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Author Topic: Bitcoins and Asset Protection  (Read 6986 times)
samadamsbeer
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July 13, 2012, 03:03:37 AM
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For US based folks, we have to be so worried about the IRS and lawsuit happy lawyers that there is a whole industry around "asset protection". There was a discussion of how US authorities classify BTC at:
https://bitcointalk.org/index.php?topic=62821.0;all

For liability protection (against lawsuits, divorce, etc.) and IRS reporting it seems to me, at this point, you could legally keep assets as BTC wallets and be pretty safe against these asset threats since there will be no real paper trail easily identifiable. Kinda like burying gold in the yard or cash under the mattress. Just bury your paper wallet somewhere safe! Thoughts?
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July 13, 2012, 03:45:30 AM
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Use a brainwallet. That way, you have plausible deniability. "I don't own that address!"

I recommend asking me for a signature from my GPG key before doing a trade. I will NEVER deny such a request.
BrightAnarchist
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July 13, 2012, 04:37:51 AM
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Protection from litigation is the #1 best feature of bitcoin imo: http://goxxed.blogspot.com/2012/01/real-advantages-of-bitcoin.html
samadamsbeer
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July 13, 2012, 11:54:27 AM
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But if you were Kim Dotcomm or Warren Buffet and wanted to move even a few million into BTC for asset protection, what's the easiest way to do that? Presumably you may want to "dollar cost average" but maybe you don't have the time if you were in Kim's shoes. Would a lump sum transfer order on an exchange like Mt Gox get completed quickly without significant price inflation if it was for several million? Is there an easy service or automation that can be setup to dollar cost average purchase over a period of time? I have not studied closely what the real volume on these exchanges is these days.
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July 13, 2012, 01:32:51 PM
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But if you were Kim Dotcomm or Warren Buffet and wanted to move even a few million into BTC for asset protection, what's the easiest way to do that? Presumably you may want to "dollar cost average" but maybe you don't have the time if you were in Kim's shoes. Would a lump sum transfer order on an exchange like Mt Gox get completed quickly without significant price inflation if it was for several million? Is there an easy service or automation that can be setup to dollar cost average purchase over a period of time? I have not studied closely what the real volume on these exchanges is these days.

Or hire a personal manager and have it do the conversion job for you. I would love to work for people like Kim, free of charge at first, and if he's happy with my services can start paying a salary. I can provide my resume on request.

BTCitcoin: An Idea Worth Saving - Q&A with bitcoins on rugatu.com - Check my rep
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July 13, 2012, 08:20:26 PM
 #6

But if you were Kim Dotcomm or Warren Buffet and wanted to move even a few million into BTC for asset protection, what's the easiest way to do that?
The easiest way is to operate a profitable bitcoin-accepting business and keep the profits as bitcoins.
blakdawg
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July 16, 2012, 12:44:56 AM
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Protection from litigation is the #1 best feature of bitcoin imo: http://goxxed.blogspot.com/2012/01/real-advantages-of-bitcoin.html

This is overtstated significantly - if you were involved in significant litigation, financial records would be available in discovery. If significant sums suddenly disappeared, or a person who was otherwise apparently without income or savings was able to maintain a high standard of living, it would be clear that assets had been hidden.

Also, particularly in a divorce context, often the other party knows what's going on - so if your ex-spouse knows about Bitcoin, you can count on them educating their lawyers about it, and being questioned about it.

samadamsbeer
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July 16, 2012, 03:19:02 PM
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Well Kim Dotcomm's assets were frozen prior to any litigation. This is SOP for many federal asset seizures. This is why I thought there may be some value in a service that helps move smaller amounts of money into BTC over time, specifically for asset protection. Will be much harder to detect. It will also increase expense for those trying to track your assets. Of course highly motivated, violent, agents of the state can not be stopped if they are sufficiently motivated. You can only hide from those types.
blakdawg
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July 16, 2012, 10:54:09 PM
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I don't mean to say that BTC is useless in a hostile environment.

However, a popular idea with any new technology is that it's going to be so new and so different that the legal system can't possibly understand it or deal with it.

That might have worked 20 or 30 years ago but not any more.

There's always a lag between the development of a technology, the adoption of the technology, and the regulation of the technology. Nobody bothers regulating things that aren't used, and things can't be used until they're developed. So the law (and the tax man) will always be a little behind the curve.

Witness the people squealing because Ebay and Paypal are now reporting transactions to the IRS. A lot of people were apparently unable (or unwilling) to distinguish between the reach of the law as an abstract ideal and the on-the-ground efforts of enforcers. They thought that because IRS didn't have an easy way to track Paypal/Ebay transactions, that they were somehow untaxable, or effectively immune from taxation.

I've seen statistics (don't know if they're true, to be honest I'm suspicious) that in some places Facebook is mentioned in divorce pleadings by one side or the other at a > 50% rate.

BTC will get there, too, if it turns out to be even modestly useful.

From a literal point of view, I'm not sure it would help Kim Dotcomm that much if he did have assets squirreled away as BTC or on one of the exchanges - I haven't followed every twist & turn of the case, but I gather he's still in custody and probably has no Internet access. All of his computer hardware has likely been seized and powered down, either by law enforcement or by service providers that aren't getting paid.

Even if, best case, he had a paper wallet or a brain wallet with a lot of BTC in it, he'd need to give that information to a trusted person who would then access the funds on his behalf. Or maybe the trusted person just runs for the border once they've got the cash. Sad It's not like Kim is going to be hunting them down for revenge any time soon.

The US law enforcement community has a lot of experience with tricky defendants from all of the drug cases we've seen over the last 30-40 years of the "war on drugs" - prosecutors can and will go after defendants' funds as the fruits of (or evidence of) wrongdoing, effectively denying defendants meaningful assistance from competent counsel. I haven't had that happen to me personally but it has happened to attorneys I know well and it's scary - the attorney's role can flip from advocate to co-defendant basically at the whim of the prosecutor.

And then there's the http://en.wikipedia.org/wiki/Lynne_Stewart case - I don't know whether or not she's guilty of what she was convicted of, but you can be sure that criminal defense attorneys are aware of that prosecution and are going to be very careful about proposed transactions from in-custody defendants who say "well, give this scrap of paper to my assistant" or "use this information to get my secret BTC stash" or whatever.
samadamsbeer
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July 19, 2012, 05:46:43 PM
 #10

FYI - Kim is only under "house arrest" and is confined to his home. He does have internet & has been communicating with the outside world (hence his recent call for an alternative to the payment processing cartel). So he could have hidden BTC paper wallets in his home and had access to them.

Agreed on Facebook. It's relation with government is becoming more and more alarming. The Feds are looking to regulate Facebook ID's and use them for real world transactions. Of course, I think this is helped by Facebook cooperating with Feds and seeking revenue streams thru government programs. Luckily Bitcoin won't be as easy to "work with" since there is no central authority.

The only hope is that a parallel economy can grow outside the control of an increasingly bankrupt authoritarian system. Sure they can outlaw its use but that won't stop its use & that act may backfire. Of course they can plug us all into a totalitarian matrix North Korea style, but at that point, we've got other problems.

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