them, I cannot trade them at any shop in town that I am aware of.  I cannot call my broker and buy them or buy anything tangible using them.  For me and 99.9% of americans they're still an imaginary experiment.

This line of reasoning is quite weak, since it's easy to exchange them for USD and then spend the USD.
You can also use them directly to buy prepaid credit cards...

Hint:  The credit cards are denominated in what?
If i have a marketable idea, someone will pay me $$$ for it.  I can then spend my $$$ on anything i want.  This does not imply that my idea was a currency, simply that it was sold for money.  Sorry for OT

[MPOE-PR]

Why are you asking the BTC community who here has any real advice to give that can actually be taken with credit and not a grain of salt

im just saying that the situation could have been handled better with people who have more knowledge on the subject than a bunch of speculative investors

Yeah well...crowdsourcing, right?

[ldrgn]

A bit of advice for non-U.S. entities that have offered and dealt with the U.S. citizens:

Whatever you do make sure that you return to the investor at least the original nominal value of the investment. Or that you can return the original nominal value to all the investors.

Looks like TU.SILVER is fucked.

[usagi]

A bit of advice for non-U.S. entities that have offered and dealt with the U.S. citizens:

Whatever you do make sure that you return to the investor at least the original nominal value of the investment. Or that you can return the original nominal value to all the investors.

Looks like TU.SILVER is fucked.

Too obvious troll is too obvious.

[DeathAndTaxes]

There have been quite a few references and questions regarding BTC-TC, so I'll address things as best I can.

- One of the fun things that I'd like to know regarding the 1933 securities act is what their definition of profit is.  Since I've never cross-connected BTC and Fiat, I'm not sure where the connection gets made.  For all I know, a hole in sha256 will be discovered tomorrow and BTC will be shown to have zero value in terms of Fiat.  It seems like by the strict letter of the law, playing a game such as Monopoly is illegal, as the little paper moneys have SOME fiat value, no matter how finite.

- Location of the servers is an issue.  This is partly why we do the several times a day emails to issuers of the share lists.  Addressing the server location issue has been discussed and will be tackled as soon as I can garner some trustworthy help from someone that can bootstrap an installation from bare metal.  Biggest issue is that I simply cannot trust a random ISP's platform install.  I may even end up having to make the trip myself.

- Humans involved could be nabbed.  Three things about this:
    1) They'll nab anyone they want for anything they want.  We've all done something wrong.  (google "three felonies a day.")  There's so much vague crap on the books in the US that they can find something on anyone.
    2) Things changed very recently with the "Bitcoin is money" approach the feds have taken.  Prior to that our legal approach was that Bitcoin is WOW Gold or Linden Dollars and we were a game.  (Someone want to explain to me the difference?  Why is WOW Gold or Linden Dollars not on the SEC website?  Both have exchanges (eg: ebay) and investments going on.)  To what extent law breaking occurred depends on a whole lot of things.  Probably the easiest way around this is for BTC-TC to stop accepting traffic from US users.
    3) I've been looking for overseas investors to take over the majority stake.  My personal goal is to get to where I'm the "programmer for hire" and really nothing more.  This is why so much of the site is setup to be self sustaining. The site really won't miss me much with the exception of the issues I have been running.  Which brings me to:

- Exposure on LTC-MINING and LTC-MINING.LTC... Please sell me back your shares.    Both of these are in closure mode.

- Exposure on ASICMINER-PT... this one I'm not sure there's much exposure on... it'd be hard to pin any losses for example on the PT rather than the underlying issue.  Probably I'll have to close it to US participation though as well.

- It'd be interesting to try to pin down -exactly- what distinguishes a game from an investment.  To me it's always been about learning the trading ropes in an environment that didn't involve losing "real money".  That was why we started on Litecoin.  It was a convenient in-game currency.  To me it's as cut and dry as it is for WoW.  I have no problem telling the difference between the game world and the real world.  One I walk around in for real.  The other I have to sit at the computer and log in and interact through a computer.  Take this same argument to BTC-TC and I have to ask myself, can I interact with BTC-TC in the real world?  Or do I HAVE to sit down at a computer and log in to play?  The answer so far as I can tell is that no, I cannot use my bitcoin in the real world.  I cannot hold them, I cannot buy starbucks with them, I cannot trade them at any shop in town that I am aware of.  I cannot call my broker and buy them or buy anything tangible using them.  For me and 99.9% of americans they're still an imaginary experiment.

I get back to wondering why all of a sudden the SEC/FinCEN decided out of the blue to recognize them.  The only thing I can come up with is so that they can prevent them from ever becoming "real".  To prevent people from using them they have to make examples out of people and to make examples out of people they have to first recognize them.  A bit of a catch-22 for sure.

I'm also still wrapping my brain around why all of a sudden Bitcoin is money to the US when so many prior incarnations of similar things are not money.  The Feds have argued for a century that the only real money is the money they (or another government) print.  Time and again rather than allowing commodities that act like money to exist, they have shut them down and denied that they ever were "money" or "currency".  It's definitely caught me somewhat by surprise and the site needs to make some changes to co-exist in this new world order.

In any case, there are definitely things that need to be improved for the site.  I hate to say this, but barring some kind of loophole, it may come down to excluding US citizens from playing the game.  

Rather than try to naunce some terms like "profit" why not look at SEC case against BTCST.  Pretending something is a "game" is not a defense.  If it looks like a duck, and quacks like a duck, the courts are going to find that it is a duck.  There is ABSOLUTELY nothing which requires an investment to be in legal tender or even money in general.  The definition is intentionally broad and courts have created substantial precedent allowing non-standard investments to be considered investments.  The very fact that Mr. Shavers advertised in the "Securities" portion of the forum is used against him.   However why not read what the SEC actually allegedes in the complaint.

Spoiler alert the following are not a legal defense and no competent counsel would tell you otherwise:
1) It is not an investment because ... Bitcoin.
2) It is not an investment because ... "it is a game".
3) It is not an investment because ... "I can't interact with BTC-TC in the real world" (Hint: I can't interact with the NYSE in the real world either).

Trying to self-rationalize why "LTC is a game" is a fools errand.  The law rarely ever is based on "common sense".  Find legal counsel able to stipulate that you and you might have the start of something.

The BTCST Investments Are Securities as Defined by the Federal Securities Laws
The definitions of “security” under Section 2(a)(1) of the Securities Act [15 U.S.C. §
77b(a)(1)] and Section 3(a)(10) of the Exchange Act [15 U.S.C. § 77c(a)(10)] include both
“investment contract” and “note.” Courts “are not bound by legal formalism, but instead take
account of the economics of the transaction” to determine whether a security exists. Reves v.
Ernst & Young, 494 U.S. 56, 61 (1990); see, e.g., SEC v. SG Ltd., 265 F.3d 42 (1st Cir. 2001)
(holding virtual shares in virtual company existing only online were securities). “Congress’
purpose in enacting the securities laws was to regulate investments, in whatever form they are
made and by whatever name they are called.” Reves, 494 U.S. at 61. (emphasis in original). The
BTCST investments qualify as both investment contracts and notes and, thus, are securities.

An investment contract is any contract, transaction, or scheme involving (1) an
investment of money, (2) in a common enterprise, (3) with the expectation that profits will be
derived from the efforts of the promoter or a third party. SEC v. W.J. Howey & Co., 328 U.S.
293, 298-99 (1946); see Long v. Shultz Cattle Co., Inc., 881 F.2d 129, 132-33 (5th Cir. 1989).

The “investment of money” element may be satisfied by consideration other than money. See
Int’l Bhd. of Teamsters, Chauffeurs, Warehousemen and Helpers of Am., 439 U.S. 551, 560, n.12
(1979) (the “investment” may take the form of “goods and services”). Moreover, BTC is money.
BTC may be used to purchase goods or services, or exchanged for conventional currencies,
including the U.S. dollar, Euro, Yen, and Yuan. Recognizing as much, the Department of the
Treasury issued guidance concerning the applicability of the regulations implementing the Bank
Secrecy Act to virtual currencies such as BTC. See Treasury Guidance (FIN-2013-G001) –
Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual
Currencies (Mar. 18, 2013). In the Fifth Circuit, the second and third elements of an investment
contract are met where investors are dependent upon a promoter’s expertise, just as the BTCST
investors were dependent upon Shavers’ supposed expertise in BTC market arbitrage, to generate
the returns promised on their investments. See Long, 881 F.2d at 140-41.

Any note is presumed to be a security unless the presumption can be overcome because
the note bears a strong resemblance to one of several judicially-enumerated instruments that are
not securities. Reves, 494 U.S. 56. The types of notes that are not securities include a consumer
financing note, a note secured by a mortgage on a home, a short-term note secured by a lien on a
small business or its assets, and a note which simply formalizes an open-account debt incurred in
the ordinary course of business. Id. at 65. The factors used to determine whether a note
sufficiently resembles these “non-securities” and, thus, is not a security under the federal
securities laws are: (1) the motivations that would prompt a reasonable buyer and seller to enter
into the transaction; (2) the plan of distribution of the instrument; (3) the reasonable expectations
of the investing public; and (4) whether some factor, such as the existence of another regulatory
scheme, significantly reduces the risk of the instrument, thereby rendering application of the
securities laws unnecessary. Id. at 65-67. Here, the transaction between Defendants and the
BTCST investors had all the earmarks of an investment, suggesting a security, and no
commercial or consumer aspect, as with the judicially-enumerated instruments that are not
securities. The BTCST investments were offered and sold to a broad segment of the public as
Plaintiff’s Emergency Motion for Order to Show Cause, Asset Freeze and Other Ancillary Relief
investments. Moreover, no risk-reducing factors existed to militate against a finding that the
BTCST investments were securities. No other regulatory agency oversees the BTCST
investments, and BTC itself is a virtual currency, with no single administrator, or central
authority or repository

http://ia600904.us.archive.org/35/items/gov.uscourts.txed.146063/gov.uscourts.txed.146063.1.0.pdf

BTW I am not a lawyer and none of this should be considered legal counsel however the highlighted #3 is going to be a killer.  You can call it a "game" all you wan't, you can scream "GAME, GAME, GAME" as they deliver a summons but if the "reasonable expectations of the investing public" don't see it as a game but as an investment well that is going to ring hollow.  This entire forum is already reviewed by the SEC (as evident by the detailed threads recorded and notarized in the action against Mr. Shavers).  You pointed out what about Linden dollars and WOW gold.  Well Linden has taken steps to eliminate in game investing and gambling for this EXACT reason (to avoid being regulated by SEC) and Blizzard provides no convertibility and takes steps to ban gold to USD exchangers.  Now people still do it but it provides Blizzard and Linden some level of deniability.  Having an "asset exchange" which is denominated in the worlds largest and most liquid virtual currency is hardly the same thing.  What steps have you taken to prevent people from generating (or promising) real world profits by playing this "game".  I mean if you call it a game in name only it isn't going to take a rocket scientist to pierce that paper defense.   Sudaffed can be used to make meth and that isn't the distributors of Sudafed's fault however if the box of Sudafed came with instructions on making meth and your local drug store held meth demonstrations on weekends obviously the DEA would be looking at those distributors in a different light right?  There is a difference between misuse of a product and the use of product as intended.  Do you honestly think (hint SEC likely has already downloaded an archived copy of this entire forum, plus your entire website) that based on your words, the words on your site, and the words of your issuers that an average juror is going to see this as a "not for profit" game.  Forget the prosecution's case imagine the jury just read "your side".  Do you honestly think they are that dumb?

Really you have three logical ways forward and one of them involve anything as silly as "if we keep calling it a game we are exempt"
a) The MtGox model. becomes licensed and regulated.  Most likely it will be insanely expensive, time consuming, and difficult.  Even if licensed your business model would need to change radically (hint there are no anonymous investments in the US, so called "bearer" bonds/notes have been prohibited for the better part of 40 years).  I just include this option for completeness.

b) The PokerStars model.  ACTIVELY exclude US residents, citizens, and entities from either listing or trading.  Simply having a checkbox "I am not a US resident" is likely not sufficient, just ask the foreign online poker sites that the DOJ took down (servers, companies, and bank accounts all in non-US soil and the DOJ got sufficient help from governments where the activity was legal to seize assets in excess of >$500 million).  You likely will need to consult with SEC on what would provide you a safe harbor exception but based on online poker's fallout I would imagine they would look for policies which require proof of non-US residence and actively blocking US based IP addresses.

c) The SR model. It is illegal and so what.  SR doesn't try to pretend they are a "game" that is just an idiotic half step.  Make sure your servers, operator's identities, assets, and operations are sufficiently shielded that prosecution becomes difficulty if not impossible.  Note that the SR wouldn't exist if they tried to pretend US laws didn't apply, that is just dumb.  They embrace the illegality of their actions AND are very conscious that lots of agencies with lots of resources would love nothing more than to shut them down forever.  I am sure that provides a lot of motivation to ensure they are diligent in keeping themselves shielded.  Nobody on the SR has to check a box saying this is just a "indirect delivery game", everyone is a grown up and they know what is going on.


 

[ajk]

Yeah well...crowdsourcing, right?

Lol. I can appreciate the sarcasm

I think the idea of crowdsourcing is great but every idea has its applications, this case is like the CEO asking the interns what he should do and everyone's reacting accordingly, strong staying strong and weak being weak, like any market there are a lot more weak hands then strong ones but Ethan should have checked the options before starting the fear / uncertainty

now we are left with what we are today which is indecision what is to come I have no idea but definitely not to pleased with the way things are turning out

[Deprived]

b) The PokerStars model.  ACTIVELY exclude US residents, citizens, and entities from either listing or trading.  Simply having a checkbox "I am not a US resident" is likely not sufficient, just ask the foreign online poker sites that the DOJ took down (servers, companies, and bank accounts all in non-US soil and the DOJ got sufficient help from governments where the activity was legal to seize assets in excess of >$500 million).

The implication of what you posted is that Pokerstars DID have a check-box for people to tick saying they weren't in the US.  That's totally wrong.  At the time the US moved against them Stars (and Fulltilt) both accepted US players and claimed they'd been advised that was fine.  The actual action against them didn't hinge on them having US players anyway - but on the means by which funds were being transferred between US players and the sites (and the steps that were being taken to disguise those movements of funds).

I DO agree with the main thrust of your post - that claiming it's just a game won't have any impact at all on what does/doesn't happen.  To have any chance of claiming something's a game (as, for instance, is the case with companies in Eve-Online) it would need to have no interaction at all with fiat-money.

All the time an exchange lists securities which claim to have a face value fixed in USD I really can't see the "it's a game" idea having a leg to stand on.  Same for any listing which claims to give rights to the profits of a company conducting fiat-denominated business or having fiat-denominated expenditure/income (which indicates that company/individual considers fiat/BTC to be interchangable).

The main defence exchanges have had to date is being too small to matter and trying to avoid listing scams.  Both of those things are ceasing to be the case - I'm amazed, for example, that no investor in Ziggap appears to have filed a complaint with the SEC to get the clown who ran it in trouble.

[DeathAndTaxes]

b) The PokerStars model.  ACTIVELY exclude US residents, citizens, and entities from either listing or trading.  Simply having a checkbox "I am not a US resident" is likely not sufficient, just ask the foreign online poker sites that the DOJ took down (servers, companies, and bank accounts all in non-US soil and the DOJ got sufficient help from governments where the activity was legal to seize assets in excess of >$500 million).

The implication of what you posted is that Pokerstars DID have a check-box for people to tick saying they weren't in the US.  That's totally wrong.  At the time the US moved against them Stars (and Fulltilt) both accepted US players and claimed they'd been advised that was fine.  The actual action against them didn't hinge on them having US players anyway - but on the means by which funds were being transferred between US players and the sites (and the steps that were being taken to disguise those movements of funds).

Yeah it was an unclear example.  I was thinking more Pokerstars today.  Today, if you are trying to connect from a US based IP address you can't play real money games, if you sign up for real money games you can't legitimately enter a US based address, they don't accept US based credit cards or bank accounts.  When trying to withdraw funds (over a token amount) you will need to provide KYC type docs and if you are US based well you aren't ever getting your money.  They actively monitor players and even accidentally connecting from the US (say UK player connecting on business) will get the account instantly frozen.  The exact mechanics may vary but that is the level of "dedication" necessary to take that route. Does this mean no US player has ever been able to circumvent their restrictions? Of course not, there is even a thriving EU identity business going.  The good news is absolute prohibition is rarely the standard, PokerStar's actions (today) shows a "good faith effort" to comply and prevent financial transfers from US residents.

Just having a "I promise I am not from the US" checkbox, something proposed upthread, isn't IMHO going to cause the SEC to turn a blind eye.  If an SEC agent can create an account from a US based IP address, check the "I am not a US resident" and then is free to invest unlimited funds well that likely isn't going to be seen as any good faith effort and you can believe they will test it, and record the session for future civil action (they did against the poker sites, yes agents deposited taxpayer funds and gambled it as "evidence" while on the clock).  Maybe it would have been better to say "PartyPoker model" since they were the ones to shutoff US based players prior to "Black Friday".  BTW I still have $5K tied up in Full Tilt's in-reim seizure.  Yay me!  Since I used the flawed analogy it might be a good idea to add that PokerStars failure to employ these self-policing steps before legal action cost them about $250,000,000 in fines and seized assets.  Luckily the company is immensely profitable and has deep pockets so they were able to ride it out. If a Bitcoin asset exchange tried to play "fast and loose" with the rules and got hit with a fine two magnitudes smaller, say a mere $1M in fines and asset seizures would they be able to "reform" and ride it out?  My guess is no, they would fold like a cheap card table.

The main defence exchanges have had to date is being too small to matter and trying to avoid listing scams.

Agreed.  The bad news is I think some took a lack of action to mean "we are immune".  In reality it simply means you WERE (as in past tense) too small for anyone to care.  Much like someone selling $1,000 in weed to his friends is unlikely to be the target of a federal DEA taskforce.  As the securities I am sorry "asset games" get larger and larger eventually, I don't know or even care to predict when, but eventually it WILL be big enough for the SEC to take action, even if it is just for the headline "SEC busts major illegal securities ring involving Bitcoin".

[Deprived]

b) The PokerStars model.  ACTIVELY exclude US residents, citizens, and entities from either listing or trading.  Simply having a checkbox "I am not a US resident" is likely not sufficient, just ask the foreign online poker sites that the DOJ took down (servers, companies, and bank accounts all in non-US soil and the DOJ got sufficient help from governments where the activity was legal to seize assets in excess of >$500 million).

The implication of what you posted is that Pokerstars DID have a check-box for people to tick saying they weren't in the US.  That's totally wrong.  At the time the US moved against them Stars (and Fulltilt) both accepted US players and claimed they'd been advised that was fine.  The actual action against them didn't hinge on them having US players anyway - but on the means by which funds were being transferred between US players and the sites (and the steps that were being taken to disguise those movements of funds).

Yeah it was an unclear example.  I was thinking more Pokerstars today.  If you are trying to connect from a US based IP address you can't play real money games, if you sign up for real money games you can't legitimately enter a US based address, they don't accept US based credit cards or bank accounts.  When trying to withdraw funds (over a token amount) you will need to provide KYC type docs and if you are US based well you aren't ever getting your money.  They actively monitor players and even accidentally connecting from the US (say UK player connecting on business) will get the account instantly frozen.  The exact mechanics may vary but that is the level of "dedication" necessary to take that route.  Just having a "I promise I am not from the US" checkbox  (something proposed upthread) isn't going to get the SEC to turn a blind eye.  Maybe it would have been better to say "PartyPoker model".  Since I used the flawed analogy it might be a good idea to add that PokerStars failure to do this before legal action cost them about $250,000,000 in fines and seized assets.  Luckily the company is immensely profitable and has deep pockets so they were able to ride it out.  If a Bitcoin asset exchange tried to play "fast and loose" with the rules and got hit with just say $1M in fines and asset seizures would they be able to "reform" and ride it out?  My guess is no, they would fold like a cheap card table.

The main defence exchanges have had to date is being too small to matter and trying to avoid listing scams.

Agreed.  The bad news is many I think took that to mean "we are immune" no it simply means you WERE (as in past tense) too small for anyone to care.  As the securities I am sorry "asset games" get larger and larger eventually I don't know or even care to predict when but eventually it will be big enough for the SEC to see it as a headline if nothing else. 

Agreed about the steps Stars take nowadays.

Think the main thing which will cause the SEC to go after an exchange will be when some significant-sized asset scams/defaults/fails and the operator and/or victims are in the US.  At that stage if they're having to investigate the security it kind of makes sense to go after the exchange at the same time as they'd have to interact with the exchange one way or another whilst gathering evidence.  I think that's probably AMC's best change of making headlines in the BTC world tbh - around middle of next year when it becomes apparent investors are in for a large loss to something run from on US soil.  They only need 1 US investor for all the foreign registered companies etc to be irrelevant - and AMC gave profit projections in USD so has no 'it's a game' defence to even try to hide behind.

Best defence for those of us actually running investments is to make a profit whenever the outcome of an investment hinges on our own predictions, competence or efforts.  That cuts out a lot of potential charges right away.  Not being in the US also helps of course.

[iCEBREAKER]

Really you have three logical ways forward and one of them involve anything as silly as "if we keep calling it a game we are exempt"
a) The MtGox model. becomes licensed and regulated.  Most likely it will be insanely expensive, time consuming, and difficult.  Even if licensed your business model would need to change radically (hint there are no anonymous investments in the US, so called "bearer" bonds/notes have been prohibited for the better part of 40 years).  I just include this option for completeness.

b) The PokerStars model.  ACTIVELY exclude US residents, citizens, and entities from either listing or trading.  Simply having a checkbox "I am not a US resident" is likely not sufficient, just ask the foreign online poker sites that the DOJ took down (servers, companies, and bank accounts all in non-US soil and the DOJ got sufficient help from governments where the activity was legal to seize assets in excess of >$500 million).  You likely will need to consult with SEC on what would provide you a safe harbor exception but based on online poker's fallout I would imagine they would look for policies which require proof of non-US residence and actively blocking US based IP addresses.

c) The SR model. It is illegal and so what.  SR doesn't try to pretend they are a "game" that is just an idiotic half step.  Make sure your servers, operator's identities, assets, and operations are sufficiently shielded that prosecution becomes difficulty if not impossible.  Note that the SR wouldn't exist if they tried to pretend US laws didn't apply, that is just dumb.  They embrace the illegality of their actions AND are very conscious that lots of agencies with lots of resources would love nothing more than to shut them down forever.  I am sure that provides a lot of motivation to ensure they are diligent in keeping themselves shielded.  Nobody on the SR has to check a box saying this is just a "indirect delivery game", everyone is a grown up and they know what is going on.

d) The MPEx model.  Protected server accessible only via proxy.  GPG signed orders on IRC.  High sign-up fee to keep away whiny bratty needy noob children.

[Entropy-uc]

Agreed about the steps Stars take nowadays.

Think the main thing which will cause the SEC to go after an exchange will be when some significant-sized asset scams/defaults/fails and the operator and/or victims are in the US.  At that stage if they're having to investigate the security it kind of makes sense to go after the exchange at the same time as they'd have to interact with the exchange one way or another whilst gathering evidence.  I think that's probably AMC's best change of making headlines in the BTC world tbh - around middle of next year when it becomes apparent investors are in for a large loss to something run from on US soil.  They only need 1 US investor for all the foreign registered companies etc to be irrelevant - and AMC gave profit projections in USD so has no 'it's a game' defence to even try to hide behind.

Best defence for those of us actually running investments is to make a profit whenever the outcome of an investment hinges on our own predictions, competence or efforts.  That cuts out a lot of potential charges right away.  Not being in the US also helps of course.

I doubt that it will take that long for AMC/VMC/AM/Ken Slaughter to get a visit from the folks with black suits and subpoenas.  Much of the reason no one has been prosecuted by the SEC up until now is because the SEC has never done it before.  Organizational inertia is a major factor in government.  Now that the path has been blazed that bitcoin securities offenses can be prosecuted, ambitious folks in the SEC are going to see all the low hanging fruit and go make their careers.  And there is no need for the current suckers to actually lose money and complain, a competitor could start the ball rolling just as easily.  Do you think Inaba is above dropping a dime on Ken?

[adameb]

I think that's probably AMC's best change of making headlines in the BTC world tbh - around middle of next year when it becomes apparent investors are in for a large loss to something run from on US soil.  They only need 1 US investor for all the foreign registered companies etc to be irrelevant - and AMC gave profit projections in USD so has no 'it's a game' defence to even try to hide behind.

Offtopic, but genuinely curious about this particular projection.  Any elaboration available?

[Peter Lambert]

Really you have three logical ways forward and one of them involve anything as silly as "if we keep calling it a game we are exempt"

c) The SR model. It is illegal and so what.  SR doesn't try to pretend they are a "game" that is just an idiotic half step.  Make sure your servers, operator's identities, assets, and operations are sufficiently shielded that prosecution becomes difficulty if not impossible.  Note that the SR wouldn't exist if they tried to pretend US laws didn't apply, that is just dumb.  They embrace the illegality of their actions AND are very conscious that lots of agencies with lots of resources would love nothing more than to shut them down forever.  I am sure that provides a lot of motivation to ensure they are diligent in keeping themselves shielded.  Nobody on the SR has to check a box saying this is just a "indirect delivery game", everyone is a grown up and they know what is going on.

d) The MPEx model.  Protected server accessible only via proxy.  GPG signed orders on IRC.  High sign-up fee to keep away whiny bratty needy noob children.

Isn't the MPEx model just another implementation of the SR model?

[iCEBREAKER]

Isn't the MPEx model just another implementation of the SR model?

MPEx resembles SR on the server side (you don't get to know the IP).

But MPEx management operates more or less openly.  MP/PR are easier to find, or at least to identify, than DPR.

[tinus42]

Isn't the MPEx model just another implementation of the SR model?

MPEx resembles SR on the server side (you don't get to know the IP).

But MPEx management operates more or less openly.  MP/PR are easier to find, or at least to identify, than DPR.

It's not as if MP takes great lenghts hiding his name and face:



Though why he would ride a horse instead of a camel in Egypt is indeed a great mystery.  

[tinus42]

Actually the Gizeh pyramids are not far from the city limits of Cairo as this picture shows:



It's not as if one would have to trek for hours to reach the pyramids as the usual desert side pics suggest.

[crumbs]

Isn't the MPEx model just another implementation of the SR model?

MPEx resembles SR on the server side (you don't get to know the IP).

But MPEx management operates more or less openly.  MP/PR are easier to find, or at least to identify, than DPR.

It's not as if MP takes great lenghts hiding his name and face:



Though why he would ride a horse instead of a camel in Egypt is a great mystery. 

A better question would be why he's wearing an ill-fitting 3 piece suit in the freaking desert.  Photoshop?

Not a shop as far as i can tell, if it is, it's exceptionally well done.  As in exceptionally.  As far as camel vs. pone, wouldn't you pick a horse if not for camel's novelty?  The suit is a bit...  yeah.

[iCEBREAKER]

Isn't the MPEx model just another implementation of the SR model?

MPEx resembles SR on the server side (you don't get to know the IP).

But MPEx management operates more or less openly.  MP/PR are easier to find, or at least to identify, than DPR.

It's not as if MP takes great lenghts hiding his name and face:



Though why he would ride a horse instead of a camel in Egypt is a great mystery.  

A better question would be why he's wearing an ill-fitting 3 piece suit in the freaking desert.  Photoshop?

He's riding a horse because that's the best way to get from Romania to Giza.  More scenic, girls like horses, etc.

The suit is for the Lulz of course.

[samson]

Actually the Gizeh pyramids are not far from the city limits of Cairo as this picture shows:



It's not as if one would have to trek for hours to reach the pyramids as the usual desert side pics suggest.

That's not Cairo, that's Giza.

[tinus42]

Actually the Gizeh pyramids are not far from the city limits of Cairo as this picture shows:



It's not as if one would have to trek for hours to reach the pyramids as the usual desert side pics suggest.

That's not Cairo, that's Giza.

Well it's practically Cairo. Only several miles away. For tourists from countries like the USA the distance is negligable. When there was a mall shooting in Alphen aan den Rijn some years ago American media called the town "an Amsterdam suburb". Even though it's located about 20 miles away.

[Cyberdyne]

Isn't the MPEx model just another implementation of the SR model?

MPEx resembles SR on the server side (you don't get to know the IP).

But MPEx management operates more or less openly.  MP/PR are easier to find, or at least to identify, than DPR.

It's not as if MP takes great lenghts hiding his name and face:



Though why he would ride a horse instead of a camel in Egypt is a great mystery. 

A better question would be why he's wearing an ill-fitting 3 piece suit in the freaking desert.  Photoshop?

Or "Why does he not wear sunglasses when his eyes are clearly struggling to stay open?"

[tinus42]

Or "Why does he not wear sunglasses when his eyes are clearly struggling to stay open?"

Maybe he forgot to bring them. Or lost them. It makes the picture more plausible. Squinting is what people do in bright sunlight when they have no sunglasses or proper headcovering.

[MPOE-PR]

Rather than try to naunce some terms like "profit" why not look at SEC case against BTCST.  Pretending something is a "game" is not a defense.  If it looks like a duck, and quacks like a duck, the courts are going to find that it is a duck.

Which is precisely why the game currency Bitcoin is going to stay a game currency: that's what it damned well is. Can shake that "formalism" quote all the way to Sunday, this isn't a formal matter in the least. Reasons barring Bitcoin from being a currency in the legal sense are purely functional, quite numerous and absolutely irreconcilable through formalism.

a) The MtGox model. becomes licensed and regulated.

The MtGox model is running a pretend exchange that's more like a fractional reserve scam, lying everywhere and eventually going to jail. You need better research, seriously now. (Yes there's a massive volume of wrong stuff in your post, I'm just picking a couple cause I'm not getting paid enough for the whole thing.)

[DeathAndTaxes]

Which is precisely why the game currency Bitcoin is going to stay a game currency: that's what it damned well is. Can shake that "formalism" quote all the way to Sunday, this isn't a formal matter in the least. Reasons barring Bitcoin from being a currency in the legal sense are purely functional, quite numerous and absolutely irreconcilable through formalism.

"Game currency" is no defense.  First Circuit court has already ruled that virtual shares issues by virtual companies existing only in virtual stock exchange solely for the purported reason of being a game for entertainment to still be investments.  Might want to read up on SEC v. SG, Ltd. The first circuit saw right through the sham of "it is only a game".  What matters is the intent of the participants.  I think one would find it pretty trivial to convince a jury that the public at large viewed any "asset buying games" as what they are investments.  Hell this very sub forum would provide sufficient proof.  It is impossible for an objective person to read the securities forum and believe the intent isn't for profit and instead is solely as entertainment in a game.

From SEC vs SG Ltd.  
http://studentorgs.law.smu.edu/Science-and-Technology-Law-Review/Articles/Summer-2005/Tippett.aspx

SG argued that “the virtual shares were part of a fantasy investment game created for the personal entertainment of Internet users, and therefore, those shares do not implicate the federal securities laws.” 23 The SEC countered by stating that substance ought to prevail over form, and that merely labeling a website a game should not negate the applicability of the securities laws. 24The district court agreed with the defendant and granted the motion to dismiss, stating, “the virtual shares were a clearly marked and defined game, lacking a business context.”25 The SEC appealed immediately.26  This appeal hinged on whether the district court erred in ruling that transactions in the “privileged company’s” shares did not constitute transactions in securities as a matter of law. 27 The First Circuit looked to the definition of an investment contract as a security, as defined under the three pronged test set forth by the Supreme Court in Howey. 28After applying the elements of the Howeytest and rejecting the  rationale behind the district court’s decision, the First Circuit reversed the dismissal order and remanded the case for trial. 29 The district court had created a distinction between “commercial dealings” and “games,” finding that the former were covered by federal securities law and the latter were not. The First Circuit rejected such a distinction, noting that “as long as the three-pronged Howeytest is satisfied, the instrument must be classified as an investment contract.” 30 It is immaterial whether an instrument is labeled as a serious commercial venture or a game, as the securities acts were enacted to encompass virtually any instrument that might be sold as an investment. There is no categorical exception for games.31

As a personal note I disagree with the court's decision in SG for a number of reasons but to pretend that "it's isn't a security because .... game" is just naive and dishonest.  It isn't an open and shut case but intent matters.  When asset holders are listing real assets, generating real world profits, and passing those as dividends to shareholders, and you have this entire forum dedicated to analyzing various securities, their risks, potential profits, etc it would be pretty hard to convince a jury that this is all a game solely for entertainment.  By all accounts SG's operation was more like a casino then a true free market of assets and the courts still ruled against them. If SG Ltd failed in that defense then you honestly think other asset exchanges which have listings more bound to the real world then SG's "companies" which were totally fictional entities not having assets, cashflow, or profits will be more successful.  Maybe they will but they will need a defense a lot stronger than "it is a game currency. period.".

[MPOE-PR]

it is going to get interesting.  looking at the macro picture, this in reality is bad news for US growth.

from a commerce and growth perspective, the current US legal system is really holding back a lot on innovation in how business is done, so that the Federal govt can maintain relevance in a world where it will become less relevant

Indeed.

I doubt that it will take that long for AMC/VMC/AM/Ken Slaughter to get a visit from the folks with black suits and subpoenas.

The problem with this opinion is that it has no downside.

Science, contrary to this mechanism, works by creating propositions that are falsifiable, which is to say that can be proven wrong. Then they're tested, and usually proven wrong.

Propositions that can never be proven false are a waste of time, unless you're here to propose marriage to us or something.

Much of the reason no one has been prosecuted by the SEC up until now is because the SEC has never done it before.  Organizational inertia is a major factor in government.  Now that the path has been blazed

Hold your horses, they might overturn your armchair at this rate!

No path has been blazed, the SEC venue shopped for what they think is going to be an easy hick court to slip some stuff under the rug. Suppose it turns out they get ambushed and slaughtered there. Suppose they played right into the hands of superior strategists. What then?

Though why he would ride a horse instead of a camel in Egypt is indeed a great mystery.

MP sez: "Because horses I know how to ride. Camels not so much."

Or "Why does he not wear sunglasses when his eyes are clearly struggling to stay open?"

How often have you seen people on horseback with sunglasses on? Guess why not? Guess what the question says about you?

Maybe he forgot to bring them.

See above eh.

"Game currency" is no defense.  First Circuit court has already ruled that virtual shares issues by virtual companies existing only in virtual stock exchange solely for the purported reason of being a game for entertainment to still be investments.

That is an utter misrepresentation of the Stock Generation case, and a good illustration of why it's a good idea to actually hire counsel rather then rely on some sort of "enlightened diy" where you take the most scary construction possible on anything you half read. The salient point in that case was that while 19 of the 20 purported investments were presented as gambling by the operators, the 20th was in fact presented as an investment. The court did not challenge and in fact affirmed the absolute protection games have from being incorporated into reality. The court did not challenge and in fact affirmed the SEC's absolute domain to regulate such investments as are part of reality.

Of particular concern is that your caselist contains cases sorted in what appears to be a descending order of [Internet] fame rather than a descending order of relevance. This would be worrisome if you actually had anything to do with this entire thing called "Bitcoin in court".

Note before someone gets hung up on "money" as outlined in SEC complaint upthread many cases subsequent to Howey have affirmed that money is anything of value.  In prior cases even goods or services have met the first prong of the definition.  One such example was a ponzi scheme involving gold bullion instead of dollars.

Spare me the bullion, find one with Monopoly dollars in it. Or maple leaves. Or other such things of "value". Again: that the court is free of formalism works both ways. Substantially, Bitcoin is not money, and a formalist approach to value does not save the proposal to regulate every basketball card trading club in Punjab under the SEC.

PS. What's dishonest is to make a post and then delete it/substantially change it. If you don't trust yourself to express what you really think on any topic on the first pass, write everything on a notepad and post it a week later or whatever. I am responding to your original because it is a lot more informative than the weasely stuff you replaced it with. For the record, this is exactly how reputations are broken.

[freedomno1]

Once in a while I do enjoy a Trilema article good points it doesn't matter a damn what language we use its where the money is if the US wants to be bigots about it then the English speakers will move to Canada ha-ha.
The future of Bitcoin regulation.

[360SECONDS]

What do you think about the chances they will charge everything on BTCT as illigal investment offerings?

I think they are pretty good, actually.  From the attendant Investor Alert:

"the fraud may also involve an unregistered offering or trading platform"

and, here's the real kicker:

"Any investment in securities in the United states remains subject to the jurisdiction of the SEC regardless of whether the investment is made in U.S. dollars or a virtual currency. In particular, individuals selling investments are typically subject to federal or state licensing requirements."

I have, of course, counseled my clients on this point for some time.

Attention Unregistered Exchanges, Perpetual Mining Bonds (PMBs), REITs, and other members of the Bitcoin investment space: The SEC has explicitly indicated its intention to apply the already-existing laws to your security.  You may be selling securities in violation of the Securities Laws.

these clowns have a tuff enough time reasoning with forum fannies let alone when the real pigs come after them! (= lol

[360SECONDS]

A bit of advice for non-U.S. entities that have offered and dealt with the U.S. citizens:

Whatever you do make sure that you return to the investor at least the original nominal value of the investment. Or that you can return the original nominal value to all the investors.

As far as I know, in the history of S.E.C. there wasn't a case pursued or prosecuted that didn't involve at least a nominal loss of value (denominated in whatever units).

Please check out the recent case of SatoshiDice and its recent "sale to the undisclosed investors". It is a kind of "ultimate defense". Faced with limited resources S.E.C. (and others) will not spend the energy to pursue a case where there isn't a clear loss or wrongdoing to be shown.

If you are capable of returning the funds received from the U.S.-based investors you have nothing to worry besides a stern cease-and-desist letter from S.E.C. or your local government agency that cooperates with the S.E.C.

IANAL, but I ate many lunches with them.

dude bitcoin is anonymous dd game coin if you do it right there is zero connection and as long as you are preoared to lose all whats the big deal? =) ha

[crumbs]

...
Spare me the bullion, find one with Monopoly dollars in it. Or maple leaves. Or other such things of "value". Again: that the court is free of formalism works both ways. Substantially, Bitcoin is not money, and a formalist approach to value does not save the proposal to regulate every basketball card trading club in Punjab under the SEC.
...

Tcherepnin v. Knight, 389 U. S. 332, 389 U. S. 336 (1967) (in interpreting the term "security," "form should be disregarded for substance and the emphasis should be on economic reality"). Congress' purpose in enacting the securities laws was to regulate investments, in whatever form they are made and by whatever name they are called.

Edit:  Today you're making the "PR" part seem like a real, tedious job.

[stslimited]

why are you guys collectively targeting the exchanges?

Why are MPOE and Burnside trying to justify their next move as if it matters for them.

ALL OF THE LIABILITY RESTS ON THE INDIVIDUALS AND COMPANIES IN AMERICA ISSUING SECURITIES.

So burnside, the fact you are running an exchange isn't the issue. It is the issuance of securities BY THOSE INDIVIDUAL COMPANIES, and thats not YOUR issue.


Burnside, you aren't the only exchange registered in a foreign country with servers (physical or cloud hosted) in the United States, chill out. I mean, if you run the pass through for BTC-Trading, then you need to address that

It has nothing to do with people playing your site's "game" or anything. The exchanges aren't the one exposed to liability, I mean unless you think you qualify as a broker (which you might, and might not)

I heard you were guys were talking to "a lawyer" but I think you'll still get some wrong FUD information, unless I just point these above things out.

This "game" talk is practically inviting the SEC to make an example out of someone.

[burnside]

Which is precisely why the game currency Bitcoin is going to stay a game currency: that's what it damned well is. Can shake that "formalism" quote all the way to Sunday, this isn't a formal matter in the least. Reasons barring Bitcoin from being a currency in the legal sense are purely functional, quite numerous and absolutely irreconcilable through formalism.

"Game currency" is no defense.  First Circuit court has already ruled that virtual shares issues by virtual companies existing only in virtual stock exchange solely for the purported reason of being a game for entertainment to still be investments.  Might want to read up on SEC v. SG, Ltd. The first circuit saw right through the sham of "it is only a game".  What matters is the intent of the participants.  I think one would find it pretty trivial to convince a jury that the public at large viewed any "asset buying games" as what they are investments.  Hell this very sub forum would provide sufficient proof.  It is impossible for an objective person to read the securities forum and believe the intent isn't for profit and instead is solely as entertainment in a game.

From SEC vs SG Ltd.  
http://studentorgs.law.smu.edu/Science-and-Technology-Law-Review/Articles/Summer-2005/Tippett.aspx

SG argued that “the virtual shares were part of a fantasy investment game created for the personal entertainment of Internet users, and therefore, those shares do not implicate the federal securities laws.” 23 The SEC countered by stating that substance ought to prevail over form, and that merely labeling a website a game should not negate the applicability of the securities laws. 24The district court agreed with the defendant and granted the motion to dismiss, stating, “the virtual shares were a clearly marked and defined game, lacking a business context.”25 The SEC appealed immediately.26  This appeal hinged on whether the district court erred in ruling that transactions in the “privileged company’s” shares did not constitute transactions in securities as a matter of law. 27 The First Circuit looked to the definition of an investment contract as a security, as defined under the three pronged test set forth by the Supreme Court in Howey. 28After applying the elements of the Howeytest and rejecting the  rationale behind the district court’s decision, the First Circuit reversed the dismissal order and remanded the case for trial. 29 The district court had created a distinction between “commercial dealings” and “games,” finding that the former were covered by federal securities law and the latter were not. The First Circuit rejected such a distinction, noting that “as long as the three-pronged Howeytest is satisfied, the instrument must be classified as an investment contract.” 30 It is immaterial whether an instrument is labeled as a serious commercial venture or a game, as the securities acts were enacted to encompass virtually any instrument that might be sold as an investment. There is no categorical exception for games.31

As a personal note I disagree with the court's decision in SG for a number of reasons but to pretend that "it's isn't a security because .... game" is just naive and dishonest.  It isn't an open and shut case but intent matters.  When asset holders are listing real assets, generating real world profits, and passing those as dividends to shareholders, and you have this entire forum dedicated to analyzing various securities, their risks, potential profits, etc it would be pretty hard to convince a jury that this is all a game solely for entertainment.  By all accounts SG's operation was more like a casino then a true free market of assets and the courts still ruled against them. If SG Ltd failed in that defense then you honestly think other asset exchanges which have listings more bound to the real world then SG's "companies" which were totally fictional entities not having assets, cashflow, or profits will be more successful.  Maybe they will but they will need a defense a lot stronger than "it is a game currency. period.".

I read through the entire article.  There are many parallels to where we are today.

Ultimately however, they were in court because they committed fraud using USD, making promises that they could not keep.  Read the "Operation" section on the page here: http://en.wikipedia.org/wiki/Stock_Generation  ... They basically outright stole people's USD.

- BTC-TC does not steal USD or BTC in ANY way, shape, or form.
- BTC-TC does not commit fraud.  (though the issuers might!)
- BTC-TC makes NO promises of guaranteed returns.  
- With the exception of the LTC-GLOBAL shares, which are BTC Trading Corp's liability, the Howey test does not apply to the exchange directly, it applies to the issuers using the exchange.

The first prong of the Howey test may or may not apply to bitcoin.  (is bitcoin "money"?  in Australia and many parts of the world it explicitly IS NOT.  In the US it has not been decided in court, but FinCEN is saying they consider it money and it will thus end up in court sooner rather than later.)

Subsequent prongs of the Howey test almost certainly apply.



It's been a day or so since I've posted in here and some may be wondering where BTC-TC stands with things.

- BTC-TC will not be closing it's doors to US citizens.  US citizens using the site are not doing anything wrong and the issues around investing in assets from the various issuers is better addressed on a per-issuer basis.  For instance, a fully registered and compliant issuer should be able to have unfettered access to the entire US population, whereas an issuer that has not properly registered their company puts themselves at risk and thus we would hope would close off access to the riskier markets.  (note that this registration takes many forms depending on where you are located.)
- BTC-TC will be adapting it's ToS and wording on the site to be clearer and to avoid words that imply regulation where there is not.  For example, calling something a stock implies a share of a regulated, registered company, when in fact that may not truly be the case.  These changes will be made over time as we work things out with the help of legal representation.
- BTC-TC will be building a set of tools to assist issuers in maintaining compliance with securities law internationally.  Initially this means that we will be giving issuers the ability to solicit (or not solicit) investment on a per-country basis.  Eventually we could also facilitate validation and filtering of accredited investors versus non-accredited investors.

Cheers.

[stslimited]

Which is precisely why the game currency Bitcoin is going to stay a game currency: that's what it damned well is. Can shake that "formalism" quote all the way to Sunday, this isn't a formal matter in the least. Reasons barring Bitcoin from being a currency in the legal sense are purely functional, quite numerous and absolutely irreconcilable through formalism.

"Game currency" is no defense.  First Circuit court has already ruled that virtual shares issues by virtual companies existing only in virtual stock exchange solely for the purported reason of being a game for entertainment to still be investments.  Might want to read up on SEC v. SG, Ltd. The first circuit saw right through the sham of "it is only a game".  What matters is the intent of the participants.  I think one would find it pretty trivial to convince a jury that the public at large viewed any "asset buying games" as what they are investments.  Hell this very sub forum would provide sufficient proof.  It is impossible for an objective person to read the securities forum and believe the intent isn't for profit and instead is solely as entertainment in a game.

From SEC vs SG Ltd.  
http://studentorgs.law.smu.edu/Science-and-Technology-Law-Review/Articles/Summer-2005/Tippett.aspx

SG argued that “the virtual shares were part of a fantasy investment game created for the personal entertainment of Internet users, and therefore, those shares do not implicate the federal securities laws.” 23 The SEC countered by stating that substance ought to prevail over form, and that merely labeling a website a game should not negate the applicability of the securities laws. 24The district court agreed with the defendant and granted the motion to dismiss, stating, “the virtual shares were a clearly marked and defined game, lacking a business context.”25 The SEC appealed immediately.26  This appeal hinged on whether the district court erred in ruling that transactions in the “privileged company’s” shares did not constitute transactions in securities as a matter of law. 27 The First Circuit looked to the definition of an investment contract as a security, as defined under the three pronged test set forth by the Supreme Court in Howey. 28After applying the elements of the Howeytest and rejecting the  rationale behind the district court’s decision, the First Circuit reversed the dismissal order and remanded the case for trial. 29 The district court had created a distinction between “commercial dealings” and “games,” finding that the former were covered by federal securities law and the latter were not. The First Circuit rejected such a distinction, noting that “as long as the three-pronged Howeytest is satisfied, the instrument must be classified as an investment contract.” 30 It is immaterial whether an instrument is labeled as a serious commercial venture or a game, as the securities acts were enacted to encompass virtually any instrument that might be sold as an investment. There is no categorical exception for games.31

As a personal note I disagree with the court's decision in SG for a number of reasons but to pretend that "it's isn't a security because .... game" is just naive and dishonest.  It isn't an open and shut case but intent matters.  When asset holders are listing real assets, generating real world profits, and passing those as dividends to shareholders, and you have this entire forum dedicated to analyzing various securities, their risks, potential profits, etc it would be pretty hard to convince a jury that this is all a game solely for entertainment.  By all accounts SG's operation was more like a casino then a true free market of assets and the courts still ruled against them. If SG Ltd failed in that defense then you honestly think other asset exchanges which have listings more bound to the real world then SG's "companies" which were totally fictional entities not having assets, cashflow, or profits will be more successful.  Maybe they will but they will need a defense a lot stronger than "it is a game currency. period.".

I read through the entire article.  There are many parallels to where we are today.

Ultimately however, they were in court because they committed fraud using USD, making promises that they could not keep.  Read the "Operation" section on the page here: http://en.wikipedia.org/wiki/Stock_Generation  ... They basically outright stole people's USD.

- BTC-TC does not steal USD or BTC in ANY way, shape, or form.
- BTC-TC does not commit fraud.  (though the issuers might!)
- BTC-TC makes NO promises of guaranteed returns.  
- With the exception of the LTC-GLOBAL shares, which are BTC Trading Corp's liability, the Howey test does not apply to the exchange directly, it applies to the issuers using the exchange.

The first prong of the Howey test may or may not apply to bitcoin.  (is bitcoin "money"?  in Australia and many parts of the world it explicitly IS NOT.  In the US it has not been decided in court, but FinCEN is saying they consider it money and it will thus end up in court sooner rather than later.)

Subsequent prongs of the Howey test almost certainly apply.



It's been a day or so since I've posted in here and some may be wondering where BTC-TC stands with things.

- BTC-TC will not be closing it's doors to US citizens.  US citizens using the site are not doing anything wrong and the issues around investing in assets from the various issuers is better addressed on a per-issuer basis.  For instance, a fully registered and compliant issuer should be able to have unfettered access to the entire US population, whereas an issuer that has not properly registered their company puts themselves at risk and thus we would hope would close off access to the riskier markets.  (note that this registration takes many forms depending on where you are located.)
- BTC-TC will be adapting it's ToS and wording on the site to be clearer and to avoid words that imply regulation where there is not.  For example, calling something a stock implies a share of a regulated, registered company, when in fact that may not truly be the case.  These changes will be made over time as we work things out with the help of legal representation.
- BTC-TC will be building a set of tools to assist issuers in maintaining compliance with securities law internationally.  Initially this means that we will be giving issuers the ability to solicit (or not solicit) investment on a per-country basis.  Eventually we could also facilitate validation and filtering of accredited investors versus non-accredited investors.

Cheers.

great news: these features would make your exchange the most evolved exchange in the world, and the most advanced and accessible solution for raising capital

[AngelSky]

great news: these features would make your exchange the most evolved exchange in the world, and the most advanced and accessible solution for raising capital

Nice to see some people seeing further.

[Cyberdyne]

Or "Why does he not wear sunglasses when his eyes are clearly struggling to stay open?"

How often have you seen people on horseback with sunglasses on? Guess why not? Guess what the question says about you?

I have no idea what you're talking about. Do you just type random words and then go back later and see if they make sense or not?

[MPOE-PR]

I have no idea what I'm talking about so here's a pic of a mare riding it out.

Right.

[Lohoris]

For the lulz, linking Yahoo answers! Can I wear sunglasses while horseback riding?

[MPOE-PR]

For the lulz, linking Yahoo answers! Can I wear sunglasses while horseback riding?

Lol okay.

But seriously, apparently it's a significant injury risk. Or mebbe MP is just being conservative, in the XIXth century sense of the term.

[freedomno1]

For the lulz, linking Yahoo answers! Can I wear sunglasses while horseback riding?

Lol okay.

But seriously, apparently it's a significant injury risk. Or mebbe MP is just being conservative, in the XIXth century sense of the term.

Would have went with a cowboy hat on

[forensick]

http://blogs.marketwatch.com/thetell/2013/07/29/bitcoin-now-illegal-in-thailand/?mod=MW_home_latest_news maybe a little offtopic, but interesting

[MPOE-PR]

Would have went with a cowboy hat on

Apparently you got a post out of it.

[tinus42]

Would have went with a cowboy hat on

Apparently you got a post out of it.

Glad to have this big mystery solved.

[jedunnigan]

...it's about time we start working on decentralized share issuing https://www.youtube.com/watch?v=SH5OUtWMeZc

[MPOE-PR]

...it's about time we start working on decentralized share issuing https://www.youtube.com/watch?v=SH5OUtWMeZc

Nothing has changed re "decentralized" issuing since January.

And for that matter, nothing has changed with regard to the SEC's relevance to Bitcoin financials since 2012, the ignorant flailings of a magistrate judge in Bumfuck notwithstanding.

[narayan]

Erik Voorhees was wise to sell SDICE and pay back all the investors before the same thing happened to him.

[jedunnigan]

...it's about time we start working on decentralized share issuing https://www.youtube.com/watch?v=SH5OUtWMeZc

Nothing has changed re "decentralized" issuing since January.

The premise of that first article is flawed:

So, if I say no it’s not because of any other reason than simply the obvious : I do not believe them to be either useful or practical.

The discussion going on in this thread about limiting US-based investors is a perfect example of a good use case; right now (as far as I can tell) btct, bitfunder, etc... don't have extremely nuanced controls over who can buy shares and what they do with them after. **I may be wrong here, please correct me if so.

Here it would be relatively trivial to build a client that interfaced with the btc protocol but added an extra layer of complexity to participating users, namely one could generate classes of rules for their colored coins that would restrict IPs, among other options.

A person currently interested in owning some Bitcoin will either fire up a web wallet and receive some Bitcoins from a friend/counterparty, or will open MtGox and buy some bitcoins. Conspicuously absent from this either-or list is the downloading, over many days, through an inefficient process, of many Gigabytes of “blockchain”.

Did he really just use that excuse? If the investors trusted the company enough to invest in their shares they could also trust them to store the blockchain and run an SPV node on their client. No need to worry about the blockchain.

Seriously, start working on the BTC securities trade system of the future without ever having worked for MPEx, without having humbly presented your inept ideas to the most grandiose master Mircea Popescu (ie, me), without anything like that ? O, why, because you’re a special little trainflake of brilliance and genius who can ? Really ?

Glad he made it personal, lol. Not to mention one doesn't have to build a whole trading platform to issue shares. Companies could issue their own shares with their own little colored coin client, no need for top down expertise in the area of running an entire SE needed. They would only have to build in the rules relevant to their issuance. Diligent research would provide you with all the tools you need. At the end you open source the client so people can trust your work.

It is conceivable that someone could build a model for this, and when a company wished to issue shares, they would modify the conditions, much like the process in creating an alt cryptocurrency.

Go tell the average finance person that any security trade on either side will have to be held an unspecified interval, of no less than five or so minutes and possibly as lengthy as an hour or more... In fact, people double spend securities all the time, it is called short selling. No big deal.  

I feel like he isn't thinking outside the box here. If the central issuer is being trusted and participants have been verified, just lower the number of confirmations. Stipulations could be built in to said color coin to allow for short selling I imagine as well, but again not my expertise I am just musing here.

Even supposing you can somehow implement this so only crosses, not all transactions end up in the blockchainix, the problem of “what do we do in five years” looms.

Again, if off-chain/micropayment solutions would not work to minimize bloat, you could just fork the chain and run your own party as long as the code is OS and people can see what is going on.

And for that matter, nothing has changed with regard to the SEC's relevance to Bitcoin financials since 2012, the ignorant flailings of a magistrate judge in Bumfuck notwithstanding.

They are withstanding, though. Not to mention their argument about the 'issuer', which I admit is a clever reading of the law, will not hold up in court. As we saw with FinCEN guidence earlier this year, they made a stipulation for the issuer problem and just did a side step around it. This will most likely happen with the SEC as well.

I won't bother mentioning the fact that the article is very old, and fails to look at precedents set in the past that make similar arguments, namely that it is not money and that calling it as such would stifle video game developers and the like. I think those court cases were even mentioned in here.


edit: on second thought i may be making too many presumptions with my analysis. i dont know how easy/hard this would be to do in reality, so take what i have said with a grain of salt.

[ErebusBat]

Erik Voorhees was wise to sell SDICE and pay back all the investors before the same thing happened to him.

FYI that would necessarily devoid him of any responsibility.  If I started a casino then sold it to jimmy that I still broke the law and profited from the crime and could still be prosecuted.

[DeathAndTaxes]

Erik Voorhees was wise to sell SDICE and pay back all the investors before the same thing happened to him.

FYI that would necessarily devoid him of any responsibility.  If I started a casino then sold it to jimmy that I still broke the law and profited from the crime and could still be prosecuted.

In theory but in reality no smoke less chance of a fire.

The chances of a prosecution go down (especially over time) if the operation is wrapped up and there is no complaint.  While yes if the staute of limitations is 7 years they could wait until 2021 and prosecute him them but that probably isn't going to happen.  This is the government we are talking about.  There is always some new dumbass to go after which is still in the news and seen as a "bigger deal".

[ErebusBat]

Erik Voorhees was wise to sell SDICE and pay back all the investors before the same thing happened to him.

FYI that would necessarily devoid him of any responsibility.  If I started a casino then sold it to jimmy that I still broke the law and profited from the crime and could still be prosecuted.

In theory but in reality no smoke less chance of a fire.

The chances of a prosecution go down (especially over time) if the operation is wrapped up and there is no complaint.  While yes if the staute of limitations is 7 years they could wait until 2021 and prosecute him them but that probably isn't going to happen.  This is the government we are talking about.  There is always some new dumbass to go after which is still in the news and seen as a "bigger deal".

This is true...  however assume that Erik gets nabed for something else.  They can use it to stack charges.

But I agree that he is most likely ok.

[kingcrimson]

EV doesn't even live in the US, they can't touch him

[wachtwoord]

EV doesn't even live in the US, they can't touch him

Just like Kim Schmidt?

[Peter Lambert]

EV doesn't even live in the US, they can't touch him

Tell that to all the innocent civilians killed by drones over the past few years.

[MPOE-PR]

The discussion going on in this thread about limiting US-based investors is a perfect example of a good use case;

I fail to grasp how you imagine implementing some sort of p2p exchange attempt is going to resolve or even allow limiting users by geographical accident.

Here it would be relatively trivial to build a client that interfaced with the btc protocol but added an extra layer of complexity

And also relatively trivial to bypass. What are you on about?!

Did he really just use that excuse? If the investors trusted the company enough to invest in their shares they could also trust them to store the blockchain and run an SPV node on their client. No need to worry about the blockchain.

Then by your standards MPEx already is a p2p exchange. Problem solved, go use it.

It is conceivable that someone could build a model for this, and when a company wished to issue shares, they would modify the conditions, much like the process in creating an alt cryptocurrency.

Everything is conceivable. The point of the article is that what you "coinceive" isn't worth two shits, because that's not what the game is. We're not ALL a bunch of stoners hanging about "conceiving" fucking "ideas". Does this get through at all?

I feel like he isn't thinking outside the box here.

Srsly now.

MP doesn't think "outside the box". MP tells you where the box you should be thinking in is. If you fail to follow that you lose, and if you don't believe so go ahead and convince yourself. The entire forum pretty much consists of the life stories of people who verified this point for their own needs so far.

They are withstanding, though. Not to mention their argument about the 'issuer', which I admit is a clever reading of the law, will not hold up in court. As we saw with FinCEN guidence earlier this year, they made a stipulation for the issuer problem and just did a side step around it. This will most likely happen with the SEC as well.

Nobody cares what US regulatory agencies say, outside of the people working for those very agencies. This is what happens when a state goes rogue.

Let me drive this point home with a number of illustrations. Clapper vs Amnesty International:

Before the process Solicitor General Donald B. Verrilli Jr. denied that a ruling the U.S. governments favor would immunize the surveillance program from constitutional challenges. "That contention is misplaced," Verrilli wrote in a brier. "Others may be able to establish standing even if respondents cannot. As respondents recognize, the government must provide advance notice of its intent to use information obtained or derived from" the surveillance authorized by the 2008 law "against a person in judicial or administrative proceedings and that person may challenge the underlying surveillance."[8] The USCC then stated in its ruling: "If the government intends to use or disclose information obtained or derived from" surveillance authorized by the 2008 law "in judicial or administrative proceedings, it must provide advance notice of its intent, and the affected person may challenge the lawfulness of the acquisition."

The opposite of Verrilli told the Supreme Court happened since then in actual criminal prosecutions. Federal prosecutors, apparently unaware of his representations, have refused to make the promised disclosures. In a prosecution in Federal District Court in Fort Lauderdale, Fla., against two brothers accused of plotting to bomb targets in New York, the government has said it plans to use information gathered under the Foreign Intelligence Surveillance Act of 1978, or FISA, which authorized individual warrants. But prosecutors have refused to say whether the government obtained those individual warrants based on information derived from the 2008 law, which allows programmatic surveillance. Prosecutors in Chicago have taken the same approach in a prosecution of teenager accused of plotting to blow up a bar.

Hedges vs Obama:

In this hearing, Obama's attorneys refused to assure the court, when questioned, that the NDAA's provision -- one that permits reporters and others who have not committed crimes to be detained without trial -- has not been applied by the US government anywhere in the world -- AFTER Judge Forrest's injunction.

Obamacare:

The White House argued on Friday that the individual mandate at the heart of Obamacare is a penalty, not a tax, contradicting the Supreme Court's 5-4 ruling a day earlier upholding the historic health care law.

The US administration cannot be taken at its word, and that includes the opinions of its administrative courts. (Here's a hint: Mazzant is a magistrate judge, not an actual judge, as magistrature is an Article I tribunal in the US, as opposed to actual courts, which are Article III tribunals).

tl;dr: Nobody cares what the Soviets say, or what they misrepresent the law into saying. This is equally true whether we're in the 1980s CCCP or in the 2010s USSA.

edit: on second thought i may be making too many presumptions with my analysis. i dont know how easy/hard this would be to do in reality, so take what i have said with a grain of salt.

So if you don't know, then why are you talking?

Erik Voorhees was wise to sell SDICE and pay back all the investors before the same thing happened to him.

FYI that would necessarily devoid him of any responsibility.  If I started a casino then sold it to jimmy that I still broke the law and profited from the crime and could still be prosecuted.

In theory but in reality no smoke less chance of a fire.

The chances of a prosecution go down (especially over time) if the operation is wrapped up and there is no complaint.  While yes if the staute of limitations is 7 years they could wait until 2021 and prosecute him them but that probably isn't going to happen.  This is the government we are talking about.  There is always some new dumbass to go after which is still in the news and seen as a "bigger deal".

There's two kinds of people in this world, of which arguably only one kind actually is people.

Consider your own case, rather than the distant one of Erik, as similar as it may be. You had a business, you were damned good at it, you were doing something useful and being appreciated by your peers for it.

Then one day you shuttered the whole thing, out of fear of your own government. Not because you were doing something wrong, not because what you were doing wasn't worth doing, but simply because you live in a country which terrorizes its citizens as a matter of common policy (and would try its darndest to terrorize foreign nationals, too, in the hopes they may respond in kind which then can be used as "proof" of the putative "terrorism" which the government "is defending" people from. By creating it, by doing it in the first place.) So what do you have now? As much gin at The Chestnut Tree as you can stand? Well ain't that something!

Do you see anything wrong with the picture? Sure, you don't want to go to jail. I have news for you, Gerald: you're already in jail. This is what jail is, this is what jail means, this is what it feels like. You're already there. Whether you move from the large jail cell hosting everyone else you know to one of the smaller cells isn't even up to you, because, again, this is what jail is. When your keepers decide to move you they will move you, and that decision has absolutely nothing to do with you. Sure, they'll represent it otherwise, especially if they may extract amusement out of you by doing so, much like a cat will play with a captured mouse. Go ahead, argue with me, explain how wrong I am and how great it all is. Make our day, mine and theirs equally, as that's the one bridge that unites the free people and the gaolers of the world: their equal contempt for that other kind of people.

нe coздáй cвoю coбcтвeннyю тюpьмy.

[narayan]

I want to make a MPEx account just because of that post. Kudos.

Initially, I was a n00b. I thought you were crazy, a lunatic, the "village idiot" that keeps on rambling.

I thought you're obnoxious. Stupid. And annoying. I disregarded everything you said.

As time went on and history was in the making, I realized that you're nearly always right.

Many others don't seem to appreciate your opinion, judgement or wisdom. But that's okay, because they're sticking their head in the sand.

I laugh when someone accuses Mireca and Hannah being the same person with multiple personality disorder

[tinus42]

EV doesn't even live in the US, they can't touch him

Just like Kim Schmidt?

Kim Dotcom succesfully fought extradition charges in New Zealand.

http://www.theguardian.com/media-network/partner-zone-infosecurity/kim-dotcom-wins-round-extradition

He'll do wise not to travel to any country that extradites people to the US though.

[jedunnigan]

I fail to grasp how you imagine implementing some sort of p2p exchange attempt is going to resolve or even allow limiting users by geographical accident.

That's because I gave no real substantive details.

edit: on second thought i may be making too many presumptions with my analysis. i dont know how easy/hard this would be to do in reality, so take what i have said with a grain of salt.

So if you don't know, then why are you talking?

Lol, thank you for the thoughtful post. I edited at the end because I realized my words wouldn't hold weight. Again, they were just musings. Trying to put words on the page see if I can begin formulating substance from an idea.

You make good points I won't bother getting dirty over each statement because you are right for the ones that count. If you don't want to believe in the possibility of a p2p exchange that is certainly fine with me, I won't stop you. Especially after reading this:

MP doesn't think "outside the box". MP tells you where the box you should be thinking in is. If you fail to follow that you lose, and if you don't believe so go ahead and convince yourself. The entire forum pretty much consists of the life stories of people who verified this point for their own needs so far.

[MPOE-PR]

Trying to put words on the page see if I can begin formulating substance from an idea.

Nothing wrong with that in principle, but there's always the consideration of context. If you whimsically muse about how women are on average shorter than men at some women's lib convention you might end up with a riot on your hands. Even though women actually are shorter than men.

Granted, on the Internet context is always a mess, so what can you do.

I want to make a MPEx account just because of that post. Kudos.

Initially, I was a n00b. I thought you were crazy, a lunatic, the "village idiot" that keeps on rambling.

I thought you're obnoxious. Stupid. And annoying. I disregarded everything you said.

As time went on and history was in the making, I realized that you're nearly always right.

Many others don't seem to appreciate your opinion, judgement or wisdom. But that's okay, because they're sticking their head in the sand.

I laugh when someone accuses Mireca and Hannah being the same person with multiple personality disorder

Kinda how it goes for the people that are paying attention.

[nubbins]

Do you see anything wrong with the picture? Sure, you don't want to go to jail. I have news for you, Gerald: you're already in jail. This is what jail is, this is what jail means, this is what it feels like. You're already there. Whether you move from the large jail cell hosting everyone else you know to one of the smaller cells isn't even up to you, because, again, this is what jail is. When your keepers decide to move you they will move you, and that decision has absolutely nothing to do with you. Sure, they'll represent it otherwise, especially if they may extract amusement out of you by doing so, much like a cat will play with a captured mouse. Go ahead, argue with me, explain how wrong I am and how great it all is. Make our day, mine and theirs equally, as that's the one bridge that unites the free people and the gaolers of the world: their equal contempt for that other kind of people.

нe coздáй cвoю coбcтвeннyю тюpьмy.

[wachtwoord]

EV doesn't even live in the US, they can't touch him

Just like Kim Schmidt?

Kim Dotcom succesfully fought extradition charges in New Zealand.

http://www.theguardian.com/media-network/partner-zone-infosecurity/kim-dotcom-wins-round-extradition

He'll do wise not to travel to any country that extradites people to the US though.

They stole all his property though and lost millions.

[tinus42]

EV doesn't even live in the US, they can't touch him

Just like Kim Schmidt?

Kim Dotcom succesfully fought extradition charges in New Zealand.

http://www.theguardian.com/media-network/partner-zone-infosecurity/kim-dotcom-wins-round-extradition

He'll do wise not to travel to any country that extradites people to the US though.

They stole all his property though and lost millions.

AFAIK he still has his villa and still has millions. He staged a fake FBI raid when he launched MEGA. That must have cost him a large amount of money. Of course all his assets which he held in the US are seized.

[wachtwoord]

EV doesn't even live in the US, they can't touch him

Just like Kim Schmidt?

Kim Dotcom succesfully fought extradition charges in New Zealand.

http://www.theguardian.com/media-network/partner-zone-infosecurity/kim-dotcom-wins-round-extradition

He'll do wise not to travel to any country that extradites people to the US though.

They stole all his property though and lost millions.

AFAIK he still has his villa and still has millions. He staged a fake FBI raid when he launched MEGA. That must have cost him a large amount of money. Of course all his assets which he held in the US are seized.

He lost a lot due to confiscation, much much more than he still has.

[tinus42]

EV doesn't even live in the US, they can't touch him

Just like Kim Schmidt?

Kim Dotcom succesfully fought extradition charges in New Zealand.

http://www.theguardian.com/media-network/partner-zone-infosecurity/kim-dotcom-wins-round-extradition

He'll do wise not to travel to any country that extradites people to the US though.

They stole all his property though and lost millions.

AFAIK he still has his villa and still has millions. He staged a fake FBI raid when he launched MEGA. That must have cost him a large amount of money. Of course all his assets which he held in the US are seized.

He lost a lot due to confiscation, much much more than he still has.

I wouldn't mind having what he still has. And since he has a knack for business he'll soon recoup his losses with the money he has left to invest.

[wachtwoord]

EV doesn't even live in the US, they can't touch him

Just like Kim Schmidt?

Kim Dotcom succesfully fought extradition charges in New Zealand.

http://www.theguardian.com/media-network/partner-zone-infosecurity/kim-dotcom-wins-round-extradition

He'll do wise not to travel to any country that extradites people to the US though.

They stole all his property though and lost millions.

AFAIK he still has his villa and still has millions. He staged a fake FBI raid when he launched MEGA. That must have cost him a large amount of money. Of course all his assets which he held in the US are seized.

He lost a lot due to confiscation, much much more than he still has.

I wouldn't mind having what he still has. And since he has a knack for business he'll soon recoup his losses with the money he has left to invest.

So not the point. You sound like those people who think it's okay to tax those that earn more than average to death because "they can afford it". Right ...

[tinus42]

EV doesn't even live in the US, they can't touch him

Just like Kim Schmidt?

Kim Dotcom succesfully fought extradition charges in New Zealand.

http://www.theguardian.com/media-network/partner-zone-infosecurity/kim-dotcom-wins-round-extradition

He'll do wise not to travel to any country that extradites people to the US though.

They stole all his property though and lost millions.

AFAIK he still has his villa and still has millions. He staged a fake FBI raid when he launched MEGA. That must have cost him a large amount of money. Of course all his assets which he held in the US are seized.

He lost a lot due to confiscation, much much more than he still has.

I wouldn't mind having what he still has. And since he has a knack for business he'll soon recoup his losses with the money he has left to invest.

So not the point. You sound like those people who think it's okay to tax those that earn more than average to death because "they can afford it". Right ...

I just say that he will do well. Not that it's right what the US did to him. Far from that... 

[MPOE-PR]

EV doesn't even live in the US, they can't touch him

Just like Kim Schmidt?

Kim Dotcom succesfully fought extradition charges in New Zealand.

http://www.theguardian.com/media-network/partner-zone-infosecurity/kim-dotcom-wins-round-extradition

He'll do wise not to travel to any country that extradites people to the US though.

They stole all his property though and lost millions.

Fortunately that's not nearly so easy to do with Bitcoin.

[wachtwoord]

EV doesn't even live in the US, they can't touch him

Just like Kim Schmidt?

Kim Dotcom succesfully fought extradition charges in New Zealand.

http://www.theguardian.com/media-network/partner-zone-infosecurity/kim-dotcom-wins-round-extradition

He'll do wise not to travel to any country that extradites people to the US though.

They stole all his property though and lost millions.

Fortunately that's not nearly so easy to do with Bitcoin.

Indeed. Progress

[freedomno1]

Would have went with a cowboy hat on

Apparently you got a post out of it.

First time I made trilema I guess the right of passage is completed.

Regarding intelligence
By the modern standard our ancestors would be labeled idiotic.
Since we know this to not be true we just need to evaluate WISC and raven trends to determine that the cognitive gulf between the generations should be huge.

An example: Excerpt from What Is Intelligence: James R. Flynn

Between 1972 and 2002, US schoolchildren made no gain in their store of general information and only minimal vocabulary gains. Therefore, while today's children may learn to master pre-adult literature at a younger age, they are no better prepared for reading more demanding adult literature.

You cannot enjoy War and Peace if you have to run to the dictionary or encyclopedia every other paragraph. Take Kipling's poem

Over the Kremlin's serpentine pavement white
Strode five generals
Each simultaneously taking snuff
Which softness itself was yet the stuff
To leave the grand white neck no gash
Where a chain might snap

If you do not know what the Kremlin is, or what "serpentine" means, or that taking snuff involves using a snuff rag, you will hardly realize these generals caught the Czar unaware and strangled him.
But by age 17, their grandparents had caught up. And since current students are no better than their grandparents in terms of vocabulary and general information, the two generations at 17 are dead equal in their ability to read the adult literature expected of a senior in high school.

Simply put the acceleration of knowledge is dependent on external factors just as much as genetic ones.

Then again to quote a part from F.U. Money: Make As Much Money As You Damn Well Want And Live Your Life As You Damn Well Please by Dan The Man Lok
I'm sure MP would love this person since you two come from a common style and thread of thought.

Just the fact that you're reading this book means you have to be a little on the "weird" side. Why? Because according to the American Book-Sellers Association:

80% of Americans did not buy or read a book this year
70% of American adults have NOT been in a bookstore in the last five years
58% of American adults have never read a book after high-school

For fun here's a few for you save them useful retorts.

A penny Saved is Sill Just a Penny
 "Waste not, want not. Be tight, be frugal. Cut up your credit cards. Live below your means. Don't drink the latte coffee in the morning. Save that few dollars"

"A penny saved is a penny earned"

BULLSHIT. A penny saved is still just a fucking penny.

AREN'T RICH PEOPLE MEAN AND GREEDY?

If you actually meet some rich people you'll find out they give back. They give to charities and often have businesses that provide for communities in terms of providing jobs, as well as tax revenue for the city and state. How can they do it? Because they aren't thinking ONLY about themselves. Since they have more than enough they CAN think about other people and therefore make a difference in the lives of many. Rich people who use their wealth for the betterment of others can accomplish so much more, which brings even more success and happiness in other areas.
Think about it. Look at Bill Gates- now you can say whatever you want about him, that Microsoft is a monopoly, that he's greedy that he's "crushing small business" and taking over the world - whatever. I dare you to try to find anyone who has been MORE charitable than Bill Gates. In the years since Microsoft went public, Gates has donated billions of dollars to charities. I guess the only one more charitable would be Warren Buffet. He gives away 97% of his net worth - billions and billions if dollars! There are poor people who will STILL criticize these men. They feel justified in their stupidity by saying, "Hell, they're RICH! They SHOULD give their money away." So, instead, I want to know - what the HELL have poor people done for society lately? Nothing! Why? Because they can't afford to do anything! And yet they try to sit in judgement of those who ARE doing something because they CAN. People are fucking nuts. I've found that it's the same poor people, who sit in judgement of rich people like this, that have a welfare mentality. Poor people have a sense of entitlement. They think the world owes them something. They are selfish as hell. These same people wouldn't be caught dead reading a book like this, acquiring new knowledge and trying to improve their miserable lives. They're the same people who wouldn't set foot in a public library if their lives depended on it. (a place where they could LEARN SKILLS to improve their financial situation - for FREE!) They're living paycheck to paycheck, and yet they still would rather spend every last penny on junk food, video games, romance novels, cigarettes, and illegal drugs. They waste their time watching Jerry Springer reruns on TV and surfing porn on the internet. In fact, it's been my experience that it's poor people who have lied, cheated, and stolen throughout the years. They are the salesmen trying to sell me crap I don't need. The con-artists who try to rip me off when I go to get my car fixed. The lazy employees who surf the Internet and work as little as possible when the boss isn't looking. The Medicaid recipients who clog up emergency rooms when they have a slight case of the sniffles or a headache - and force healthcare costs to skyrocket for everyone else. Now, are ALL poor people lazy and are ALL rich people generous? Of course not. Just don't let the media brainwash you. Why not find out yourself what rich people are really like? Go and talk to some of them.

Motivated by a cowboy hat

[MPOE-PR]

By the modern standard our ancestors would be labeled idiotic.

Nope.

[bob131313]

80% of Americans did not buy or read a book this year
70% of American adults have NOT been in a bookstore in the last five years
58% of American adults have never read a book after high-school

Sigh.
Now no joy that lacks salt that is not dashed with pain.

[crumbs]

80% of Americans did not buy or read a book this year
70% of American adults have NOT been in a bookstore in the last five years
58% of American adults have never read a book after high-school
How many Americans without a high school diploma read a book that they have not purchased in the last 3 years?  Show your work.

[freedomno1]

By the modern standard our ancestors would be labeled idiotic.

Nope.

Misquote
Since we know this to not be true we just need to evaluate WISC and raven trends to determine that the cognitive gulf between the generations should be huge.

However I did find the intelligence data
Figure 1 Page 8
http://books.google.ca/books?id=qvBipuypYUkC&pg=PA8&lpg=PA8&dq=flynn+1998a+figure+3&source=bl&ots=dJaEVmX356&sig=c_HYFrJ-il6PAI3S1JvjfEPyjf8&hl=en&sa=X&ei=qkYJUpaKIq7cigKW54E4&ved=0CCwQ6AEwAA#v=onepage&q=flynn%201998a%20figure%203&f=false

Data: Read Page 9-10
Then you can continue to page 19 or read all
My quote on the US Schoolchildren is from page 20
Read the full excerpt ^_^
Honestly it keeps going for a good 20 + pages but I don't want to wall of text you guys

80% of Americans did not buy or read a book this year
70% of American adults have NOT been in a bookstore in the last five years
58% of American adults have never read a book after high-school
How many Americans without a high school diploma read a book that they have not purchased in the last 3 years?  Show your work.

Can't find the FU money source data aka the google book online
However I did find the places where they got the information from so saying my sources are completely incorrect would be erroneous but I will concede that this data seems to be a Pain to find
http://roborant42.appspot.com/show/entry/4021
http://buzzmachine.com/2006/07/21/the-book-on-books/
http://books.google.ca/books/about/F_U_Money.html?id=vdpePgAACAAJ&redir_esc=y
Candalmo, 2007 http://www.benthamscience.com/open/topolisj/articles/V003/1TOPOLISJ.pdf

A recent report of reading in the U.S. indicates that 80%
of American families did not buy or read a book “last year,”
and 70% of American adults have not been in a bookstore in
the last five years (Candalmo, 2007). An AP-Ipsos poll
conducted August 6-8, 2007 showed that 27% of adults
admitted they had not read a book “last year” (Fram, 2007).
 Polls between 1994 and 2006 also show that people aged
18-29 were less likely to report reading a book for pleasure
“yesterday” than were their elders, although the differences
are small on occasion. In 2006, however, not only were those
aged 18-29 slightly more likely to report reading a book for
pleasure “yesterday” than those between 30 and 44 years of
age (40% vs. 36%), young people were just as likely as those
over 45 to report reading a book.
 When we looked at the simultaneous impact of formal
schooling and age on book reading, we found that higher
education made less difference among the youngest age
grouping than among those aged 30 or older. In 2006, the
gap between the best educated young and their age-peers
who had never attended an institution of higher education
was 19 percentage points. Among those 65 or older, the
difference was 36 percentage points. The spread among
those aged 45 to 64 was 25 percentage points. Finally, the
difference among those aged 30 to 44 was 24 percentage
points.
 The Pew Research Center’s question asks about books
read “yesterday” that were not connected to schooling or
work. Perhaps young people who attend college or university
are so preoccupied with reading as part of their courses that
they do not have time to read for pleasure. In addition, since
reading books for pleasure inversely correlates with
performance in college/university (Astin, 1997, pp. 190-
191), students seeking better grades may prefer to “hit the
textbooks.”
 Before exculpating young people attending institutions of
higher learning, however, consider Bauerlein’s observation
that the average college student watches TV for 3 hours and
41 minutes per day (2006, p. B6). Given low levels of
knowledge of history, literature and the arts, politics, and
geography among young people with higher education
exposure (Bauerlein, 2006, pp. B7-B8; ISI, 2006, 2007,
2008), we are hard-pressed to believe that college students
spend much  time reading to acquire information on these
subjects.

...it's about time we start working on decentralized share issuing https://www.youtube.com/watch?v=SH5OUtWMeZc

Nothing has changed re "decentralized" issuing since January.

And for that matter, nothing has changed with regard to the SEC's relevance to Bitcoin financials since 2012, the ignorant flailings of a magistrate judge in Bumfuck notwithstanding.

https://bitcointalk.org/index.php?topic=96118.40

[Cyberdyne]

80% of Americans did not buy or read a book this year
70% of American adults have NOT been in a bookstore in the last five years
58% of American adults have never read a book after high-school

Sigh.
Now no joy that lacks salt that is not dashed with pain.

And what % of Americans have had their shoes shined this year?

Maybe people are reading electronic media.

I haven't bought a CD in about 15 years (or even patronized iTunes for that matter). Doesn't mean I forgot how to listen to music.

[nubbins]

80% of Americans did not buy or read a book this year
70% of American adults have NOT been in a bookstore in the last five years
58% of American adults have never read a book after high-school

Sigh.
Now no joy that lacks salt that is not dashed with pain.

And what % of Americans have had their shoes shined this year?

Maybe people are reading electronic media.

I haven't bought a CD in about 15 years (or even patronized iTunes for that matter). Doesn't mean I forgot how to listen to music.

I used to work with a brilliant programmer who once mentioned that he had never read a book cover-to-cover. Very intelligent, very well written; self-made man, huge house, etc. Didn't like to read.

Some people just don't read books.

[tinus42]

I used to work with a brilliant programmer who once mentioned that he had never read a book cover-to-cover. Very intelligent, very well written; self-made man, huge house, etc. Didn't like to read.

Some people just don't read books.

Not even a programming book? 

[nubbins]

I used to work with a brilliant programmer who once mentioned that he had never read a book cover-to-cover. Very intelligent, very well written; self-made man, huge house, etc. Didn't like to read.

Some people just don't read books.

Not even a programming book?  

Not cover-to-cover.  

(EDIT: besides, who reads programming books? Just google it!)

[freedomno1]

I used to work with a brilliant programmer who once mentioned that he had never read a book cover-to-cover. Very intelligent, very well written; self-made man, huge house, etc. Didn't like to read.

Some people just don't read books.

Not even a programming book?  

Not cover-to-cover.  

(EDIT: besides, who reads programming books? Just google it!)

A programming book technically is a book, I presume the statistic meant casual reading not reading your university books browsing through your work notes etc.
And also finished reading said book completely cover to cover not just skimming pages here and there even if it is a programming book and you just need a few lines.
This almost seems like it should go to Meta and screw with this statistic 90% chance it will be a lot higher than the average, just need to think about how to write the question in a bitcoin format to avoid an off-topic ^^.

But the key lines were one was measuring families one measured adults, and the other statistic included babies?

An AP-Ipsos poll
conducted August 6-8, 2007 showed that 27% of adults
admitted they had not read a book “last year” (Fram, 2007).

A recent report of reading in the U.S. indicates that 80%
of American families did not buy or read a book “last year,”

And 70% of American adults have not been in a bookstore in
the last five years (Candalmo, 2007).

[User705]

The whole "Bitcoin is money" ruling was likely a Texas court being glib to the feds.  The interesting issue might be if they rule that the stolen coins are stolen property and must be returned as in clawbacks.  Then use the blockchain to locate them and see if any of the large and public entities like the ones that were recently subpoenaed have them.  Now that would be interesting seeing that its over 700,000 coins involved and all are forever locatable and the entities that controlled those addresses are identifiable.

[DeathAndTaxes]

The whole "Bitcoin is money" ruling was likely a Texas court being glib to the feds.

It isn't a "texas court" in any meaningful sense of the word.  It is a federal judge in a federal court ruling on the applicability of federal law in a federal lawsuit brought forward by federal agents (SEC) which just so happens to be physically located in Texas.  There are over 800 judges in the federal court system with courthouses in more than a dozen states if for no other reason than practicality.

The ruling sided with the arguments of the federal agents.  The SEC claimed Mr. Shaver's operated a ponzi scheme and issued unlicensed securities in violation of federal law. It was the defense claim that Bitcoin is not money and thus Bitcoin contracts can't be securities and the SEC had no basis for the lawsuit.  

[User705]

Are you saying the judge lives in California and flies to Texas every now and again for work?  What I meant was he could've worded it in a number of different ways without actually putting to paper "bitcoin is money" and it's possible that his place of residency might have had something to do with it.

[NewLiberty]

An AP-Ipsos poll
conducted August 6-8, 2007 showed that 27% of adults
admitted they had not read a book “last year” (Fram, 2007).

A recent report of reading in the U.S. indicates that 80%
of American families did not buy or read a book “last year,”

And 70% of American adults have not been in a bookstore in
the last five years (Candalmo, 2007).

This is sad.
I <3 books.

[Peter Lambert]

And 70% of American adults have not been in a bookstore in
the last five years (Candalmo, 2007).

Does browsing Amazon count?

What about a library? I borrow books from my library much more frequently than I go to a bookstore.

[mrhelpful]

Despite what everyone says, BTC is still a un-licensed currency.

[freedomno1]

And 70% of American adults have not been in a bookstore in
the last five years (Candalmo, 2007).

Does browsing Amazon count?

What about a library? I borrow books from my library much more frequently than I go to a bookstore.

I assume it meant you went to the mall saw a bookstore and didn't enter it ;p

[ltcgaming]

Can I file a complaint with the SEC if I lose some NeoPoints on Neopets then ?