Shit Hits the Fan for Dodgy Bitcoin Mining Companies

[Bitcoinorama]

After fraudulent information was 'leaked' to the Wall Strret Journal last week by a supposed ex-Lehman's bankster intent on deception to spin BS PR, one of the journalists duped is after blood...

Looks like now Bitcoin is seen in the US as a currency, corruption and fraud with special reference to the Bitcoin Mining genre mentioned here, is being taken very very seriously.

Note to mods; I believe this has everything to do with the 'Custom Hardware' child board and serves a warning to all those companies specifically out to defraud and manipulate Bitcointalk members as well as journalists.


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The Wall Street Journal
TECHNOLOGY
Updated August 11, 2013, 10:11 p.m. ET

Regulator Examines Bitcoin Practices
New York Issues Subpoenas to Firms Tied to Bitcoin.
By ROBIN SIDEL

New York's top banking regulator has issued subpoenas to roughly two dozen companies associated with bitcoin as part of a wide-ranging inquiry into the business practices of the fledgling virtual-currency industry, according to people familiar with the matter.

The subpoenas, from the New York Department of Financial Services, seek information on a range of topics, including antimoney-laundering programs, consumer-protection measures and investment strategies, according to the people..

Subpoenas were sent to firms backed by high-profile Bitcoin investors such as Cameron and Tyler Winklevoss.

The department, led by Benjamin Lawsky, also plans on Monday to issue a memo expressing concern that virtual-currency companies aren't complying with the state's money-transmission laws. As a result, the state is considering setting new guidelines that are specifically aimed at virtual currencies.

"We believe that—for a number of reasons—putting in place appropriate regulatory safeguards for virtual currencies will be beneficial to the long-term strength of the virtual-currency industry," wrote Mr. Lawsky in a draft of the memo reviewed by The Wall Street Journal.

Companies that received subpoenas include some of the best-known names in the nascent industry, including Coinbase Inc., BitInstant and Coinsetter.

Executives from Coinbase and BitInstant couldn't be reached for comment on Sunday. Jaron Lukasiewicz, chief executive of Coinsetter, said in an email that the information request is "an opportunity for companies in our space to open up a much needed dialogue with regulators."

He added, "They'll quickly find that most companies are working to legitimize Bitcoin and want to build bridges that help regulators understand and support these financial innovations."

The state agency also sent subpoenas to companies backed by high-profile Bitcoin investors, including venture capitalist Marc Andreessen, and twins Cameron and Tyler Winklevoss, who are best known for battling Mark Zuckerberg over ownership of Facebook Inc. FB -0.10% Mr. Andreessen and the Winklevoss brothers couldn't be reached for comment on Sunday.

Bitcoin, the best-known of a crop of virtual currencies, are created in a computer process called "mining." They also can be traded on a number of exchanges or swapped privately among users. Most bitcoin are traded on a Tokyo-based exchange called Mt. Gox, where one bitcoin was valued Friday at roughly $102.

A subpoena is a legal demand for information and doesn't signal wrongdoing by the recipient. The New York banking department sent the subpoenas late last week, according to the people familiar with the matter.

The subpoenas come amid heightened scrutiny from state and federal regulators into the world of virtual currencies. Because virtual currencies aren't backed by a central government like traditional ones are, regulators are worried they can be used for illegal activity or can violate laws involving money transmission.

Federal regulators earlier this year issued guidelines placing virtual-currency exchanges under the same comprehensive antimoney-laundering requirements as traditional money-transmission businesses such as Western Union Co.

Although a growing number of bitcoin exchanges have registered their businesses with the U.S. Treasury Department's Financial Crimes Enforcement Network, they have moved more slowly at the state level. In part, that is because the process of getting a license in each of the 48 states that require them is complicated and lengthy. In addition, states also typically require companies to put up a bond that could run as much as several million dollars.

New York has been one of a handful of states aggressively examining the industry. Mr. Lawsky has assembled a team to assess the issue and already sent a warning letter to BitInstant, a New York company that allows customers to buy and sell bitcoins.

"If virtual currencies remain a virtual Wild West for narcotraffickers and other criminals, that would not only threaten our country's national security, but also the very existence of the virtual currency industry as a legitimate business enterprise," according to the memo.

The round of subpoenas also are aimed at gleaning information about how the companies are dealing with individual investors who may be attracted to the novelty of virtual currencies, but may not be sophisticated enough to understand the risk associated with them.

Write to  Robin Sidel at robin.sidel@wsj.com

[mjb]

I am not happy with how Bitsyncom is treating customers either.

However, what makes you think that they were the source of the rumor last week? And are there any indications that the WSJ journalist is out for Bitsyncom's (or anyone else's) blood, apart from writing an IMO rather neutral article about Bitcoin regulation?

Please substantiate your claims!

[Bitcoinorama]

I am not happy with how Bitsyncom is treating customers either.

However, what makes you think that they were the source of the rumor last week? And are there any indications that the WSJ journalist is out for Bitsyncom's (or anyone else's) blood, apart from writing an IMO rather neutral article about Bitcoin regulation?

Please substantiate your claims!

C'mon man you don't hear a peep out of Bitsyncom for over a month and then there is a bombshell dropped that they've hooked up with an ex-Lehman's bankster to visit TSMC on the Tuesday, two days before the agreed meet.

You would have heard nothing from Bitsyncom unless people hadn't started collating damning evidence such as chips in hand a month earlier, circulating contact details and researching avenues of recourse.

Guess what they have secured funding, don't need help from the community anymore, have all their money and chips and had a meeting at TSMC in Amsterdam on Tuesday.

To top it off the journalist responsible for being manipulated and duped now suddenly drops mainstream finance to take an interest in Bitcoin scams and writes the above article.

Do you really need these dots connecting?!

Now the US formally recognised Bitcoin as a currency this past week, this has become a whole lot more serious and scamming people's Bitcoins and manipulating currency by delaying their products is the same a manipulating fiat and theft of cash. Basically it's not on, and you can't do it, and the evidence suggests it has taken place.

I previously have held nothing against Yifu and quite frankly loved his character until these photos started circulating of chips in Bitsyncom's possession a month earlier and mining equipment turning up blatantly used, dusty and pre configures to pools they were mining with. Yet Yifu has stated on record they don't mine themselves. His true character, business ethic and integrity now seems questionable. He's blatantly lied and been caught out. The customs hold up and threats seem like BS as well. He's provided no proof and has avoided addressing all the evidence to the contrary.

Substantiate you claim this isn't happening!

Now is the chance for balanced argument with evidence...

[mjb]

Bitcoinorama, your heart seems to be in the right place and many of your countless posts are informative, IMO. So I really do not want to get into a flame-war. Furthermore, I do not think you are a troll, otherwise I would have just put you on ignore and moved on.

That said, I take issue with the way this thread was opened.

Substantiate you claim this isn't happening!

Now is the chance for balanced argument with evidence...

This is not how it works! It was you to open this thread and cross-post the WSJ article together with your interpretation in all Avalon threads. So it is you who has to bring the on evidence (or if it is mere speculation and "connecting the dots", at least tone it down and do not cross-post it).

It is ironic that everyone is piling in on bashing the WSJ reporter because he posted rumors as fact yet many of the very same posters keep doing the same thing  on the forum day in day out.

I am aware that this forum is called bitcointalk and not bitcoinfacts (and should not be held to the same standard as the WSJ). Nevertheless, I would kindly ask to at least try to keep the S/N ratio up. Just look at what happened to the KnC thread - it basically degraded into useless, arbitrary chit-chat.

I will try to restrain myself from continuing posting in this thread because I have nothing more of substance to add.

[Bitcoinorama]

Bitcoinorama, your heart seems to be in the right place and many of your countless posts are informative, IMO. So I really do not want to get into a flame-war. Furthermore, I do not think you are a troll, otherwise I would have just put you on ignore and moved on.

That said, I take issue with the way this thread was opened.

Substantiate you claim this isn't happening!

Now is the chance for balanced argument with evidence...

This is not how it works! It was you to open this thread and cross-post the WSJ article together with your interpretation in all Avalon threads. So it is you who has to bring the on evidence (or if it is mere speculation and "connecting the dots", at least tone it down and do not cross-post it).

It is ironic that everyone is piling in on bashing the WSJ reporter because he posted rumors as fact yet many of the very same posters keep doing the same thing  on the forum day in day out.

I am aware that this forum is called bitcointalk and not bitcoinfacts (and should not be held to the same standard as the WSJ). Nevertheless, I would kindly ask to at least try to keep the S/N ratio up. Just look at what happened to the KnC thread - it basically degraded into useless, arbitrary chit-chat.

I will try to restrain myself from continuing posting in this thread because I have nothing more of substance to add.

Fair play, I'll remove it if you want. I just thought the whole thing was ironic that the same reporter duped last week should be sharing an interest in Bitcoin scams this week, and that this should encourage and motivate a bit more honesty and openness from current, last and future companies...

Companies need to understand it is no longer acceptable to deceive harmless virtual coins anymore, they will be held accountable.

The KnC thread has degenerated because there's really nothing to see currently, but fingers crossed in a month here should be something hopefully positive. In the mean time I probably should step back and get some fresh air.

[bit_wizard]

C'mon man you don't hear a peep out of Bitsyncom for over a month and then there is a bombshell dropped that they've hooked up with an ex-Lehman's bankster to visit TSMC on the Tuesday, two days before the agreed meet.

You would have heard nothing from Bitsyncom unless people hadn't started collating damning evidence such as chips in hand a month earlier, circulating contact details and researching avenues of recourse.

Guess what they have secured funding, don't need help from the community anymore, have all their money and chips and had a meeting at TSMC in Amsterdam on Tuesday.

To top it off the journalist responsible for being manipulated and duped now suddenly drops mainstream finance to take an interest in Bitcoin scams and writes the above article.

Do you really need these dots connecting?!

Now the US formally recognised Bitcoin as a currency this past week, this has become a whole lot more serious and scamming people's Bitcoins and manipulating currency by delaying their products is the same a manipulating fiat and theft of cash. Basically it's not on, and you can't do it, and the evidence suggests it has taken place.

I previously have held nothing against Yifu and quite frankly loved his character until these photos started circulating of chips in Bitsyncom's possession a month earlier and mining equipment turning up blatantly used, dusty and pre configures to pools they were mining with. Yet Yifu has stated on record they don't mine themselves. His true character, business ethic and integrity now seems questionable. He's blatantly lied and been caught out. The customs hold up and threats seem like BS as well. He's provided no proof and has avoided addressing all the evidence to the contrary.

Substantiate you claim this isn't happening!

Now is the chance for balanced argument with evidence...

Well said. And I feel this to be the hidden truth aswell.

Boycott Bitsyncom / Avalon! None of us know what else they have up their sleeves.

[-Redacted-]

They've already damaged the mining community and a number of promising business start-ups.  I don't care what their "gen-2" chips do, I will never order anything again that depends on Avalon in some fashion.  They've been added to my personal scammer-do-not-buy-from-ever again list along with BFL.

[reactor]

They've already damaged the mining community and a number of promising business start-ups.  I don't care what their "gen-2" chips do, I will never order anything again that depends on Avalon in some fashion.  They've been added to my personal scammer-do-not-buy-from-ever again list along with BFL.

The funny thing is that anyone with a sense of ethics will agree with you.  

The problem is there are plenty within the community who will happily buy from their Gen2 offering, if it ever happens, in hopes of being first out of the gate with fresh new gear, thus rewarding Avalon once again despite evidence of massive theft and fraud.

[Paladin69]

The department, led by Benjamin Lawsky, also plans on Monday to issue a memo expressing concern that virtual-currency companies aren't complying with the state's money-transmission laws. As a result, the state is considering setting new guidelines that are specifically aimed at virtual currencies.

So now hardware manufacturers must comply with money transmitter licenses?  That will jack up the mining hardware costs a lot.

"We believe that—for a number of reasons—putting in place appropriate regulatory safeguards for virtual currencies will be beneficial to the long-term strength of the virtual-currency industry," wrote Mr. Lawsky in a draft of the memo reviewed by The Wall Street Journal.

Something tells me Mr. Lawsky has interests related to Fiat.  Regulations & licensing will consolidate the Bitcoin ecosystem down to a few centralized, wealthy, old-money hands.  Done on purpose.

In part, that is because the process of getting a license in each of the 48 states that require them is complicated and lengthy. In addition, states also typically require companies to put up a bond that could run as much as several million dollars.

Gee, ya think?

New York has been one of a handful of states aggressively examining the industry.

Of course they are.  They don't want anything disrupting their ability to drink your milkshake.

"If virtual currencies remain a virtual Wild West for narcotraffickers and other criminals, that would not only threaten our country's national security, but also the very existence of the virtual currency industry as a legitimate business enterprise," according to the memo.

You're the ones threatening our national security you fucking assholes.  Go read the economics of alcohol prohibition you fuckwads.

[dropt]

Is it just me, or is not one line in that article talking about mining companies, or mining outside of that one generic statement?

Further, seems like quite a stretch to tie the motivation for the article to this one sub-forum.

[Operatr]

Is it just me, or is not one line in that article talking about mining companies, or mining in general for that matter?

Further, seems like quite a stretch to tie the motivation for the article to this one sub-forum.

I was just about to say the same thing. The only thing this will affect maybe are any entities that translate Bitcoin to fiat and vice versa in a proper currency exchange. Mining may feed those exchanges to an extent but they are a far cry from "money transmitters" and any related regulations.


I take it as a good sign though. First, they ignore you. Then they laugh at you. Then they fight you. They are starting to see that Bitcoin isn't just some fad or a joke now, and naturally want to kill it before it kills Wall Street and their entire global ponzi scheme.

However what this has to do with mining specifically is beyond me. The only consumer protection needed there is not being an idiot when it comes to making your hardware purchases.

[rammy2k2]

its the customers fault, because they like to pre-order .. if people would demand a in stock product, there would be no fraud ...

[Bitcoinorama]

Is it just me, or is not one line in that article talking about mining companies, or mining outside of that one generic statement?

Further, seems like quite a stretch to tie the motivation for the article to this one sub-forum.

http://www.bloomberg.com/news/2013-08-12/n-y-regulator-subpoenas-firms-over-bitcoin-crime-risks.html

In addition to BitInstant, Dwolla and Coinsetter, the regulator sent subpoenas to the following service providers: BitPay, Coinabul, Coinbase Inc., CoinLab, eCoin Cashier, Payward, Inc., TrustCash Holdings Inc. and ZipZap, the person said.

Butterfly Labs, a technology company, also received a subpoena, according to the person familiar with the matter.

[Trongersoll]

BFL? we can only hope. Then at least we'll know whether they are a scam or just really bad business men, without the speculation that runs rampant in this forum.

[Bicknellski]

They've already damaged the mining community and a number of promising business start-ups.  I don't care what their "gen-2" chips do, I will never order anything again that depends on Avalon in some fashion.  They've been added to my personal scammer-do-not-buy-from-ever again list along with BFL.

You said it brother... Let see how far BFL or Avalon get when people simply stop buying their late to market, overpriced and underperforming products. We are now able to pick and choose from other offerings that is a great thing and given the leaps ahead of BFL and Avalon the next generation producers are going it seems Avalon and BFL are pretty much losing out anyhow to much more powerful and efficient offerings.

[CoinHoarder]

They've already damaged the mining community and a number of promising business start-ups.  I don't care what their "gen-2" chips do, I will never order anything again that depends on Avalon in some fashion.  They've been added to my personal scammer-do-not-buy-from-ever again list along with BFL.

You said it brother... Let see how far BFL or Avalon get when people simply stop buying their late to market, overpriced and underperforming products. We are now able to pick and choose from other offerings that is a great thing and given the leaps ahead of BFL and Avalon the next generation producers are going it seems Avalon and BFL are pretty much losing out anyhow to much more powerful and efficient offerings.

+1 let them rot

(although I do hope someone wants to buy our Avalons for trade in purposes after I've used and abused them for a while.) 

[dropt]

http://passionforfreshideas.com/wp-content/uploads/2013/02/butterfly.jpg
http://www.dogbreedinfo.com/images22/LabradorRetrieversJakeHamletOthelloYellowBlackChocolate1.jpg
https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcQIRjP_2_gGWtGnwKeYYafiqLA0SUZc_ICCGaPzzMeM5JTsTmS6
http://southparkstudios-intl.mtvnimages.com/shared/sps/images/shows/southpark/vertical_video/import/season_08/sp_0805_04_v6.jpg?width=480

Hahah, thanks for that.  Most entertaining post I've seen here in ages.   

I only asked because the OP did not contain the fine details that the bloomberg link you shared does.  Thanks.