BitInstant CEO arrested by FBI

[alrachid]

Man, seems like there is always something shady going on.

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[empoweoqwj]

Man, seems like there is always something shady going on.

I bet this is the tip of the Silk Road iceberg. Take down the main man, pressure him to name names, the rest will be an ugly mess for a few years to come. Charlie Shrem won't be the last big name in the bitcoin community to be arrested.  The Feds love breaking up drug rings, good for their resumes. And SR was about an easy target as you could imagine. People using SR got told BTC was totally anonymous lol

[TheButterZone]

And all the people on SR who had nothing to do with trading drugs or any other "illegal" thing will be persecuted as "guilty by association", because GBA's not indefensible bullshit, at all!

[empoweoqwj]

And all the people on SR who had nothing to do with trading drugs or any other "illegal" thing will be persecuted as "guilty by association", because GBA's not indefensible bullshit, at all!

Remind me - what % of stuff sold on SR wasn't "illegal drugs"?

[TheButterZone]

>0%, while <0 fucks are given about the legal distinction, because all the BTC is going to be auctioned off in a completely above-board, non-crony fashion according to BurtW.

[empoweoqwj]

>0%, while <0 fucks are given about the legal distinction, because all the BTC is going to be auctioned off in a completely above-board, non-crony fashion according to BurtW.

Hey, that's the US government for you. Is it fair? No. Is it what they do? Yes. I don't think water-boarding people at secret locations was fair either but as they say in the States, "what are you gonna do"?

[TheButterZone]

>0%, while <0 fucks are given about the legal distinction, because all the BTC is going to be auctioned off in a completely above-board, non-crony fashion according to BurtW.

Hey, that's the US government for you. Is it fair? No. Is it what they do? Yes. I don't think water-boarding people at secret locations was fair either but as they say in the States, "what are you gonna do"?

Continue to lose the cold civil war by default, until .gov decides it's democide time and takes it hot.

[PrintMule]

This forum search capabilities are the worst.

Heard these news, rushed to find more info on the forums, and what do I get? 2012 threads? Had to use advanced search, which is not perfect. In the end I just stumbled on this topic in "unread" section.

I guess most of early adopters have used SR in one way or another, and some % of those early adopter became big. Me, myself, first heard about bitcoin in some thread about SR on 4chan, not the other way around.

[TheButterZone]

We can inform Juries of their right & duty to Nullify laws. That's what we can do.
Please read http://fija.org/ You probably already agree with it anyway, because you think logically.
We just need to spread the idea, and i know bitcoiners are great at that

May need to send out a remote-controlled robot in our place around courthouses... 1 person arrested is 1 too many.

[Bitco]

I wounder why he thought this was smart. I guess he has 25 years now to think about that.

Laundering drug money in the USA... That is almost as dumb as running silk road form the USA.

How exactly did he launder money?  Shrem is accused of having customers who were probably junkies.  It was dumb, yes, but it doesn't seem to meet the legal definition of money laundering.

What if I want a TV and my neighbor offers to sell me his?  Nothing wrong with that, right?  What if I think that my neighbor is a pothead?  Does my paying for the TV suddenly become money laundering?  What if my neighbor spends that money on drugs?

The case against BTCKing is even more of a stretch.  What he is accused of doing is taking orders and passing them along to BitInstant.  The customers paid BitInstant without him touching the money.  Merely arranging a deal between buyer and seller is money laundering?  Wow.

[empoweoqwj]

I wounder why he thought this was smart. I guess he has 25 years now to think about that.

Laundering drug money in the USA... That is almost as dumb as running silk road form the USA.

How exactly did he launder money?  Shrem is accused of having customers who were probably junkies.  It was dumb, yes, but it doesn't seem to meet the legal definition of money laundering.

What if I want a TV and my neighbor offers to sell me his?  Nothing wrong with that, right?  What if I think that my neighbor is a pothead?  Does my paying for the TV suddenly become money laundering?  What if my neighbor spends that money on drugs?

The case against BTCKing is even more of a stretch.  What he is accused of doing is taking orders and passing them along to BitInstant.  The customers paid BitInstant without him touching the money.  Merely arranging a deal between buyer and seller is money laundering?  Wow.

And you know what the FBI found in his inbox do you? Nothing to do with selling TV's is my best guess.

[murraypaul]

so the CEO got arrested for supplying BTC to someone who does legal cash sales?   I don't get it.

Try actually reading the complaint.

[Bitco]

And you know what the FBI found in his inbox do you? Nothing to do with selling TV's is my best guess.

It's an analogy.  Of course he was selling bitcoins and not TVs.

What if he was selling laundry detergent?  There have been cases where laundry detergent was traded for drugs.  Is it illegal to sell soap?  What if they customer wants 10 boxes of soap?

[empoweoqwj]

And you know what the FBI found in his inbox do you? Nothing to do with selling TV's is my best guess.

It's an analogy.  Of course he was selling bitcoins and not TVs.

What if he was selling laundry detergent?  There have been cases where laundry detergent was traded for drugs.  Is it illegal to sell soap?  What if they customer wants 10 boxes of soap?

How much soap was sold at SR? Please be serious here ...... it was a place to sell illegal drugs, not soap.

[Kluge]

This forum search capabilities are the worst.

Heard these news, rushed to find more info on the forums, and what do I get? 2012 threads? Had to use advanced search, which is not perfect. In the end I just stumbled on this topic in "unread" section.

I guess most of early adopters have used SR in one way or another, and some % of those early adopter became big. Me, myself, first heard about bitcoin in some thread about SR on 4chan, not the other way around.

That's roughly what happened with me. I didn't take Bitcoin seriously or bother reading much on it until I learned about Silk Road (I think it was actually Chuck Schumer, just recently at the NY conference, who made the video of himself browsing in disgust). It was a pretty significant proof-of-concept. That's when I said "wow, people are actually doing something NEW with this." Before that, it was just some goofy online currency weirdos used. I'd guess it's similar with all the people being introduced to Bitcoin and hearing that it has marginally lower fees... if you either trust someone with your money or spend weeks downloading a blockchain after more weeks researching it.

If that was proof-of-concept, I'd call this proof-of-failure... or at least an alert that there's still a good ways to go -- not with BTC (there've been some pretty awesome developments lately... don't think anyone can complain about a lack of innovation in the privacy dep't), but communications. They're a good bit dependant on each other. If your communications aren't secure, it doesn't really matter how obfuscatable Bitcoin transactions are. I used PGP in the early days of BTC, but it's too much of a hassle unless you're only talking to a small handful of people each week. Frankly, stuff like selling someone coins he claims to resell on a "black market" wouldn't even cross my mind to encrypt, though I don't run a $multi-million MSB. The Windows GPA software is terrible and crashes pretty frequently. Very user-unfriendly.... built-in email tools are pretty decent if you're willing to spend a few minutes reading up on it and downloading the software. GPG's not totally secure by itself, though, even if the user-friendliness problem were solved... but now that I think about it, I can't really recall a story where government put in much effort trying to break cryptography (well, trying to break INTO encrypted documents, anyway). I'm not sure I've ever seen the words "government brute-forced" together. I guess they generally still use crusty old tactics, which is still quite effective.

[Kluge]

And you know what the FBI found in his inbox do you? Nothing to do with selling TV's is my best guess.

It's an analogy.  Of course he was selling bitcoins and not TVs.

What if he was selling laundry detergent?  There have been cases where laundry detergent was traded for drugs.  Is it illegal to sell soap?  What if they customer wants 10 boxes of soap?

How much soap was sold at SR? Please be serious here ...... it was a place to sell illegal drugs, not soap.

IIRC, they did sell a good bit of gardening equipment, from grow-lights to shovels. Maybe someone sold some Lava soap or something there.

(or the shovels were moved to their weapons site... I think they were sold in gardening, though, which was an actual category, at least a couple years ago or whenever it was I last visited.)

[empoweoqwj]

And you know what the FBI found in his inbox do you? Nothing to do with selling TV's is my best guess.

It's an analogy.  Of course he was selling bitcoins and not TVs.

What if he was selling laundry detergent?  There have been cases where laundry detergent was traded for drugs.  Is it illegal to sell soap?  What if they customer wants 10 boxes of soap?

How much soap was sold at SR? Please be serious here ...... it was a place to sell illegal drugs, not soap.

IIRC, they did sell a good bit of gardening equipment, from grow-lights to shovels. Maybe someone sold some Lava soap or something there.

(or the shovels were moved to their weapons site... I think they were sold in gardening, though, which was an actual category, at least a couple years ago or whenever it was I last visited.)

lol. yeah, IIRC is right. I missed the soap category.

[Bitco]

lol. yeah, IIRC is right. I missed the soap category.

It's a reference to this:

http://nymag.com/news/features/tide-detergent-drugs-2013-1/

[Bitco]

so the CEO got arrested for supplying BTC to someone who does legal cash sales?   I don't get it.

Try actually reading the complaint.

Assuming what is alleged in the complaint is true, it's not clear whether what Faiella did was illegal.  Selling bitcoins is not illegal per se. Does it become illegal when done in a venue known for illegal drugs?

The case against Shrem is a bit more complicated.  He's charged with willfully failing to report Faiella to the feds.  Was that illegal?  That depends on whether Shrem thought what Faiella was doing was illegal.

How a judge and jury would view this conduct is uncertain, but history suggests it would not be looked upon favorably.  Two decades ago, Gary Tucker went to prison for selling grow lights.  Maybe a present-day jury would be more sympathetic to Shrem, and maybe not.

[Bitco]

Shrems lawyer told Shrem that what he was doing was illegal. He ignored good advice. Shrem can not even play ignorant here. He did it after he was told not to do it. Like it or not this case will not go well for Shrem in court. They would not have placed charges unless they were 99.999% sure they were going to win. Sounds like they have all the stuff they need and I bet this never goes to trial. I doubt he gets 25 years however as this is not exactly the most serious case for money laundering ever, however if what the Feds say is true, clearly a crime in the USA.

When did Shrem's lawyer tell Shrem that what he was doing was illegal?  If Shrem's lawyer did say that, then did Shrem have to report himself to the feds under 31 USC 5318(g)?  Or is he protected from being a witness against himself under the Fifth Amendment?

While I agree that the case might not go well for Shrem, it isn't quite as open-and-shut as you imply.  If Shrem has a good lawyer, maybe they'll try to negotiate a settlement similar to the HSBC case.