BBC News: Charlie Shrem admits unlicensed money transfers

[Robin_Good]

It's not confusion. It's pointing out the hypocrisy of the system.

Casino chips aren't money either, but you can still get in big trouble for buying/selling them.

[CoolBliss]

I thought that during the time that BitInstant was operating that the federal government had not yet classified bitcoin as currency. I do recall that they introduced that idea at some point, then used that new classification to argue that existing bitcoin exchanges were suddenly illegal.

[Altminer79]

Soon enough we will see btc-e getting seized for some illegal act.The bitcoin days no more safe at last the financial hypocrites are gonna win over bitcoin.

[dankkk]

But bitcoin isn't money. How can he plead guilty to running a money exchange, when the IRS has ruled it isn't money. He was only buying and selling a virtual property. Do we need to start arresting people who buy and sell high ticket items like wine or cars?

You're confused. The IRS said it's a property, but their opinion doesn't matter when it comes to regulatory issues. The various departments of the government are under no obligation to treat bitcoin the same.
It's stupid, but that's reality.

It's not confusion. It's pointing out the hypocrisy of the system.

It is not a money exchange it was a money transmitting service. There is a big difference; a money exchange would be to exchange one type of money ($5 bills) for another type of money ($100 bills); a money transmitting service is when you accept money and agree to send/give a certain percentage of that money to someone else while taking the rest as payment.

[jbreher]

The government is saying in Shrem's case that he knew the bitcoin was going to be used on SR.

I don't think that is an element of the money laundering crime. I doubt that paying from the US, for drugs on SR, to be shipped from a Portugal address to another Portugal address is illegal. Even if it was, there were legal items for sale on SR as well as illegal ones.

[itsAj]

The government is saying in Shrem's case that he knew the bitcoin was going to be used on SR.

I don't think that is an element of the money laundering crime. I doubt that paying from the US, for drugs on SR, to be shipped from a Portugal address to another Portugal address is illegal. Even if it was, there were legal items for sale on SR as well as illegal ones.

I think it is well established that people went to SR for the purpose of buying illegal items. Yes there were some items sold that were not illegal, but these items were a very small minority (I think).

Where the drugs were being shipped from or two is not the issue, the issue is that he was operating inside the US and was taking money from inside the US that was to be given to other people.

[cccarnation]

So he finally admitted he broke the law? Took awhile...

[DooMAD]

Soon enough we will see btc-e getting seized for some illegal act.The bitcoin days no more safe at last the financial hypocrites are gonna win over bitcoin.

BTC-e is based in Bulgaria.  Let's keep things in perspective.  I don't think the US can seize anything there without a severe backlash.  Shrem is an American, so the US have the power to seize his assets.  It's not some crazy domino effect where everything suddenly gets shut down because this one thing happened.

[davida]

How many staff from HSBC went to jail for 5 years after laundering hundreds of millions billions for the mexican drug cartel?

I'm pretty sure nobody did... They got off with a fine or something, correct me if I'm wrong!!!

[The One]

The operator of an exchange for the virtual currency Bitcoin has pleaded guilty to running an unlicensed money transmitting business.

Charlie Shrem from BitInstant.com admitted the charges in a New York federal court hearing.

Another Bitcoin trader, Robert Faiella, also pleaded guilty.

Both were arrested in January, accused of selling more than $1m (£603,000) in bitcoins to users of online drug marketplace the Silk Road.

The site was shut down last year and its alleged owner was arrested.

The two traders admitted the charges as part of a deal struck with US prosecutors in order to settle the allegations against them.

Bitcoin exchanges are services that allow users to trade bitcoins for traditional currencies.

Mr Shrem had been accused of allowing Mr Faiella to use BitInstant to purchase large quantities of bitcoins to sell on to Silk Road users who wanted to buy drugs anonymously.

The authorities said Mr Shrem was aware that the bitcoins were being used for such purchases, and therefore he was in violation of the Bank Secrecy Act.

The Act requires financial institutions in the US to alert authorities to any suspicious activity that may suggest money laundering is taking place.

...
http://www.bbc.com/news/business-29072886

Who were the victim?

No victim = no crime.

[QuestionAuthority]

How many staff from HSBC went to jail for 5 years after laundering hundreds of millions billions for the mexican drug cartel?

I'm pretty sure nobody did... They got off with a fine or something, correct me if I'm wrong!!!

HSBC wasn't using Bitcoin and there wasn't just one compliance officer for the company though. That's the difference. With Charlie there was just one guy from the company to slap and teach a lesson to other small Bitcoin startups. Always remember we are just children and sometimes need our govermom to teach us a lesson.

[niothor]

The operator of an exchange for the virtual currency Bitcoin has pleaded guilty to running an unlicensed money transmitting business.

Charlie Shrem from BitInstant.com admitted the charges in a New York federal court hearing.

Another Bitcoin trader, Robert Faiella, also pleaded guilty.

Both were arrested in January, accused of selling more than $1m (£603,000) in bitcoins to users of online drug marketplace the Silk Road.

The site was shut down last year and its alleged owner was arrested.

The two traders admitted the charges as part of a deal struck with US prosecutors in order to settle the allegations against them.

Bitcoin exchanges are services that allow users to trade bitcoins for traditional currencies.

Mr Shrem had been accused of allowing Mr Faiella to use BitInstant to purchase large quantities of bitcoins to sell on to Silk Road users who wanted to buy drugs anonymously.

The authorities said Mr Shrem was aware that the bitcoins were being used for such purchases, and therefore he was in violation of the Bank Secrecy Act.

The Act requires financial institutions in the US to alert authorities to any suspicious activity that may suggest money laundering is taking place.

...
http://www.bbc.com/news/business-29072886

Who were the victim?

No victim = no crime.

So , police should stop giving speeding tickets , right? Cause there are victims only when you run into somebody else.

Also , everybody should start their own shops without licenses or without paying taxes as probably there will no victims from this either.

Rather than arguing about how the law is applied change the law.

[master-P]

How many staff from HSBC went to jail for 5 years after laundering hundreds of millions billions for the mexican drug cartel?

I'm pretty sure nobody did... They got off with a fine or something, correct me if I'm wrong!!!

HSBC wasn't using Bitcoin and there wasn't just one compliance officer for the company though. That's the difference. With Charlie there was just one guy from the company to slap and teach a lesson to other small Bitcoin startups. Always remember we are just children and sometimes need our govermom to teach us a lesson.

I think another difference was that with HSBC the laundering of money was less then intentional, and was likely the result of lax controls in place to prevent the laundering of money to mexico; very similar to bitinstant prior to it was discovered that the other guy was selling bitcoin on silk road. It is alleged that Shrem was aware of the activity and declined to try to stop it.

[QuestionAuthority]

How many staff from HSBC went to jail for 5 years after laundering hundreds of millions billions for the mexican drug cartel?

I'm pretty sure nobody did... They got off with a fine or something, correct me if I'm wrong!!!

HSBC wasn't using Bitcoin and there wasn't just one compliance officer for the company though. That's the difference. With Charlie there was just one guy from the company to slap and teach a lesson to other small Bitcoin startups. Always remember we are just children and sometimes need our govermom to teach us a lesson.

I think another difference was that with HSBC the laundering of money was less then intentional, and was likely the result of lax controls in place to prevent the laundering of money to mexico; very similar to bitinstant prior to it was discovered that the other guy was selling bitcoin on silk road. It is alleged that Shrem was aware of the activity and declined to try to stop it.

Yeah, they knew.

http://www.huffingtonpost.com/marni-halasa/is-anybody-listening-hsbc_b_3831412.html

[Bitbirdhunt]

 Banks going after the little guys once again that are trying to bring a change and eventually delivering a fatal blow to the banking system.
Proof that the government is rotten to its core and does what the big corporations tells it to do.

[The One]

The operator of an exchange for the virtual currency Bitcoin has pleaded guilty to running an unlicensed money transmitting business.

Charlie Shrem from BitInstant.com admitted the charges in a New York federal court hearing.

Another Bitcoin trader, Robert Faiella, also pleaded guilty.

Both were arrested in January, accused of selling more than $1m (£603,000) in bitcoins to users of online drug marketplace the Silk Road.

The site was shut down last year and its alleged owner was arrested.

The two traders admitted the charges as part of a deal struck with US prosecutors in order to settle the allegations against them.

Bitcoin exchanges are services that allow users to trade bitcoins for traditional currencies.

Mr Shrem had been accused of allowing Mr Faiella to use BitInstant to purchase large quantities of bitcoins to sell on to Silk Road users who wanted to buy drugs anonymously.

The authorities said Mr Shrem was aware that the bitcoins were being used for such purchases, and therefore he was in violation of the Bank Secrecy Act.

The Act requires financial institutions in the US to alert authorities to any suspicious activity that may suggest money laundering is taking place.

...
http://www.bbc.com/news/business-29072886

Who were the victim?

No victim = no crime.

So , police should stop giving speeding tickets , right? Cause there are victims only when you run into somebody else.

Also , everybody should start their own shops without licenses or without paying taxes as probably there will no victims from this either.

Rather than arguing about how the law is applied change the law.

Yes on private roads. No on public roads.

Licenses needed for what? pointless, costly and waste of resources. Taxes IS theft.

Many laws needs to be repelled en mass. There are too many stupid laws and no one can possibly remember them all. People are being criminalise for no reason.

[jbreher]

BTC-e is based in Bulgaria.  Let's keep things in perspective.  I don't think the US can seize anything there without a severe backlash. 

Kim Dotcom might argue against your assertion.

[itsAj]

The operator of an exchange for the virtual currency Bitcoin has pleaded guilty to running an unlicensed money transmitting business.

Charlie Shrem from BitInstant.com admitted the charges in a New York federal court hearing.

Another Bitcoin trader, Robert Faiella, also pleaded guilty.

Both were arrested in January, accused of selling more than $1m (£603,000) in bitcoins to users of online drug marketplace the Silk Road.

The site was shut down last year and its alleged owner was arrested.

The two traders admitted the charges as part of a deal struck with US prosecutors in order to settle the allegations against them.

Bitcoin exchanges are services that allow users to trade bitcoins for traditional currencies.

Mr Shrem had been accused of allowing Mr Faiella to use BitInstant to purchase large quantities of bitcoins to sell on to Silk Road users who wanted to buy drugs anonymously.

The authorities said Mr Shrem was aware that the bitcoins were being used for such purchases, and therefore he was in violation of the Bank Secrecy Act.

The Act requires financial institutions in the US to alert authorities to any suspicious activity that may suggest money laundering is taking place.

...
http://www.bbc.com/news/business-29072886

Who were the victim?

No victim = no crime.

So , police should stop giving speeding tickets , right? Cause there are victims only when you run into somebody else.

Also , everybody should start their own shops without licenses or without paying taxes as probably there will no victims from this either.

Rather than arguing about how the law is applied change the law.

I agree with you that we do need rules in our society and it is appropriate to punish people who do not follow the rules. With that being said the government also needs to follow certain rules to make sure people have a fair chance in court when they are charged with a crime, and to follow rules regarding a person's "papers" (rules regarding search and seizure).

Regarding if Charlie apparently broke the rules, I would say yes, but only from a technical standpoint. He could have changed his behavior in a very minor way to stay in compliance with the law and the outcome of the transactions in question would not have changed.

Regarding the government following the rules, I would say they almost certainly did break them. Their getting access to the SR servers is questionable at best (they admit to not having a warrant prior to receiving the copy of the server). Also IIRC they had seized the servers of an email service that was marketed to TOR users, and some of Charlie's communications were from this service. I don't see the legal justification here to for the government to be able to read all of the emails on this email service without specific warrants that document probable cause.

[QuestionAuthority]

The operator of an exchange for the virtual currency Bitcoin has pleaded guilty to running an unlicensed money transmitting business.

Charlie Shrem from BitInstant.com admitted the charges in a New York federal court hearing.

Another Bitcoin trader, Robert Faiella, also pleaded guilty.

Both were arrested in January, accused of selling more than $1m (£603,000) in bitcoins to users of online drug marketplace the Silk Road.

The site was shut down last year and its alleged owner was arrested.

The two traders admitted the charges as part of a deal struck with US prosecutors in order to settle the allegations against them.

Bitcoin exchanges are services that allow users to trade bitcoins for traditional currencies.

Mr Shrem had been accused of allowing Mr Faiella to use BitInstant to purchase large quantities of bitcoins to sell on to Silk Road users who wanted to buy drugs anonymously.

The authorities said Mr Shrem was aware that the bitcoins were being used for such purchases, and therefore he was in violation of the Bank Secrecy Act.

The Act requires financial institutions in the US to alert authorities to any suspicious activity that may suggest money laundering is taking place.

...
http://www.bbc.com/news/business-29072886

Who were the victim?

No victim = no crime.

So , police should stop giving speeding tickets , right? Cause there are victims only when you run into somebody else.

Also , everybody should start their own shops without licenses or without paying taxes as probably there will no victims from this either.

Rather than arguing about how the law is applied change the law.

I agree with you that we do need rules in our society and it is appropriate to punish people who do not follow the rules. With that being said the government also needs to follow certain rules to make sure people have a fair chance in court when they are charged with a crime, and to follow rules regarding a person's "papers" (rules regarding search and seizure).

Regarding if Charlie apparently broke the rules, I would say yes, but only from a technical standpoint. He could have changed his behavior in a very minor way to stay in compliance with the law and the outcome of the transactions in question would not have changed.

Regarding the government following the rules, I would say they almost certainly did break them. Their getting access to the SR servers is questionable at best (they admit to not having a warrant prior to receiving the copy of the server). Also IIRC they had seized the servers of an email service that was marketed to TOR users, and some of Charlie's communications were from this service. I don't see the legal justification here to for the government to be able to read all of the emails on this email service without specific warrants that document probable cause.

The US Govt doesn't use logic concerning laws.

In the past 25 years, 210,000 marijuana-related arrests have been made in the state of Colorado alone. Of that number, more than 50,000 took place between 2006 and 2010. So now that Colorado has officially legalized the commercial sale and consumption of marijuana, how many of those people arrested for previous weed crimes will be let out of prison? Or, if they’ve already served their time, how many will have their marijuana crimes expunged from their records, making it easier to get a job?

The answer: Zero on all counts.

The United States is one of the only countries in the world that doesn’t guarantee what’s called “retroactive ameliorative relief” in sentencing. Meaning, when a law is passed to ease or eliminate punishments for a specific crime, those already convicted of that crime don’t necessarily receive the same relaxation or cessation of their sentence.

http://www.takepart.com/article/2013/01/02/no-relief-convicted

[DooMAD]

BTC-e is based in Bulgaria.  Let's keep things in perspective.  I don't think the US can seize anything there without a severe backlash. 

Kim Dotcom might argue against your assertion.

Fair point.  At least on the plus side, he seems to be winning his fight.  Relaunching mega to make it less prone to future takedown attempts and using encryption.  If every site that gets blocked comes back stronger and better than before, then maybe it's ultimately a good thing that someone's out to challenge free information.  They might win the battle against Shrem for now, but they'll lose the war.