[HAVELOCK] Crypto Financial (CFIG) Official Thread

[Crypto Financial]

Dear DeathAndTaxes,

We fall under FinCen Financial Institutions not MSB

http://www.fincen.gov/financial_institutions/di/index.html

Also, we will not transfer funds externally to an exchange at another Financial Institution. Both our Customers and Exchange Companies will hold Bank Accounts with our Company. A Fiduciary Financial service company regulated in Panama is already a "Licensed Money Transmitter" Registered with Swift and is able to handle IBAN transfers world-wide. Since we are only in one jurisdiction Panama, we are not required by FinCen or any other state in the U.S to be licensed their individually. You will be able to open a "Bank Account" with us. The same way you transfer funds between different Bank accounts you own now.  Remember when your Bank in the U.S transfers an International wire to your Bank now in Panama, it is transferred from your own bank account to your own bank account here in Panama. What you chose to do with those funds is up to you. The AML/KYC is solved. We know you sent a wire to your account with us from your U.S Bank account in your own name in the U.S.

The difference between our Financial Services and other Bitcoin Exchanges is that when you sent them fiat funds before, all of those funds were concentrated in one Bank account, the Bank account of the exchange. With us you are actually sending a wire to yourself. And if and when you choose to, you may transfer funds internally to an Exchange that also has an account with us, where you will be able to convert said fiat to crypto. The transfer will be instant, thereby eliminating the lag.

And as jedunnnigan commented while we were typing this, He is correct, we are held to much higher standards than an MSB.

[DeathAndTaxes]

They are trying to say this: If you are a bank you don't need to register as an MSB because you are an MSB and more. You have the licensing (under BSA) necessary to do these transactions and will be doing KYC/AML implicitly.

However they are NOT a bank, the BSA specifies what is a bank (including a foreign bank).  Being licensed by a foreign bank doesn't make one a bank.  I would be more comfortable if they had any legal counsel with expertise in US KYC/AML willing to vouch for their claims which so far appear to be bogus.  They will be offering money transmission to Americans without registering to FinCEN or being licensed by the states.  That is a recipe for disaster.


When they can't even explain it properly it is worrisome.  Like in the post above CFIG keeps trying to make the claim that because funds only go from one account to another one at the same bank it isn't money transmission.  By that "logic" PayPal isn't a money transmitter either.  This isn't to say they aren't licensed and 100% legit in Panama but if you accept funds form US customers then you have to play by FinCEN (and the states) rules.  They seem to think they don't.

[Crypto Financial]

Being licensed by a foreign bank doesn't make one a bank.  

We never stated anywhere that we are licensed by a bank???

We will be licensed by Panamanian Government Regulators which regulate all Financial Service providers in Panama.

We apologize for any confusion.

Thank you,

Crypto Financial

[MonkeyBear68]

They are trying to say this: If you are a bank you don't need to register as an MSB because you are an MSB and more. You have the licensing (under BSA) necessary to do these transactions and will be doing KYC/AML implicitly.

However they are NOT a bank, the BSA specifies that is a bank including a foreign bank.  Being licensed by a foreign bank doesn't make one a bank.  I would be more comfortable if they had any legal counsel with expertise in US KYC/AML willing to vouch for their claims.

When they can't even explain it properly it is worrisome.  Like in the post above CFIG keeps trying to make the claim that because funds only go from one account to another one at the same bank it isn't money transmission.  By that "logic" PayPal isn't a money transmitter either.

This isn't to say they aren't licensed and 100% legit in Panama but if you accept funds form US customers then you have to play by FinCEN (and the states) rules.  They seem to think they don't.

Their executive summary states they are a Licensed Financial Services company that will be able to offer A Private Individual/Corporate International Bank account (quoted below).

"By being a Licensed Financial Services company we will be able to offer our customers the following services:
1. A Private Individual/Corporate International Bank account
2. Support for more than 20 different Fiat Currencies; USD, JPY, EUR etc.
3. The option for a Visa Debit Card with the ability to withdraw funds at any ATM worldwide
4. Several open Exchange platforms to convert Fiat Currency to Crypto Currency"

Since all funds flowing to and from their financial services company are through KYC/AML accounts then that should satisfy FinCEN. If a large amount is transferred then FinCEN will know who transferred it and who to come after. How are the 1% in America able to offshore 32 trillion dollars by placing it in international bank accounts? Obviously Americans must be allowed to have an international bank account.

[MonkeyBear68]

You got rid of the spinning globe on the website.
The programmer half of me is indifferent, but the geographer half really liked it.

[Crypto Financial]

You got rid of the spinning globe on the website.
The programmer half of me is indifferent, but the geographer half really liked it.

Annnnd the Globe is back 

Now if we can only change your fiat to Bitcoins that fast, we would all be set.

[MonkeyBear68]

You got rid of the spinning globe on the website.
The programmer half of me is indifferent, but the geographer half really liked it.

Annnnd the Globe is back 

Now if we can only change your fiat to Bitcoins that fast, we would all be set.

You guys are awesome. I have confidence that your venture will be very positive for the Bitcoin community. 

[DeathAndTaxes]

Since all funds flowing to and from their financial services company are through KYC/AML accounts then that should satisfy FinCEN. If a large amount is transferred then FinCEN will know who transferred it and who to come after. How are the 1% in America able to offshore 32 trillion dollars by placing it in international bank accounts? Obviously Americans must be allowed to have an international bank account.

The BSA has no provision for "we followed some of the regs so we are ok and don't have to follow the rest".  An entity is  either compliant or not compliant.  MSB registering with FinCEN is one requirement for compliance.  This has nothing to do with foreign bank accounts.   It has to do with money transmission.  If an entity (CFIG) accepts funds from one person (client) and at the persons direction transfer those funds to another "person" (exchange account) it is money transmission.   It seems clear they intend to violate the BSA and do so intentionally.  Investors should be aware of that risk, the risk of seizure of company (investor) assets.  For a company who's stated goal is to be compliant and above board it is disappointing that they will not either be above board or compliant. 

[Duffer1]

Crypto Financial will generate two types of revenue streams.

1. Fees from operating as a Financial Services provider: In and Out wire fees, conversion from Fiat to Fiat EUR > USD > JPY, Debit card fees etc.. These fees will pay for the day to day operation and growth of the company and will continue to be reinvested in the company. We will try to keep those fees to a minimum as to allow for our services to be offered at the lowest rate possible for Crypto Currencies customers and merchants. As the volume of our Active customers rise the fees will be lowered and vice versa.

Please remember that our company will only serve Crypto Currency customers and not the general population that just wants to open an international Bank account. This is in essence a Financial Services company by Bitcoiners for Bitcoiners. As more and more financial institution are closing their doors to Bitcoin users, we would like to be the company that provides Financial Services support to the Bitcoin community.

2. All net income derived from Profit Sharing agreements with Software Exchanges Platforms and Direct Purchase companies will be paid in turn to the Shareholders. Some of that income will be reinvested in future integration cost with said Exchange companies.

So to sum it up, think of Crypto Financial as a global "Credit Union" Allowing any Bitcoin related business that needs to interact with Fiat work with us.

We have revised our Dividends Policy to reflect the fact that our shareholders through Havelock Investments will receive priority for paid dividends until the price of ฿0.15 is reached.


Thank you,

Crypto Financial

The next logical question is: Do the owners (non BTC shareholders) derive their profit from more revenue streams than the 20% BTC shareholders?

[Korbman]

However they are NOT a bank, the BSA specifies that is a bank including a foreign bank.  Being licensed by a foreign bank doesn't make one a bank.  I would be more comfortable if they had any legal counsel with expertise in US KYC/AML willing to vouch for their claims.

When they can't even explain it properly it is worrisome.  Like in the post above CFIG keeps trying to make the claim that because funds only go from one account to another one at the same bank it isn't money transmission.  By that "logic" PayPal isn't a money transmitter either.

This isn't to say they aren't licensed and 100% legit in Panama but if you accept funds form US customers then you have to play by FinCEN (and the states) rules.  They seem to think they don't.

Their executive summary states they are a Licensed Financial Services company that will be able to offer A Private Individual/Corporate International Bank account (quoted below).

"By being a Licensed Financial Services company we will be able to offer our customers the following services:
1. A Private Individual/Corporate International Bank account
2. Support for more than 20 different Fiat Currencies; USD, JPY, EUR etc.
3. The option for a Visa Debit Card with the ability to withdraw funds at any ATM worldwide
4. Several open Exchange platforms to convert Fiat Currency to Crypto Currency"

Since all funds flowing to and from their financial services company are through KYC/AML accounts then that should satisfy FinCEN. If a large amount is transferred then FinCEN will know who transferred it and who to come after. How are the 1% in America able to offshore 32 trillion dollars by placing it in international bank accounts? Obviously Americans must be allowed to have an international bank account.

@MonkeyBear68 - Are you, by any chance, looking for work? Judging by your post history, I feel I could utilize someone who doesn't ask questions and takes everything they read at face value. Or maybe you're from some utopia where trust is inherent, which in that case I offer you my condolences for joining Bitcoin

[bitfair]

The BSA has no provision for "we followed some of the regs so we are ok and don't have to follow the rest".  An entity is  either compliant or not compliant.  MSB registering with FinCEN is one requirement for compliance.  This has nothing to do with foreign bank accounts.   It has to do with money transmission.  If an entity (CFIG) accepts funds from one person (client) and at the persons direction transfer those funds to another "person" (exchange account) it is money transmission.   It seems clear they intend to violate the BSA and do so intentionally.  Investors should be aware of that risk, the risk of seizure of company (investor) assets.  For a company who's stated goal is to be compliant and above board it is disappointing that they will not either be above board or compliant.

I'm not an expert on US law, but I'm not sure your interpretation of the regulations is entirely correct. Searching for MSBs in a normal country, for example Sweden, in the MSB Registrant Seach Web Page (http://www.fincen.gov/financial_institutions/msb/msbstateselector.html) shows no results. However, I can assure you Sweden has banks and financial institutions that can receive money transfers from Americans.

Does that mean all Swedish banks and financial institutions in violation since they are not registered MSBs with Fincen? Is wiring money to Nordea illegal?

Given that there exist Swedish banks and financial institutions, I assume they are operating fully within the law - as such, there appears to be some way to legally operate banks and financial services in foreign countries without registering as an MSB.

Have I misunderstood something fundamental?

[DeathAndTaxes]

It will be my last post because honestly I don't care enough.  Maybe an investor who doesn't want their funds seized could ask someone like MSantori in legal forum.

However A BANK isn't an MSB because it is a BANK (there is an exclusion in MSB regs specifically for banks).   However it means banks, not partnering with a bank, not licensed by a bank but actually a bank.  If the Panamanian bank was offering this service they likely would be good but I don't really see how this is complex but .... CFIG isn't a bank so the bank exclusion doesn't apply.

You won't find any swedish banks on the MSB list but you also won't find any US banks either. 

Also merely accepting funds isn't money transmission otherwise all companies in the world would be money transmitters.  So every company in the world which accepts funds from a client isn't a MT and won't be on the MSB list.  The action of money transmission has a specific definition.  Paraphrased it involves a third party (CFIG) accepting funds from one person (client) and sending those funds to a second person (exchange).  Note exact definition is included above.  CFIG offering a service where customers can send funds to an account and at their direction CFIG will transfer them to an exchange so the exchange can credit the client's exchange account is the very definition of money transmission.

Since the company intends to accept US customers and they are NOT a bank and FinCEN has indicated foreign entities are subject to MSB regs I know this is crazy but I would kinda expect that in due diligence the company would have retained US counsel and got an opinion letter or if they are so sure FinCEN doesn't classify their activity as an MSB file for an administrative ruling.  If FinCEN says no and later says yes the administrative ruling is a "get our of jail and keep your money" card.  If nothing else it is cheap insurance.

I expected some realistic answers from CFIG not "we aren't a money transmitter despite doing the TEXTBOOK definition of money transmission involving US clients".  If they are that inept and investors victims are willing to accept anything and everything at face value I don't really see the point of going further.

If CFIG isn't a money transmitter then essentially nobody in the world is a money transmitter including PayPal and WU.

[MonkeyBear68]

However they are NOT a bank, the BSA specifies that is a bank including a foreign bank.  Being licensed by a foreign bank doesn't make one a bank.  I would be more comfortable if they had any legal counsel with expertise in US KYC/AML willing to vouch for their claims.

When they can't even explain it properly it is worrisome.  Like in the post above CFIG keeps trying to make the claim that because funds only go from one account to another one at the same bank it isn't money transmission.  By that "logic" PayPal isn't a money transmitter either.

This isn't to say they aren't licensed and 100% legit in Panama but if you accept funds form US customers then you have to play by FinCEN (and the states) rules.  They seem to think they don't.

Their executive summary states they are a Licensed Financial Services company that will be able to offer A Private Individual/Corporate International Bank account (quoted below).

"By being a Licensed Financial Services company we will be able to offer our customers the following services:
1. A Private Individual/Corporate International Bank account
2. Support for more than 20 different Fiat Currencies; USD, JPY, EUR etc.
3. The option for a Visa Debit Card with the ability to withdraw funds at any ATM worldwide
4. Several open Exchange platforms to convert Fiat Currency to Crypto Currency"

Since all funds flowing to and from their financial services company are through KYC/AML accounts then that should satisfy FinCEN. If a large amount is transferred then FinCEN will know who transferred it and who to come after. How are the 1% in America able to offshore 32 trillion dollars by placing it in international bank accounts? Obviously Americans must be allowed to have an international bank account.

@MonkeyBear68 - Are you, by any chance, looking for work? Judging by your post history, I feel I could utilize someone who doesn't ask questions and takes everything they read at face value. Or maybe you're from some utopia where trust is inherent, which in that case I offer you my condolences for joining Bitcoin

I tend to let others ask the questions and observe the answers. From the responses I do believe that Crypto Financial will set up a Financial Services company that will benefit the Bitcoin community. Compliance with FinCEN could present some hurdles, but there are 6.8 Billion people in the world that could potentially be served outside the US.

The guidance that FinCEN gave also suggested that miners be registered as MSB's, I do not think this has affected mining operations in the US or the value of mining shares much. There are several US government regulatory bodies that could pounce at any time using any number of laws; this has already happened a few times this year to a few companies including MtGox.

Crypto Financial has not made any outrageous claims such as 7% profit a week etc. They are open to new ideas and seem to genuinely want to provide good customer service. They state the regulatory environment is changing and that can affect their valuation among other things. The following is from their revised prospectus:

RISK FACTORS
You should carefully consider the following factors as well as other information contained in this prospectus before deciding to invest in shares of the virtual stock.
Our Operating Results May Fluctuate Significantly Due to Factors Which Are Not
Within Our Control
Not FDIC Insured • No Bank Guarantee • May Lose Value
Our quarterly operating results may fluctuate in the future based on a number of factors, many of which are not in our control. Crypto Currencies acceptance and rejection as a whole may affect our ability to offer our services. New regulations that are currently not part of the Crypto Currency realm may be signed into law. The value of Crypto Currencies has in the past and will in the future fluctuate significantly due to factors which are not within our control. Please understand those risk factors prior to purchasing any of our virtual shares.

They clearly explain there are many risk factors. I have dealt with Havelock Investments long enough to have trust in their assessment that this is not some sort of scheme. I have invested at my comfort level and encourage others to do the same.

[MonkeyBear68]

It will be my last post because honestly I don't care enough.  Maybe an investor who doesn't want their funds seized could ask someone like MSantori in legal forum.

However A BANK isn't an MSB because it is a BANK (there is an exclusion in MSB regs specifically for banks).   However it means banks, not partnering with a bank, not licensed by a bank but actually a bank.  If the Panamanian bank was offering this service they likely would be good but I don't really see how this is complex but .... CFIG isn't a bank so the bank exclusion doesn't apply.

You won't find any swedish banks on the MSB list but you also won't find any US banks either. 

Also merely accepting funds isn't money transmission otherwise all companies in the world would be money transmitters.  So every company in the world which accepts funds from a client isn't a MT and won't be on the MSB list.  The action of money transmission has a specific definition.  Paraphrased it involves a third party (CFIG) accepting funds from one person (client) and sending those funds to a second person (exchange).  Note exact definition is included above.  CFIG offering a service where customers can send funds to an account and at their direction CFIG will transfer them to an exchange so the exchange can credit the client's exchange account is the very definition of money transmission.

Since the company intends to accept US customers and they are NOT a bank and FinCEN has indicated foreign entities are subject to MSB regs I know this is crazy but I would kinda expect that in due diligence the company would have retained US counsel and got an opinion letter or if they are so sure FinCEN doesn't classify their activity as an MSB file for an administrative ruling.  If FinCEN says no and later says yes the administrative ruling is a "get our of jail and keep your money" card.  If nothing else it is cheap insurance.

I expected some realistic answers from CFIG not "we aren't a money transmitter despite doing the TEXTBOOK definition of money transmission involving US clients".  If they are that inept and investors victims are willing to accept anything and everything at face value I don't really see the point of going further.

If CFIG isn't a money transmitter then essentially nobody in the world is a money transmitter including PayPal and WU.

The FinCEN guidance also seems to indicate that bitcoin miners are transmitters. Please see red text from part c of FinCEN guidelines copied below.


"            c. De-Centralized Virtual Currencies

            A final type of convertible virtual currency activity involves a de-centralized convertible virtual currency (1) that has no central repository and no single administrator, and (2) that persons may obtain by their own computing or manufacturing effort.

            A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter. By contrast, a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter. In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency. "


The government regulations seem ambiguous enough that some have taken this to mean the exchange one sells the BTC on must be registered. There are still a lot of unknowns.

[canth]

Since all funds flowing to and from their financial services company are through KYC/AML accounts then that should satisfy FinCEN. If a large amount is transferred then FinCEN will know who transferred it and who to come after. How are the 1% in America able to offshore 32 trillion dollars by placing it in international bank accounts? Obviously Americans must be allowed to have an international bank account.

The BSA has no provision for "we followed some of the regs so we are ok and don't have to follow the rest".  An entity is  either compliant or not compliant.  MSB registering with FinCEN is one requirement for compliance.  This has nothing to do with foreign bank accounts.   It has to do with money transmission.  If an entity (CFIG) accepts funds from one person (client) and at the persons direction transfer those funds to another "person" (exchange account) it is money transmission.   It seems clear they intend to violate the BSA and do so intentionally.  Investors should be aware of that risk, the risk of seizure of company (investor) assets.  For a company who's stated goal is to be compliant and above board it is disappointing that they will not either be above board or compliant.

I am not a lawyer so someone please correct me, but here is a way that I see CFIG could partially comply with FinCEN MSB requirements and still be above board:

I agree that by definition, it appears that CFIG is operating as a MSB but there are different requirements for Federal and State laws.

1) Federal law requires that MSBs register with the Department of the Treasury by filling out form 107 and filing this electronically. http://www.fincen.gov/financial_institutions/msb/msb.registration.html I have been told that this is relatively straightforward and no/low cost.

2) The next hurdle for operating an MSB would be state laws, for which there are 47 states that have various requirements, costs and time involved to become fully compliant. However, is there a requirement for a foreign entity which has US customers to register and file at the state level? I would think not and that the individual states would have little recourse to target a foreign entity without US bank accounts, US personnel or US physical assets.

Feel free to shoot holes in this line of reasoning. For example, as I understand it MtGox's US subsidiary's dwolla account was targeted because they didn't file their MSB licenses properly with the federal requirements. If they had, this wouldn't have been as easy for federal regulators to seize their account.

[canth]

Lol, perhaps you missed the entire thread. These guys are trying to be above-board, as is reflected in their [supposed] backing by a Panamanian bank. As an extension of this you would assume they are trying to run a legit operation, so it's only fair I ask. Or perhaps you would prefer me to just assume one way or the other. That always ends well.

Regardless, what I think really shouldn't matter to you, as we should deduce our own judgments about these guys, so I'm curious as to why you really care what I think anyway? Not to mention you have no idea why I asked the question (as is very clear by your response) in the first place, so again, thanks for that worthless post!

To be clear, the reason I asked is because I want to start a dialogue with them. I assume they aren't and want to ask why.

+1
LOL

I'll take back the snarky tone, but no, I haven't missed anything in the thread. And quite honestly, no, I don't see any benefit for them registering with the SEC. You have your answer and dialogue from CFIG - can you enlighten me (us) as to why this would be a significant criteria?

[jedunnigan]

Lol, perhaps you missed the entire thread. These guys are trying to be above-board, as is reflected in their [supposed] backing by a Panamanian bank. As an extension of this you would assume they are trying to run a legit operation, so it's only fair I ask. Or perhaps you would prefer me to just assume one way or the other. That always ends well.

Regardless, what I think really shouldn't matter to you, as we should deduce our own judgments about these guys, so I'm curious as to why you really care what I think anyway? Not to mention you have no idea why I asked the question (as is very clear by your response) in the first place, so again, thanks for that worthless post!

To be clear, the reason I asked is because I want to start a dialogue with them. I assume they aren't and want to ask why.

+1
LOL

I'll take back the snarky tone, but no, I haven't missed anything in the thread. And quite honestly, no, I don't see any benefit for them registering with the SEC. You have your answer and dialogue from CFIG - can you enlighten me (us) as to why this would be a significant criteria?

Cool, I'll retract my dickishness too. The reason is mostly personal - I'm cofounder of a US-based Bitcoin business considering going public and I am just doing my due diligence, seeing if anyone has gone the extra step and registered with the SEC. I don't see it as a good or bad thing per se, I'm not for or against regulation, I just want to bring in the maximum number of investors in while protecting me and my employees from (potential) future prosecution.

If that means I have operate under Regulation S and not cater to US then so be it. I'd rather not be a fly-by-night operation. If these guys had in fact registered with the SEC it would have set a precedent for Bitcoin businesses (as far as I know), so it would have been nice to know IF I decided to register I wouldn't be the first one stepping in the door. I hope that answers your question.

edit:in the context of CFIG, full compliance with the SEC might bring in investors who wouldn't have invested otherwise (institutional investors, your average joe, etc...). Full compliance appears safer to gen pop then a fly by night op.

[kleeck]

What is the plan if all four tranches do not sell out? I couldn't seem to find any information regarding action in the event of a failed IPO.

Thanks!

[canth]

Cool, I'll retract my dickishness too. The reason is mostly personal - I'm cofounder of a US-based Bitcoin business considering going public and I am just doing my due diligence, seeing if anyone has gone the extra step and registered with the SEC. I don't see it as a good or bad thing per se, I'm not for or against regulation, I just want to bring in the maximum number of investors in while protecting me and my employees from (potential) future prosecution.

If that means I have operate under Regulation S and not cater to US then so be it. I'd rather not be a fly-by-night operation. If these guys had in fact registered with the SEC it would have set a precedent for Bitcoin businesses (as far as I know), so it would have been nice to know IF I decided to register I wouldn't be the first one stepping in the door. I hope that answers your question.

edit:in the context of CFIG, full compliance with the SEC might bring in investors who wouldn't have invested otherwise (institutional investors, your average joe, etc...). Full compliance appears safer to gen pop then a fly by night op.

Yeah, it seems like registering with the SEC, even for an exemption, would be providing more information than CFIG is willing to disclose. Not having the company officers disclosed to the public isn't exactly reassuring to typical institutional investors, but this isn't a typical investment and I'll give them the benefit of the doubt about local regulatory environments.

Personally I've invested a token amount - I'm not comfortable investing more at this point.

[MonkeyBear68]

What is the plan if all four tranches do not sell out? I couldn't seem to find any information regarding action in the event of a failed IPO.

Thanks!

Crypto Financial answered that much earlier in the postings on this thread. See the response given in the following post:

https://bitcointalk.org/index.php?topic=269191.msg2880035#msg2880035