More fallout from Silk Road. First bitcoin money laundering case?

[KevinNYC]

[QUOTE]The operators of two exchanges for the virtual currency Bitcoin have been arrested in the US.

The Department of Justice said Robert Faiella, known as BTCKing, and Charlie Shrem from BitInstant.com have both been charged with money laundering.

The authorities said the pair were engaged in a scheme to sell more than $1m (

[KevinNYC]

The complaint unsealed on Monday suggested that Mr. Shrem and his business partners were themselves grappling with what was and was not allowed.
I wonder if he believed this part in bold? (http://dealbook.nytimes.com/2014/01/27/two-executives-of-bitcoin-businesses-are-arrested/)

When a co-founder of BitInstant asked Mr. Shrem why he was working with someone with such clear affiliation with Silk Road, Mr. Shrem wrote in an email in 2012 that, “he has not broken a law and Silk Road itself is not illegal,” according to the complaint. Mr. Shrem added, “We make good profit from him.”

Or did the red part just make him want to believe it.

[Dresta]

These losers :lol

There's already been another Silk Road for months. They should just admit their jobs are a waste of time and money and **** off.

[shadow]

interesting that HSBC got off with a slap on the wrist and not a single criminal charge levied against anybody and here we have what amounts to a small fry and the DoJ puffing it's chest like they just dunked on Shaq or something when In truth all they manged was a dunk over Earl Boykins on an 8 foot rim.

[Dresta]

interesting that HSBC got off with a slap on the wrist and not a single criminal charge levied against anybody and here we have what amounts to a small fry and the DoJ puffing it's chest like they just dunked on Shaq or something when In truth all they manged was a dunk over Earl Boykins on an 8 foot rim.
:roll:

Perfect analogy.

[KevinNYC]

interesting that HSBC got off with a slap on the wrist and not a single criminal charge levied against anybody and here we have what amounts to a small fry and the DoJ puffing it's chest like they just dunked on Shaq or something when In truth all they manged was a dunk over Earl Boykins on an 8 foot rim.
How are they puffing out their chests?

And how does a $2 billion fine and a delayed prosecution agreement = slap on the wrist?

[niko]

So people create a currency that's harder to track, use it to buy drugs, and are seemingly upset the government seems to be going after it. Um, ok.

[Dresta]

They'll use any excuse to start cracking down on bitcoin. Typical government behaviour: gotta control absolutely everything.

[niko]

They'll use any excuse to start cracking down on bitcoin. Typical government behaviour: gotta control absolutely everything.
So money laundering is ok?

[DukeDelonte13]

So people create a currency that's harder to track, use it to buy drugs, and are seemingly upset the government seems to be going after it. Um, ok.


my thoughts exactly. I can't believe people are somehow surprised that the gov. is monitoring a fake currency primarily used to buy drugs.

Just use cash.

[Dresta]

This has nothing to do with money laundering, and it has everything to do with the state trying to get their grubby hands all over digital currencies. Obviously they don't like the idea of competing currencies when they are running their own into the ground.

This 'money laundering' is little different than me going to a bank, changing my pounds into dollars, and then walking outside and buying some drugs with those dollars. Silk Road actually sold plenty of legal products as well, so i don't see how it is his responsibility what people did with their bitcoins. It's all rather pathetic and desperate from the DEA: people will keep using digital currencies and silk road type sites will continue to thrive, while they continue to fight the same futile battle they've been fighting ever since Nixon first established that joke of an agency (while saying btw 'it's about targeting the blacks without seeming to').

The federal government has been exercising power beyond its right for a long time, so its actions carry no moral legitimacy with me, and they shouldn't with anyone else.

[niko]

This has nothing to do with money laundering, and it has everything to do with the state trying to get their grubby hands all over digital currencies. Obviously they don't like the idea of competing currencies when they are running their own into the ground.

This 'money laundering' is little different than me going to a bank, changing my pounds into dollars, and then walking outside and buying some drugs with those dollars. Silk Road actually sold plenty of legal products as well, so i don't see how it is his responsibility what people did with their bitcoins. It's all rather pathetic and desperate from the DEA: people will keep using digital currencies and silk road type sites will continue to thrive, while they continue to fight the same futile battle they've been fighting ever since Nixon first established that joke of an agency (while saying btw 'it's about targeting the blacks without seeming to').
It sounds a lot like money laundering. I appreciate your little diatribe, but the situation described in OP's post is money laundering. Not sure what your 100 words after have to do with anything except you are in favor of bitcoin, :cheers: Sounds great. But you can't make a currency, use it to launder money, and expect it to be ok.

You're arguing a whole bunch of other things about the govt not wanting bitcoin, etc. but to me that's not relevant to going after a crime. If people are going to use this as a currency, it needs to be regulated as a currency.

There is a case right now about someone basically scamming people out of approx $1B in bitcoins. The person who took them can't even use them, essentially he made them usuable. The govt is prosecuting him too. If this is going to be used as real money, there has to be some regulation to it.

[Dresta]

The Federal Government should focus on regulating its own currency properly instead of scamming the whole country by creating huge amounts out of thin air and handing it straight to banks.

It is so ****ing obvious why they're going after bitcoin and this has been expected for months by anyone who has a bit of sense. The charges are tenuous to say the least considering a bitcoin exchange is not a bank, and there is nothing stopping someone conducting business with Americans from another country. Or perhaps the US will take it to the UN and enforce their laws around the world, as they did with drugs the first time round.

[niko]

The Federal Government should focus on regulating its own currency properly instead of scamming the whole country by creating huge amounts out of thin air and handing it straight to banks.

It is so ****ing obvious why they're going after bitcoin and this has been expected for months by anyone who has a bit of sense. The charges are tenuous to say the least considering a bitcoin exchange is not a bank, and there is nothing stopping someone conducting business with Americans from another country. Or perhaps the US will take it to the UN and enforce their laws around the world, as they did with drugs the first time round.
You're just ranting on a totally separate topic. It's money laundering. Saying they should focus on other things is not a valid argument to not pursue a crime.

[Dresta]

They should be locking themselves up tbh.

[niko]

They should be locking themselves up tbh.
The $1B everyone got scammed, should that person be prosecuted, and should the govt try to recover the money? Or should it be "too ****ing bad, free market FTW!"?

There needs to be some sort of oversight or else one day everyone might wake up and the money might be gone.

[DukeDelonte13]

The $1B everyone got scammed, should that person be prosecuted, and should the govt try to recover the money? Or should it be "too ****ing bad, free market FTW!"?

There needs to be some sort of oversight or else one day everyone might wake up and the money might be gone.




people who are foolish enough to buy large quantities of an unstable quasi legal currency deserve what they get.

[Dresta]

people who are foolish enough to buy large quantities of an unstable quasi legal currency deserve what they get.
This.

The reward potential was huge early on, but people were (or should have been) aware that there were no guarantees when it came to investing in bitcoin. And it's not like bitcoin is the only digital currency. If this sort of thing keeps happening then people will stop using it and it will die on its own.

[Jailblazers7]

This.

The reward potential was huge early on, but people were (or should have been) aware that there were no guarantees when it came to investing in bitcoin. And it's not like bitcoin is the only digital currency. If this sort of thing keeps happening then people will stop using it and it will die on its own.

Yeah, that was the big issue with Bitcoin. No matter how you looked at it, it was a commodity that derived its value from its ability to work outside the confines of the law (whether that be black market, money laundering, capital loopholes in China, etc.) Once govts start closing the loopholes, then Bitcoin devolves into a *********ory thought experiment for libertarians.

[KevinNYC]

Yeah, that was the big issue with Bitcoin. No matter how you looked at it, it was a commodity that derived its value from its ability to work outside the confines of the law (whether that be black market, money laundering, capital loopholes in China, etc.) Once govts start closing the loopholes, then Bitcoin devolves into a *********ory thought experiment for libertarians.

The best pro argument I've read for Bitcoin is this from Mark Andressen.
http://dealbook.nytimes.com/2014/01/21/why-bitcoin-matters/?ref=marcandreessen

It inspired this critique
https://medium.com/the-magazine/23e551c67a6

[KevinNYC]

They'll use any excuse to start cracking down on bitcoin. Typical government behaviour: gotta control absolutely everything.


So money laundering is ok?

How is prosecuting a money launderer an attack on bitcoin? Unless money laundering is a standard feature of bitcoin, this doesn't make sense.

[niko]

How is prosecuting a money launderer an attack on bitcoin? Unless money laundering is a standard feature of bitcoin, this doesn't make sense.
I personally don't think it is, I think they see something that can be construed as money laundering and they are going after it.

[Bush4Ever]

I made a (very) small fortune on bitcoins, but I am almost completely cashed out and never had the delusion that it would function as a general medium of exchange, or that the government wouldn't squash it at the point of exchange if it got too large.

None of this should be surprising.

For all of his poor behavior, Bob Wenzel has it (mostly) right on Bitcoin at the Economic Policy Journal.

[HarryCallahan]

my thoughts exactly. I can't believe people are somehow surprised that the gov. is monitoring a fake currency primarily used to buy drugs.

Just use cash.

What makes it a fake currency?

[Al Thorton]

whats the new silk rode called?

[HarryCallahan]

people who are foolish enough to buy large quantities of an unstable quasi legal currency deserve what they get.

Exactly. Morons who keep large quantities of USD deserve to have their money devalued as they hold it.

[Jailblazers7]

The best pro argument I've read for Bitcoin is this from Mark Andressen.
http://dealbook.nytimes.com/2014/01/21/why-bitcoin-matters/?ref=marcandreessen

It inspired this critique
https://medium.com/the-magazine/23e551c67a6

Both really good reads, thanks for that. I think Andres sen definitely paints an optimistic version of the future for Bitcoin. I'm glad the critique brought up the topic of fraud on the part of sellers. That came immediately to my mind.