2013-12-12 Wired - U.S. Government Nastygram Shuts Down One-Man Bitcoin Mint

[The-Real-Link]

That's so bad to hear.  I've been championing Mike's stuff whenever I hear people ask about "how you get a physical coin" or something equivalent to that.  I don't happen to be an owner of any but it's been so incredibly tempting.  To hear of this is heartbreaking and I hope either he can find a way to continue or at least pass the hurdles before him. 

[1714061328]

1714061328

[Gabi]

I am wondering if that is legal or not.

Some months ago the bitcoin foundation received a letter saying that they were money transmitters and had to get the licenses or cease 'money transmitting'. Of course that was epic bullshit.
What if this case is the same? Just a bullshit letter without any sense? What is the 'bitcoin foundation' opinion about that? Are they doing something about that?

[other_side]

FinCEN is a regulator, so they are going to try to regulate whatever they can.  They sent Mike a letter to say, "we think we'd like to regulate you."  He has the option to say, "No thanks" and let them pursue legal action against him.  

Next comes FBI action. The main problem with all US based bitcoin businesses is that they don't want to share their profits and finance legal center to improve the situation.

[marcus_of_augustus]

FinCEN is a regulator, so they are going to try to regulate whatever they can.  They sent Mike a letter to say, "we think we'd like to regulate you."  He has the option to say, "No thanks" and let them pursue legal action against him.  

Next comes FBI action. The main problem with all US based bitcoin businesses is that they don't want to share their profits and finance legal center to improve the situation.

yes looks like the racketeers are moving into action ... despite all the protestations and appeals to 'working' with them, light regulations, etc. Same as it ever was ... next you'll be lining up to pay for BitLicenses that can be pulled magically out of their 2BitAsses.

[NewLiberty]

It might make sense for the physical wallet makers to get together on this issue.  We will all face it sooner or later.

Lots of ways to do it, shared legal costs, a joint-venture marketing LLC that holds the MSB registrations for each brand, etc.
No need to duplicate costs and fees paid unless absolutely necessary.

[DeathAndTaxes]

FinCEN is a regulator, so they are going to try to regulate whatever they can.  They sent Mike a letter to say, "we think we'd like to regulate you."  He has the option to say, "No thanks" and let them pursue legal action against him.  In my opinion, Mike could probably win a court case defending his non-MSB status, but it would be a landmark ruling and a huge expense to undertake.  

The issue is that the deck is stacked and the consequences are disproportionate to each side.  If FinCEN loses they say "hmm well now we know" and there is absolute no consequence.  Even the cost of the trial was simply paid for by taxpayers (including Mike indirectly). If Mike loses the "justice" system could take everything he owns, include his freedom for the next thirty years.  Not really worth it.

Imagine we played a game of poker and if you win I have to say "I was wrong" in public, if I win you get executed.  Now you are 80% sure you can beat me in poker, everyone says you have a very sold game.  Would you play?  How about if you were 99.9% sure?

[justusranvier]

If FinCEN loses they say "hmm well now we know" and there is absolute no consequence.  Even the cost of the trial was simply paid for by taxpayers (including Mike indirectly). If Mike loses they judicial system could take everything he owns, include his freedom for the next thirty years.  Not really worth it.

Imagine we played a game of poker and if you win I have to say "I was wrong" in public, if I win you get executed.  Now you are 80% sure you can beat me in poker, everyone says you have a very sold game.  Would you play?  How about if you were 99.9% sure?

Everybody thought I was exaggerating. "It's no problem - we'll talk to the regulators and do what it takes to become compliant like a good citizens and everything will be fine," they said.

Future Bitcoin services need to be run as if they are illegal enterprises, like Silk Road, even if what they are doing is apparently legal.

Why:

• Laws change.
• Regulations are vague and open-ended, and it's probably impossible to operate a business without accidentally violating one.
• Even if you do manage to operate without violating any rule law enforcement agencies do not always limit themselves to the letter of the law when deciding to begin an enforcement action.
• Governments are not the only threats to a successful business. Non-governmental organized crime is almost equally capable of extortion.

The solution is to run all services in the darknet, not tied to any physical location or legal jurisdiction, and without any explicit connection to a real-life identity.

[TheButterZone]

Hope Mike was prepared to go Snowden...

[NewLiberty]

FinCEN is a regulator, so they are going to try to regulate whatever they can.  They sent Mike a letter to say, "we think we'd like to regulate you."  He has the option to say, "No thanks" and let them pursue legal action against him.  

Next comes FBI action. The main problem with all US based bitcoin businesses is that they don't want to share their profits and finance legal center to improve the situation.

Spent how?

[TTBit]

So does Mike have the option to just quit producing casascius coins without further legal trouble from FinCEN, or is he going to need lawyers looking over his shoulder for the rest of his life?

[bryant.coleman]

So does Mike have the option to just quit producing casascius coins without further legal trouble from FinCEN, or is he going to need lawyers looking over his shoulder for the rest of his life?

I fear it is the second case. He probably will have to produce the list of all his buyers as well. Should have moved to Germany or Switzerland a long back.

[other_side]

Spent how?

1) Lawsuit against FINCEN to reclassify bitcoin as commodity/virtual goods.
2) Maintaining database of lawyers who are ready to specialize in bitcoin related cases.
EFF is a good example of similar organization.

[justusranvier]

1) Lawsuit against FINCEN to reclassify bitcoin as commodity/virtual goods.
2) Maintaining database of lawyers who will specialize in bitcoin related cases.
EFF is a good example of similar organization.

It's a waste of money that could be better used to relocate to a less-hostile country.

[NewLiberty]

1) Lawsuit against FINCEN to reclassify bitcoin as commodity/virtual goods.
2) Maintaining database of lawyers who will specialize in bitcoin related cases.
EFF is a good example of similar organization.

It's a waste of money that could be better used to relocate to a less-hostile country.

Both are simultaneously possible, and its not that expensive or hard to get started.  My last move was more than US$5K and it was only across town.

[casascius]

I haven't made a big deal out of this, but I too have registered as an MSB with FinCEN.

It's actually not that big of a deal.  You can do it online yourself at http://bsaefiling.fincen.treas.gov in 15 minutes, even registering yourself as an individual if you felt like it.  Making an account on BSA seemed easier than making a gmail account, and then filling out RMSB (Register Money Services Bureau) was only painful to just get the form working (uses some weird PDF-related plugin and seems to only work in IE7-10) but even still, after having filled out the second form, it was still far easier than applying for Obamacare.

As I understand it, it's the states that impose the licensing requirements, as though FinCEN just wants you to sign up and proactively give them a good feed of data as to who's moving money where and then they're happy (which comes chained to a due diligence burden of KYC since you can't really give "good" data without it).  My sense is that if FinCEN says I'm a money transmitter, the states need to either say in their eyes no I'm not, or let me license, before they declare "you knew you were a money transmitter, the feds even told you so, and you still didn't comply"... and there's 50 individual states.

[NewLiberty]

I haven't made a big deal out of this, but I too have registered as an MSB with FinCEN.

It's actually not that big of a deal.  You can do it online yourself at http://bsaefiling.fincen.treas.gov in 15 minutes, even registering yourself as an individual if you felt like it.  Making an account on BSA seemed easier than making a gmail account, and then filling out RMSB (Register Money Services Bureau) was only painful to just get the form working (uses some weird PDF-related plugin and seems to only work in IE7-10) but even still, after having filled out the second form, it was still far easier than applying for Obamacare.

As I understand it, it's the states that impose the licensing requirements, as though FinCEN just wants you to sign up and proactively give them a good feed of data as to who's moving money where and then they're happy (which comes chained to a due diligence burden of KYC since you can't really give "good" data without it).  My sense is that if FinCEN says I'm a money transmitter, the states need to either say in their eyes no I'm not, or let me license, before they declare "you knew you were a money transmitter, the feds even told you so, and you still didn't comply"... and there's 50 individual states.

Am not aware of what you might be doing that ought to trigger this MSB requirement, were they specific?  

Which is it according to them (if you don't mind sharing)?

(1) Currency dealer or exchanger.
(2) Check casher.
(3) Issuer of traveler's checks, money orders or stored value.
(4) Seller or redeemer of traveler's checks, money orders or stored value.
(5) Money transmitter.
(6) U.S. Postal Service.

[casascius]

Money transmitter

They were not specific as to my activity other than it was clear they recognized me as involved in virtual currency.

[prophetx]

So now if I make a physical cookie dough coin I am a money transmitter?

if it has a private key that gives access to virtual currency in  or on it perhaps using chocolate chips for encoding then yes you are a money transmitter.

[prophetx]

1) Lawsuit against FINCEN to reclassify bitcoin as commodity/virtual goods.
2) Maintaining database of lawyers who will specialize in bitcoin related cases.
EFF is a good example of similar organization.

It's a waste of money that could be better used to relocate to a less-hostile country.

Both are simultaneously possible, and its not that expensive or hard to get started.  My last move was more than US$5K and it was only across town.

when was the last time you all read a copy of the latest amended constitution...

if a bunch of dry folks can get alcohol banned via a constitutional amendment way before the internet and telephones existed why are you people afraid to do the same for something a lot more meaningful than not having a mickey of whiskey after church

this isn't rocket science ...  the tools to do fundraising and collecting signatures to get amendments passed at the state level are right there for you to use...

[casascius]

Would be interesting to "transmit" money through the mail using colored Legos.  The Legos themselves wouldn't be the money, just the colors as they are stacked.