Mt. Gox Dwolla account frozen by DHS
bitcointalk.org
bitcointalk.org
"In order not to compromise this ongoing investigation being conducted by ICE Homeland Security Investigations Baltimore, we cannot comment beyond the information in the warrant, which was filed in the District of Maryland earlier today."
More: http://news.cnet.com/8301-13578_3-57584511-38/homeland-secur...
dirty money -> mt gox -> bitcoin -> mt gox -> clean money
Where "[whatever]" is something relatively unverifiable. Programming, essay writing, whatever. Declare it properly as income and you probably won't have issues unless somebody actually decides to look closer.
Not all that different from "selling" heavily marked up drinks at your bar in exchange for cash, then pouring said drinks down the drain. It will work for a while so long as you avoid suspicion.
Yep. And that may sound inefficient, but it's actually really great at decreasing information about the source of money. For example, you might have a legitimate software business where you're selling custom software to a customer, but meanwhile you're financing the creation of those bits through dirty e-goldcashcoin. Later, you transfer the bits through Tor to yourself, with very little record of the origin of those bits.
The only problem is that the worker that was paid in dirtcoin might be able to recognize their work in the future (in the wild), breaking the anonymity of that value-creating transaction. So you can focus on content creation work that is less unique, but you can't always charge customers that much for that sort of work anyway..
I think it's an interesting problem to think about. I am sure there's a solution where you don't end up with a stray existential threat like the worker stumbling upon his beautiful artwork in the future. Assassination market? That's really extreme, surely there's a better way.
Do it right and you might actually even turn your casino into a legitimate source of income itself.
^ I'm not sure where this would be legal. Not the US clearly.
That's not helpful, because the transaction is really obvious. If your casino is unpopular, it's even more obvious that it might just be you. This is a much worse idea than the one in your original comment.
Edit: also, you can't verify that obfuscators operate without logs, so using "mixers" isn't a legitimate answer either.
The first is simply disassociating your money from the crime. If you robbed a bank this means swapping your bills for other bills. If you robbed MtGox or sold a bunch of coke on the silk road this means using a fuckton of mixers... but that is not a good solution as you have noted. Bitcoin does not lend itself to this at all. Honestly if I somehow found myself in the possession of a ton of prominently stolen bitcoins I would just write them off; the risk involved in recovery would be far to great. If it was just bitcoins I got from selling some coke on silk road then I would be more relaxed; a few (presumably) independent mixers over a few months would put me at relative ease. None of the money from this step is useful though.. not unless you are content with paying your rent in cash for a few years or blowing all your bitcoins on VPSs... For the money to become actually usable you need part two.
The second part is the traditional money laundering. Taking money that is assumed to be unconnectable with the crime and associating it with your identity in a way that appears legitimate. If you robbed a bank this means taking the bills that you got out of step one and finding a way to put them back into the bank. If you are selling coke in real life then this is actually the only step you need to worry about; take the cash you got for the coke, "spend" it at your bar, and deposit it at the end of the week in your bank account. If you mined a shitton of coins a few years ago and don't really care to explain that you are a miner, then this is the only step you need to worry about.
The idea of both the "freelancing" and "casino" ideas is to do only step 2; that is to say they are both just to associate money with your identity in an "official" way. Neither will work worth a damn for step 1... at least I wouldn't trust either of them for that.
The nice thing about bitcoin casinos is that they are easy to spin up. Just load one up, spam it all over the place over the period of a week. During that week you "gamble" with yourself, then you taper that down to simulate waning interest in your service. Rinse and repeat as often as you need more money, just rip off whatever the current preferred gambling/toy is in the community at the moment. Never keep them around long enough for them to be popular or unpopular, only new. With the freelancing idea you may eventually have to explain where you are getting your contracts, but with technically legal fly-by-night gambling schemes nobody would expect even you to know or care. Gambling sites involve far less fabricated story and background, which is to your advantage.
Which I would choose would depend on how much money I wanted to attach to my identity and how fast. For modest amounts quickly I'd make a gambling site. For large amounts infrequently but at steady interval, I would become a freelancer. That would be the better one to attempt to live off of. (Also I'm in the US, so a gambling site is a non-starter anyway.)
Ah, I thought you meant the otherway around. Hire a freelancer, tell them what to do, pay them with dirty money, sell their bits for clean money. I don't see how becoming the freelancer is a good idea; that doesn't scale unless you have extremely specialized knowledge and can blow through $1000/hour or whatever. But if you have extremely specialized knowledge, it's probably easy to de-anonymize you as a freelancer.
> Honestly if I somehow found myself in the possession of a ton of prominently stolen > bitcoins I would just write them off; the risk involved in recovery would be far to great.
I think this is a great solution until something better is figured out. Also, you could just use them for other activities that are unrelated to you, as long as you're okay with that and very careful (don't let tracking pixels catch your browser, even if you're under Tor, etc.).
> blowing all your bitcoins on VPSs
Fascinating idea; you could blow your bitcoins on VPSs to mine more bitcoins. However, you will have to be sure that your VPS is not being logged. Otherwise those bitcoins will be tainted too. But you could probably just participate in a mining pool maybe, and have one mining-pool-account per VPS instance?
> The nice thing about bitcoin casinos is that they are easy to spin up. Just load one up, spam it all over the place over the period of a week.
Ehhh.. I am still skeptical. You could make the site claim it's been around for longer ("Copyright 2003"), and you could even re-purpose a bitcoin address that someone else was using before. But it is relatively easy to figure out a shift in the types of accounts that are sending in money, and use that to determine a change in ownership of the account to prove that the casino hasn't actually been around as long as it claimed. And if the bitcoin address has a previous public identity associated with the address, that's a dead give away that your casino was just using that history to seem more legitimate.
How is that not like gambling, and how do I run my own?
(any) money -> mt gox -> bitcoin -> groups not aligned to DHS interestsAnd there is always the Tor network for anonymity.
But good luck trying to get the value out that you put in. Dollars and Euros are relatively stable compared to bitcoin. There is a much higher guarantee that you're going to get the same value out that you put in with Dollars or Euros compared to bitcoin. Bitcoin looks like a great investment until you actually try to turn it back into dollars or euros.
That 2BN fine was leveraged for a combined failure to monitor more than $670bn in wire transfers and $9.4bn in dollar purchases in Mexico. You can bet yer britches they made more than 2bn off of all the shadiness -- and when a fine is less than the profit of the act being fined, the act will not cease.
Aw crap, full circle.
Speculation, not fact.
http://www.justice.gov/opa/documents/hsbc/dpa-attachment-a.p...
It's very misleading to leave out the "unless the customers were otherwise classified as high risk." That smacks of someone not understanding how to properly implement the compliance function.
The rest of the statement of facts reads like a classic case of a company cheating out on the compliance function (like every company tries to do) and failing to adequately monitor a foreign subsidiary.
I think the fine was too small, but the facts are consistent with negligence warranting a fine, not intentional criminal conduct that might warrant jail time.
18. Between 2000 and 2009, HSBC Bank USA, and its executives and officers, were aware of numerous publicly available and industry-wide advisories about the money laundering risks inherent to Mexican financial institutions.
19. Despite this evidence of the serious money laundering risks associated with doing business in Mexico, from at least 2006 to 2009, HSBC Bank USA rated Mexico as standard risk, its lowest AML risk category. As a result, wire transfers originating from Mexico, including transactions from HSBC Mexico, were generally not reviewed in the CAMP system. From 2006 until May 2009, when HSBC Bank USA raised Mexico’s risk rating to high, over 316,000 transactions worth over $670 billion from HSBC Mexico alone were excluded from monitoring in the CAMP system.
Furthermore, the remaining 80% of the document goes on to outline a pervasive and long-running pattern of behavior consistent with willful subversion of both the letter and the spirit of AML.
I find it disappointing if not unsurprising that HSBC can continue to operate as usual after openly flaunting at staggering scale the very policies that Mt Gox is being effectively shut down for potentially falling afoul of.
What about this strikes you as intentionally criminal activity?
This analysis is spot-on. White collar crime is difficult to prosecute because people fuck up all the time and it's hard to distinguish between a run of the mill fuck up and malicious intent, especially because our usual go-to for inferring intent ("motive") is hard to rely on because in the context of billions of dollars flying around, there always seems like there was motive.
Hence the fine, though we're in agreement that it should be bigger, in order to make it more justifiable to spend resources on exercising more care.
The DOJ-HSBC joint statement acknowledges that, among other offenses, "From the mid-1990s through at least September 2006, HSBC Group Affiliates violated both U.S. and New York State criminal laws by knowingly and willfully moving or permitting to be moved illegally hundreds of millions of dollars through the U.S. financial system on behalf of banks located in Cuba, Iran, Libya, Sudan, and Burma, ... in violation of U.S. economic sanctions."
The statement then goes on for several pages to outline in detail how they demonstrably knowingly broke the law, including this gem:
"HSBC Group was aware of this practice as early as 2000. In 2003, HSBC Group’s Head of Compliance acknowledged that amending payment messages “could provide the basis for an action against [HSBC] Group for breach of sanctions.” At that time, HSBC Group Compliance instructed HSBC Europe to stop the practice. However, HSBC Europe appealed, and due to the “significant business opportunities” offered by the Sanctioned Entities, HSBC Group’s Head of Compliance granted HSBC Europe an extension to continue processing payments in the same manner."
How about this part?
>Without adequate KYC information, HSBC Mexico knew very little about who these high risk customers were or why they had such large amounts of U.S. dollars. However, even without the benefit of adequate KYC information, the risks were obvious. Indeed, one HSBC Mexico compliance officer noted “the massive misuse of [the HSBC Mexico Cayman Islands U.S. dollar accounts] by organized crime.” One example, identified by HSBC Group’s Head of Compliance in July 2008, involved “significant USD remittances being made by a number of [HSBC Mexico’s Cayman Islands U.S. dollar] customers to a US company alleged to be involved in the supply of aircraft to drug cartels.”
Or this?
>When suspicious activity was identified, HSBC Mexico repeatedly failed to take action to close the accounts. Senior business executives at HSBC Mexico repeatedly overruled recommendations from its own AML committee to close accounts with documented suspicious activity.
Or the part where HSBC Mexico was laundering so much money that both the Mexican Central Bank and the Mexican Financial Intelligence Division both complained to them within 6 months of each other?
>In November 2007, Banco de Mexico, the central bank of Mexico, expressed concerns about the volume of U.S. dollars exported by HSBC Mexico back to the United States. Specifically, Banco de Mexico wanted an explanation as to why HSBC Mexico’s U.S. dollar exports were significantly larger than its market share would suggest.
In February 2008, HSBC Mexico’s CEO met with the head of the CNBV and the head of Mexico’s financial intelligence unit, Unidad de Inteligencia Financiera (“UIF”). Again, the volume of HSBC Mexico’s U.S. dollar exports was raised as a concern. Specifically, HSBC Mexico’s CEO was told that law enforcement in Mexico and the United States were seriously concerned that the U.S. dollars being deposited at HSBC Mexico might represent drug trafficking proceeds. HSBC Mexico’s CEO was also told that Mexican law enforcement possessed a recording of a Mexican drug lord saying that HSBC Mexico was the place to launder money.
Or my personal favorite, where the cartels designed special boxes to maximize the rate at which they could shove their dirty money through the teller windows:
>In order to efficiently move this volume of cash through the teller windows at HSBC Mexico branches, drug traffickers designed specially shaped boxes that fit the precise dimensions of the teller windows. The drug traffickers would send numerous boxes filled with cash through the teller windows for deposit into HSBC Mexico accounts.
And before you tell me that this was limited to HSBC Mexico:
>Senior HSBC Group executives, including the CEO, Head of Compliance, Head of Audit, and Head of Legal, were all aware that the problems at HSBC Mexico involved U.S. dollars and U.S. dollar accounts.
By your logic the Chinese government should be fining American banks (i.e. Citibank) which offer RMB<-->USD conversion services outside China. Because, after all, the RMB is a controlled currency in China and the behavior of American banks is illegal under Chinese law.
That's quite the straw man you've set up. I don't believe I ever once said anything like that.
I do think it is appropriate for the US to regulate the operations of a foreign bank within their boarders. If the multinational bank violated US law, the multinational bank and its US subsidiaries should lose their ability to continue to conduct business in the US. You know, like what DHS is doing to Mt Gox now, which was the whole point of this thread in the first place.
Huh? Your post goes on and on accusing HSBC Mexico of malfeasance yet does not contain a single accusation of wrongdoing on the part of any American subsidiary or company.
As far the MtGox issue goes, DHS has shut down an American account belonging to an American company (a subsidiary explicitly created in the US to process USD). It is an entirely different matter.
The document outlines in unambiguous terms the extent to which HSBC (the parent HSBC) consistently, knowingly, and over an extended period of time, manipulated transactions and associated processes, at times over the objections of their own US subsidiaries, to conduct business, in America, in US Dollars, that was in violation of AML laws and regulations.
I'm not sure what else there's left to say about this at this point.
"dialing down Mexico, one of the top and well known high risk areas for drug money, into merely Standard Risk"?
You make their on purpose decision to benefit from looser checks sound as some kind of ...unfortunate miscalculation on their behalf of the risk of Mexican money.
It's very misleading to leave out the "unless the customers were otherwise classified as high risk." That smacks of someone not understanding how to properly implement the compliance function.
I don't see anything misleading. It clearly shows this was no negligence.
They purposefully complied only for the coarser and more dangerous cases ("customers classified as high risk") and stood to benefit for letting all the others go through.
Would you expand on this (possibly with examples)?
Likewise, another example is a bookmaker - those who are in conflict are the punters who are betting on an outcome (one of them wins & one of them loses) - however, to the bookmaker it is trivial who wins or loses because they always make money on that outcome. It's the same with the banks etc.
It's not a risk, it's a business opportunity. At least it was for HSBC http://www.bbc.co.uk/news/business-18866018 . Joe Schmo from small Town, MN would have been a felon by now for doing the same with $10K. The fact that HSBC, other banks (NY Mellon Bank iirc too) and their execs got away with a "cost of doing business fine" shows what's wrong with the system
Money in Saudi Arabia -> mt gox -> bitcoin -> mt gox -> terrorists inside the USAOr actually just kill people with pistols. Seung-Hui Cho, the Virginia Tech mass killer, kills 35 people with his Glock 19 and Walther P22.
The attacker is basically undetectable until he start his assault, and the probability of success is quite high. He can even use his car to ram into the mall door and run down individuals before he start his shooting spree. The only hope for civilians at that point is that a policeman or a civilian with a pistol to start shooting back.
The operation can be done with the attacker saving money for those purchase of weapons by working at his usual job. You don't need to send funds.
(Of course, if it was that easy, why don't terrorists do it more often?)
Ever tried to send money to Somalia? If you think that's a silly question, there are a lot of Somalians here in Minneapolis who would like to feed their families back home (and a lot of banks who would like to make money by helping out). But politics makes that very, very hard. This is just one example.
[0] - https://ripple.com/
I'm not making up issues, you know. Inability to move money to Somalia is a real thing. Here's one link: http://www.startribune.com/local/minneapolis/136396028.html
Whether those regulations are actually effective is questionable (see HSBC, BoA, etc.), but that's the rationale.
Edit: Did a little bit of digging[1], looks like they accept wire transfers (e.g. Western Union), and I'm sure there would be ways through those e-currency and other services to deposit large amounts of unregulated money.
[1]https://support.mtgox.com/entries/20490576-Withdrawals-and-D...
I have personally discussed this with a friend that is a federal reserve spokesman, so anyone that wants to argue otherwise should consider that first.
A major federal reserve branch maybe has $30 billion in cash on hand at any given time. The marginalization of the US cash market is almost complete after the past decade.
Lastly, consider the possiblity that those back scatter xray machines aren't about weapons.
It isn't, which is why there are big stacks of anti-money-laundering regulations that governments impose on banking and forex.
A similar attack was made against Wikileaks.
If you can't transfer your cash to Bitcoin, or your Bitcoin to cash, then the decentralized nature of Bitcoin itself is immaterial.
Unless you can turn your bitcoins into goods and services.
You'll have no way to convert electronic dollars into bitcoin. Saying that the government can prevent the conversion of cash into bitcoins is like saying it can prevent the conversion of cash into drugs.
For one, an often overlooked and dead simple way: you can sell goods/services and tell your customers you accept Bitcoin.
You can buy bitcoins for cash from sellers you meet face to face: https://en.bitcoin.it/wiki/Category:Directories
You can mine.
Etc.
Even if it's regulated, it can't possibly be more illegal than it is now.
I doubt the regulatory environment in the US will have much effect on Bitcoin adoption curves.
drugs->bitcoins->mt. gox->USD->Dwolla->Bank Account
A buyer would do the above actions in reverse.
As it stands today there are many, many ways to perform that chain of actions. I personally funded my Mt. Gox account with Dwolla because it seemed like the only above the board operation out there.
drugs -> USD -> mattress -> grocery store
Don't be ridiculous. You have to both launder money and not give any of it back with campaign donations. Only then do you get shut down.
Post-2001 and the Patriot Act, bank tellers, stock brokers and insurance agents have all become lay intelligence officers under "Know your customer" compliance requirements. Informal value transfer systems, barter/black-market, are only a problem in terms of taxation.
Mt. Gox and money exchanges were functionally brought under these KYC compliance regulations and it is only a question of time until bitcoin users will have to speak about the source of the money. Sources are important because that's how taxes are levied.
If you can show you have paid taxes on your money, it's rare to have a problem.
We have systemic trillion dollar annual deficits, so tax collection efforts are being ramped up. It's why you get 10,000 IRS officers hired instead of 10,000 doctors for a national health care system reorganization.
Funny. In renewable energy circles, the first, and most efficient, optimization is "conservation". Converting the 50 incandescent bulbs in your home to their LED or CFL counterparts yield more long-term value than spending the money on the ability to produce the power those original bulbs consumed.
Likewise, our government needs to quit pretending it actually needs money and cut spending. The TSA and middle-east war machines are the first places I'd start with.
Absolutely, but those things are a drop in the bucket relatively speaking and aren't systemic budget problems. By far the biggest culprits are Medicare/Medicaid and the Bush tax cuts, but neither party has the collective will to do anything about them. It's not totally their fault, either- it's the nature of the political system and the level of voter awareness. Anyone who started seriously gunning for any of those things would get voted out at the earliest opportunity, or at least that's their perception. It's a profoundly messed up situation.
What happens when you retire a light bulb? Contrast that with what happens when you retire a person. The light bulb goes in the trash bin, but the person begins an escalting battle for survival as he or she's financial reserves approach depletion.
I'd be impressed at any cartel making $454 million in an hour!!
Isn't the daily limit for reporting something like $10,000? There is clearly far in excess of that amount of money flowing through mtgox in transactions, so surely the possibility of money laundering is something the authorities would consider.
There are many many opportunities for money laundering which are cheaper/easier/more stable than MtGox. I personally haven't had to worry so much about AML regulations since I was last seriously involved in digital payments around 2000, but while a lot of the easier routes to accept USD cash and move it out of the US have been addressed, there are still a lot of lower hanging vectors.
The main ML vector would be localbitcoin and other person to person cash exchanges, and they go in the wrong direction (generally people buying bitcoin and GIVING you cash). I'd bet the total volume of bitcoins you could buy for physical cash is less than $5mm/yr/person right now, without a seriously high profile. And probably way less. So, less than would comfortably fit in a bag in your trunk. For domestic stuff (like a pot grow in Humboldt and selling to NYC), shipping bulk currency back and forth is probably fine.
SR is a threat to narcotics control regimes, and it's possible there are other issues with anonymous payments through Bitcoin today, but it's not a high volume channel of going from USD physical currency in the USA to any kind of useful placement.
Correct me if I'm wrong here, but couldn't you deposit money into bank accounts in "less stringent than the US" countries where mtgox operates, convert into bitcoins, then convert back into USD and withdraw from Dwolla as "legitimate" currency? That seems like the main use to me. You're getting around the paperwork and suspicion of a bank transfer directly into the US.
Of course Mtgox says that it complies with money laundering regulations, but you could chop up the transactions (foreign account -> mtgox -> bitcoins -> some other exchange -> different bitcoins -> mtgox -> USD). Once the money enters bitcoins, it's very easy to shuffle it around so it can't be "traced" (by which I mean have it go outside companies that comply with money laundering regulations- it is actually traceable technically, but I'm not sure the authorities have tools that do this yet or whether they actively look at it) and then pull it back out as USD. Seems like a problem to me, but I'm not a money launderer, so I dunno.
The direction is
product: producer (foreign) -> reseller (USA) -> user (USA)
money: buyer (USA) -> resller (USA) -> producer (foreign)
The hard part is the initial stage of taking US physical $5-20 bills and depositing it into a bank account without arousing suspicion, at scale. You can't just deposit it into a US account and wire it overseas, and you can't as easily play the remittance game where you give ~$500/wk to a bunch of Mexicans to "remit to Mexico" to accounts you control.
Right now, the best thing to do is actually "bulk currency export", where you put it in a bunch of bags and ship it overseas, then deposit it into foreign accounts. Once you get it into a foreign bank, you SWIFT it to a slightly less shady jurisdiction, going through a bunch of steps to obfuscate (although doing traffic analysis on SWIFT is a solved problem; I suspect FinCEN is a Palantir customer...), then put it into investments, usually government approved/affiliated, which won't be questioned.
By buying slightly government affiliated assets (real estate?), you then get rent streams which are "clean", and then you invest those in the US.
Your average dude buying a few hundred pounds of weed in Humboldt for $1500/pound and flipping it for $3200/pound in NYC just moves bulk currency back in the same manner he shipped his product cross-country, pays his vendors in cash, and ends up with a lot of cash, which he spends on flashy purchases for his personal life (paying rent in cash, etc.), and with the excess, may make cash investments in assets (small businesses, whatever) which generate licit revenue, on which he pays taxes and then does whatever.
Bitcoin is totally irrelevant to that.
The market where bitcoin might make sense is if you're a US research dealer who wants to buy, say, 100 grams of some new RC from a manufacturer in China. The dodgy "sell to individuals" front there might be willing to accept BTC then fedex it to you. Otherwise you have to go through the trouble of doing a wire to a foreign account, etc.
It also could make sense if your retail buyers also take bitcoin. Maybe selling cocaine to VCs in SF/NYC could meet that (1 BTC ~= 1 eight ball), assuming you can then somehow take a bunch of BTC to buy larger quantities of cocaine (maybe via silkroad?). But in practice I think the only people selling serious weight for Bitcoin above the retail level are pharm, RC, or pot.
There are laundering services that will take your money, then send it to a recipient in dribs and drabs over time. They basically say they won't work with police.
Dwolla was probably stopped because there's some regulation regarding converting money between currencies.
As part of the case apparently filed against MtGox in Maryland, they will likely soon confiscate the domain (since it is a .com and the US has declared itself the emperor of all .com's). Then, it won't matter whether they actually win the case. Having the domain gone for a long period of time will make a serious dent in their business. It probably won't be the death knell, since Bitcoin users tend to be more sophisticated and used to complications like this, but the filing of this case is probably a sign that Mt Gox will be headed out as the market leader.
You mean by filing a case against them and then, in the discovery process, locating the emails in which the founders of Mt. Gox openly admit that the whole enterprise is built on deliberate cultivation of commercial copyright infringement, so much so that the operators of Mt. Gox actually pay their users to upload pirated movies?
That sounds far fetched. If the US is going to try to take down Mt. Gox, I think they'll do it a different way than how they went after Mega.
Big difference between an internet company and an internet website.
One of the e-mails presented as evidence Megaupload paid copyright infringers talked about them relaxing their policy and paying someone with copyrighted content uploaded to their account a commission for downloads because none of those downloads involved the copyrighted content. (Presumably they were using their account for backups or something, I don't know.)
I'm not even saying they were particularly ethical; part of the reason they didn't pay out to pirates was because it saved them money, and it's not like the pirates could complain - the terms and conditions were quite clear!
http://dealbook.nytimes.com/2012/12/10/hsbc-said-to-near-1-9...
"Give me control over a nations currency, and I care not who makes its laws.”
Baron M.A. Rothschild
1. holders of dollars at MtGox will buy as many btc as possible and remove them from MtGox, because there's no other escape for their dollars
2. holders of btc at MtGox will presumably send them elsewhere because selling them for dollars doesn't make sense if you can't get the dollars (although perhaps it still makes sense for euros/pounds/yen etc)
3. There is a loss of liquidity at Gox from all the btc being pulled from there
4. The dollar price at other exchanges starts falling because they are still exit points for dollars
Most of the trading volume is in dollars at Gox if I'm not mistaken, so this might be the death blow for them. Although given their history of incompetence, it was kind of sad the network effect was protecting them. Perhaps a phoenix will rise from the ashes.
1. Holders of dollars at MtGox that live outside the US and have already had successful withdraws to their home-country banks withdraw now. (Source: I just did)
2. Then we sell a large portion of our bitcoins (essentially just leaving the, "if I'm wrong" fund of bitcoins, about 20% of what we bought way back when it was $1 or $5 or whatever).
3. Then we withdraw that amount to our home country bank.
4. Then we wait for the next 2 months as speculation of DHS swings the price down then up then down until DHS stikes against MtGox and the price collapses to about $20 or $30.
5. Then we figure out a way to buy back in.
6. We wait 2 years and start selling out at $1000 / BTC while people scream "currency of the future".
I don't think it takes too much of a crystal ball to figure out this strategy is a bad idea. Conversely, I hope all of our foreign friends remember to send a few bitcoins our way for putting this generous gift of a multi-billion dollar finance industry into their laps.
Yep we mishandled it certainly... When there is a new technology which is about to change the face of the planet, the usual response is to bring as much of the industry for that tech into your own country.
The US response has been the opposite. I suspect later generations are going to regret it.
As a wise man once said, they laughed at Galileo, they laughed at Einstein... and they laughed at Bozo the Clown.
Exactly, "they" can't tell the difference between Bozo the Clown and Einstein. It's very hard to predict what ideas or technologies will be adopted in the future. I don't think it's wise to quickly dismiss one that's already progressed this far (the DHS isn't laughing).
So it should be interesting to see what impact this has on Dwolla's business.
Although, now that I have a Dwolla account I am more likely to use it in the future.
That's mostly likely why DHS has shut them down.
I'm not a financial expert by any means but it's pretty clear when you're moving cash to Mt. Gox, you're moving it out of the country. And I think the paperwork is a joint responsibility.
Their proprietary exchange might have different rules, but iirc, it's not very widely distributed yet.
If it was money laundering/ofac, you'd see Treasury or Secret Service involved. Widespread fraud would add the FBI and AGs.
But DHS/ICE/HSI's mandate is so broad it's difficult to know what they're targeting here. Could be money laundering, could be something else. Their mandate also includes drug smuggling and computer crime, for instance.
However, I have little insight, it just seems the most likely reason to me.
https://www.fbo.gov/?s=opportunity&id=145c347388e1b1a8f5...
Click on Complete View in the tree view to see the full feature list.
If BTC ever gains enough acceptance to (largely) eliminate the need to convert in and out of USD, it could be a real problem for governments who want to control all financial transactions.
Whether or not that will happen is anybody's guess. It's something of a chicken or egg problem, as BTC is less likely to gain mainstream acceptance if you can't easily convert to/from other currencies (USD probably being one of the more important ones). If BTC remains relegated to only black-market transactions on sites like The Silk Road... well... that makes it a bit less useful. :-(
Given that 'Murican "libertarian" is entirely different that what it means anywhere else in the world, it's inaccurate to call it conventional.
If it helps, I find "liberty" as associated with "property rights" crazy. Totally ordered property rights are a symptom of a completely overarching state. The idea that people who are repulsed by aggressive force support land ownership rights and think that works is weird.
Likewise, the only way I can think to facilitate the concept of private property (including land - I don't prescribe to the ideology that since you can't pick up the dirt to the core of the planet and the air some distance over your head, plus the coordinates and area of that portion of the planets surface and move it it can't belong to you) is to have some kind of collaborative agreement between all parties in good faith to not do business with anyone that actively violates any member parties property rights, and you need to depend on that collaborative organization to have enough economic influence to keep people from robbing them. But likewise, if they have sufficient economic influence to manipulate behavior, you are pretty much at a borderline government because they can act in self interest to harm others for their own benefit since others depend on their economic productivity.
So how do you not "own" anything and have a functioning interaction between peoples? How could someone walk up to me, take the computer I just placed on a table (through no altercation of force, which is more cut and dry - party A engaged in violence against B, and must be ostracized by the group - who owns what is more nebulous - but even who initiates violence can be a conflated argument) and walk away with it, and I lose that possession but have no recourse to claim its mine. I mean, I could go and pick up someone elses laptop, but I "lost" anything I put into the work on mine (without distributed backups or something, which also aren't "mine"), and the party I take the laptop from will lose any input they impart on theirs.
I don't see how you can have productivity without ownership, but you can't enforce ownership without either violence or a collective entity power enough economically to influence behavior to their whims, which is no better than most governments. They end up acting in their own self interest, which often means witch hunts.
If it helps, consider that the idea of democracy was very radical to the age when conventional wisdom said only property owners deserved political power. After all, the country does belong to them. In comparison, the idea that everyone had equal say was basically inconceivable, and function infeasible with lack of ballot technology anyway.
Now substitute the word economic for political, it's similar to how capitalism works today. The factory owner gets to tell you what do because he owns the place. "Communism" as an idea wasn't any sort of immaculate conception, but the simple application of democracy to the economic realm. Socialism was just an intermediate step from capitalism (ie aristocracy) whereby only the factory employees (the stakeholders) are given input rather than everyone.
As to the "impractical" argument, as mentioned folks must've had the same reservations before all the implementation details of democracy (eg republics, parliament, congress, etc) were hashed out. For example, in your computer case, it might be simply recognized that sharing some things is not practical and thus some system of reservations/allocation is devised, just as we figured out who gets to write laws when it's clear not everyone can it simultaneously (or otherwise it becomes a mess).
Factory ownership and ownership of labor I always felt wasn't an issue with property rights but with an ongoing millennial long battle with inheritance and grandfathering, compounded by race and sex biases. The elites of a thousand years ago have, indirectly, maintained perptual ownership of the upper echelons of society for hundreds of years.
If you started everyone truly equal, without one man getting a billion dollars inheritance and another being born as a crack baby, ownership rights wouldn't be much of an issue because by merit you would come to possess things you deserve through your efforts. I also think it would be easier to eliminate illogical biases and classism towards other humans than to eliminate the desire to own and possess physical goods.
The reason the industrial revolution had so many issues revolving around the introduction of wage labor was that, even then, very few owned tremendous land and material resources and there was a great wealth divide. That divide enables some to exploit the desire for goods of the other to put them in a position where they don't benefit from their own productivity.
I am for communal ownership of the workplace, and that any worker who doesn't get his share of the profits is effectively a wage slave (just at a wage they agreed to be enslaved at). But I don't think you can render all land, material goods, etc public and expect anyone to aspire or behave any certain way because on a consistent basis humans reveal themselves to act in self interest.
Maybe in another hundred years when we have robots fabbing carbon from rock and they can manufacture anything on demand for no labor and there is no scarcity, communal resource ownership will be a reality. It will at least be essential with an automated means of production as is emerging now, because if the extremely small ultrawealthy class continues to own foundries of unlimited productivity with magnitudes less human capital invested, they are going to drain everyone except other wealthy automation owners dry. It is happening now, but the extreme case is there is no need for the worker and the owner controls the resource production in entirety. I'd also argue we are in an exponential spiral towards this now that human capital is no longer the most in demand resource to consume in the market.
But I think that just requires an extremely progressive tax system (although I lean anarcho, I still can't construct a functioning society without at least some consensus representative law council, even if they can't exercise force, that can direct culture through logical process rather than mob mentality, so I call myself libertarian) to allow people to prosper, but to prevent the run away successes (Apple is the obvious candidate of our age) from accumulating absurd amounts of total economic wealth and exploiting it as ownership of the means of production.
Frankly you already seem like a libertarian in the classical sustainable sense, and not the american "free market" bastardization built only to protect the upper crust with the language of "freedom" (from taxation). A parting point worth mentioning in that vein is the "free market" and all its siblings are entirely artificial constructs of our mutually agreed rules. For instance, if you desired to trade your wool for my corn, the only incentive I have to leave with only the wool instead of the corn, the wool, and a slave is the social consequence of break the rules. Everyday we already implicitly follow hundreds/thousands of rule of conduct, so I have little reason to doubt that people can live perfectly fine with more equitable rulesets of conducting economics just as they have for politics.
>land - I don't prescribe to the ideology that since you can't pick up the dirt to the core of the planet and the air some distance over your head, plus the coordinates and area of that portion of the planets surface and move it it can't belong to you
Me neither:) I subscribe to the position that justifications for private property are things like "I made that" or "this was given to me by someone who made it" or even "I can make the best use of it right now." The only justification for land is that you can defend it. The only ways to get land is to draw lines on the ground and threaten to kill anyone who crosses them, or to license the land from somebody who did. Same for air, oceans and rivers. Land ownership is crystallized violence.
When you have closed groups of people agreeing to defend each other's private property with violence, the only thing stopping them from claiming anyone outside of the group's property as their own private property is the size of their guns. As history shows, this starts with finding representatives (self-appointed or otherwise) to "sell" them land, and with the reification of the title to that land, forcing its residents to pay rent under pain of death. This is called wage labor.
On the other hand, the central ideas of Marxism is ( translated to libertarian language), that the relationship between a worker and his employer is a coercive one and that the worker may (will) not be able to choose a non coercive employer.
So Libertarian and Marxists thought, both try to limit coercion, and therefore the ideologies are actually quite compatible.
I remember one of the first algorithms I wrote was to pattern trade the exchange rates (USD -> CHF -> EUR -> DNK -> USD), but then I realized that the fees would kill any potential gains from the imbalances.
Its name was originally an initialism of Magic: The Gathering Online Exchange when it was an exchange for Magic: The Gathering playing cards.
Mtgox.com really did start off as "magic the gathering online exchange", and was a site where people could buy/sell Magic cards.
Nerds being nerds, the guy who ran the site got into Bitcoin when it first came out, because Bitcoin is interesting to nerds.
After Bitcoin got big, Mtgox became "just bitcoins", and was eventually purchased by the company now running it.
I wonder if dylz still refers to LG as 'Lucky Goldstar'?
So while it was named LG because of the initials of Lucky Goldstar, its name is still just LG (or I guess "LG Corporation").
Security was an afterthought - which might have been okay on a niche hobby site but wasn't when real money started to be traded.
When they get their act together and the issue stops coming up every six months it won't be as relevant. Until then, slam away - it gives potential users something real to find when searching for info about a service.
MtG:OX is terribly insecure, still using a shit codebase patched together for bitcoins, emphasising centralisation of BTC, which is dangerous.
At one point they controlled and hosted (and had access to the database) of the largest bitcoin forum, largest bitcoin exchange, which makes for a terrible monopoly.
It is dangerous to BTC ecosystem, it is dangerous to users' personal information being leaked repeatedly, getting hacked repeatedly, etc.
Side Note: if we think we actually own the dollars in our wallets...remember that it's illegal to deface government property (like writing on it)...so no we don't.
In regards to melting, this is funny to admit, when I was young, I used to believe that coins should be worth more than dollars, because if they ever lost their value, I'm pretty sure I'd have more use for the metal than paper.
It's more nuanced than that.
Back in 1965, the Treasury prohibited exporting or melting of silver coins, but that prohibition has long since been rescinded.
Currently it's unlawful to melt pennies or nickels, but not silver coins. Although silver coins (talking pre-1965 stuff here) trade for somewhere around and above spot value anyway, so melting is pointless.
https://mtgox.com/pdf/20130515_statement_regarding_dhs_court...
Though I have to fear for both campbx and coinbase - they are the next two biggest ways to convert USD to BTC.
Me too, I feel a little better for coinbase since Andreessen Horowitz got involved. CBX seems like they are all above board too, but gosh I wish they'd fix their web interface.
So would one rather be holding BTC or USD right now?
i'm not pulling my cash out because i don't believe in BTC, but with the uncertainty and volatility at the moment I'm going to take a wait and see approach