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Comment by Jd | Hacker News Reader

Even though I'm not a huge Greenspan fan (are there any?), I find this money transmitter stuff incredibly fascinating. I haven't reviewed the relevant legal code, but I strongly suspect that Greenspan is right in that:

(1) there are lots of little annoying laws related to money transmitters that makes it very difficult to get new payment stuff off the ground

(2) If you have deep pockets and good lawyers you can pretty much ignore these laws

I strongly suspect that the correct solution is to change the laws, but that this is also an even greater pain in the ass than protecting yourself with highly paid lawyers, esp. since relevant laws vary significantly from state to state. What exactly Greenspan is attempting to prove here is beyond me, but I'm still quite curious as to the results.

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IANAL.. but at the very least, I'd say its poor strategy because the people he's suing (esp. VC funds) are well connected in Silicon Valley.

It looks like he's equating "pass through" transactions with being a (unlicensed) Money Transfer Agent.

Hypothetically, If I was going to start a PayPal alternative, I would figure out a way to stay somewhat compliant.

If that fails, seek a declarative judgement against XYZ agency to get legal clarification, without dragging all the VCs, Angels and unrelated companies into the case.

is the idea that the defendants pursued unfair and illegal business practices, promoting their services, while a law abiding service got swept behind? anyone know what the precedent is for this sort of thing?

"What exactly Greenspan is attempting to prove here is beyond me"

Not seeing that this has been date stamped by the court...yet. Typically you scribd the stamped copy so you know it has been filed.

Ahh, is this why all these tech giants use a non-money credit system for their stores and networks: Sony, Apple, Microsoft, Amazon(?), ... there must be many more.

I'm pretty sure all of those companies also take $'s for digital goods. Microsoft is the most famous for having a credit system, but you can still buy retail download games using $'s.

AFAIK, the only reason these companies would use a credit system is so that people need to buy credits in bulk, reducing the hit received from processing credit card transactions.

I think most larger companies use non-money credit systems because it gets more lock-in and is slightly harder for many people to parse how much they are truly spending.

The reason why companies use points instead of $ is: 1) Easy to keep the price consistent world wide 2) There is a casino chip theory that you spend more money when it is abstracted. People spend more when they use their credit cards as opposed to cash, etc. 3) You can sell point cards at retailers to the unbanked. In the Xbox case this is important because a lot of your audience is kids.

2) is on the spot. As soon as you introduce an abstract that is one step removed from money, people are more willing to gamble with that abstract. This is true for everything from credits to casino chips and from stock/shares to options and derivatives. Also, the word "willing", in this context, is actually an intended pun, since this happens on a subconscious level.

There is a lot of literature on the topic; some pieces even establish a tie between that notion and the most recent banking crises and scandals. For example, stock options are not just one step removed from currency, but at least two or more.

Interesting stuff indeed.

I suspect that even applies to foreign hard currency that you're not familiar with.

As for 3, Apple sell currency-denominated cards for the iTunes store without any problems.

Money transmission means moving money from one person to another. If you could use your Xbox to send money to a friend who also has an Xbox, then Microsoft would need a money transmitter license. Selling products, services, or "credits" for products or services, is not money transmission and doesn't require any kind of financial license.

So in the case of AirBnb, their service is helping people find places to stay?

Is all the money you pay to Airbnb for the service of helping you find a place to stay? Or is most of it being transmitted to the property owner after the end of your stay? Yes, it is; they are acting as a money transmitter. Money transmitters typically take some of the money; they're licensed businesses, not charities.

If Airbnb says that they are being paid for the service they provide, and part of that contract with their customer is to pay a property owner (like an Travel Agent), does that change things?

Would a Travel Agent be called a money transmitter?

As someone asking someone else who seems to know more about this than I, does this lawsuit have legs to stand on? [Edit: seemed to be answered here https://news.ycombinator.com/item?id=5677731]

Travel agents are also licensed in California (and other states). They also have to post a bond to cover any money they're holding on behalf of customers, just like a money transmitter.

I see. Looking into the background of all this, I think there is an argument to be made… whether it will be heard or not in this context is a different story.

Well maybe this presents the perfect opportunity for these VC and portfolio companies to retreat offshore to the tech seastead they created for their very own special SEZ (semi-jokingly).

How is being a "money transmitter" any different than buying the "inventory" and reselling it? Airbnb could have an "expense" paying their providers.

This seems crazy.

But wouldn't that apply to Xbox too? Most of the money you spend goes to the game developer.

I think it's reasonable to assume, by this point, that anything he does should fall under the rubrik of

http://knowyourmeme.com/memes/christ-what-an-asshole

Except, unfortunately, without notably increasing the humor value, so far.

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