This is exactly why I am horrified by the number of bitcoin companies cropping up. I can only assume many of them have no idea what they are potentially exposing themselves to from a legal perspective.
Or an ethical perspective even.
Clearly, there has to be some point at which we can no longer care, because I'm not certain that (metaphorically) there is a coin circulating that hasn't been dipped in blood at least once. Otherwise, the farmer who sells a hog to the butcher that sells sliced ham to the mafia capo's wife also shares the taint.
And even that presumes that the money to be laundered is profit from an unethical act, rather than one merely prohibited by government edict. I personally do not find marijuana-based commerce to be unethical. Therefore, I don't particularly feel as though a seller of sinsemilla on Silk Road should feel bad about wanting to be able to spend his profits without getting pinched, even if it means a murderer-for-hire could theoretically also prevent someone from following his money.
It isn't the money that's dirty or clean. It's the person holding it. Thus, I believe the criminalization of money laundering practices is simply an effort by the governments to solidify their control over the financial sectors, and to make their efforts at fighting crime less labor-intensive.
Even if all money were perfectly untraceable, police could still solve crimes by examining the evidence of the crime, rather than the evidence that someone got paid for it.
Of course, states seem to think that is rather a useful tool to have, so I expect that this business will be raided and shut down sooner or later. My advice is to cash out (in actual cash, no less) on the unexpected success as soon as possible, and then exit the business entirely before someone decides to make an example of it.
There was an idea floated a while back about why 51% of the miners couldn't just disavow the Bitcoin that FBI seized from Silk Road users. The answer was that it would completely unravel the currency, and impose an ethical obligation on everyone to examine the source of coins before accepting a transaction.
Gold has no smell. If it did, it would all stink. Attaching ethical considerations to money itself places an additional transaction burden in commerce, such that even a tiny cost can grind everything to a halt, in much the way that a pinch of sand in your oil pan can destroy your engine.
Think about the ethical consequences of currency that is not completely ethically neutral, and compare with the consequences of one that is. In the one case, money laundering happens, and you cannot reasonably prevent it. In the other, black markets flourish as white markets fail, because currency can flow only between them in only one direction.
To use an extreme example, was it unethical to hide jews from the Nazi's?
hiding Jews from the Nazis was to avoid them getting shipped off to death camps.
The question is thus do you think that taxes are unethical? I don't think so but a lot of bitcoin fans seem to think so.
A car salesman goes through all sorts of paperwork and meets with the person they are selling the car too, and they hand the keys over.
This is much more similar to the service where you take a photo of a Key and you get mailed a copy of it for 5$; except it's semi-anonymous with bitcoin.
>This is why conventional financial institutions and services are undesirable for most criminals.
I think reality is in disagreement with you, as counter-intuitive as that may seem.
I suspect most lawyers/regulators would consider changing bitcoin into gift cards is legally like transmitting to cash.
Cars are regulated also, for instance to post a license plate that can be used to identify the owner's name and address, in part because they can be used in crimes.
This isn't _just_ an issue of if the seller is being ethical; it's an issue of whether they're following the law.
As for your car example, I'll leave that to the other comments already rebutting it.
Clearly the most important issue is the factual one... whether there is more than incidental money laundering happening here.
If I had an ad placement business that only placed scammy ads or if I developed software that allowed people to be oppressed, I would also have issues. I would think that enabling criminal behavior is in the same broad category.
As far as cars, there's no issue selling a car. However, if your cars had armor plating and hidden compartment for guns, you have an ethical responsibility to find out if your customers are generally up to no good. If there is still a business to be made from legitimate customers, then maybe there's a way to ensure they're the only ones you do business with.
While I don't necessarily believe that would lead to acts of malice such as confiscation raids, it has already led to bonehead moves such as publishing over the public network the names and addresses of all registered gun owners in an area.
Also, people buy illegal moonshine when legit liquor stores are available. People buy cigarettes sold in the wrong state or from a tribal reservation. Buying a gun from an alley is a possible choice for someone who would otherwise prefer to bypass taxes, paperwork, and bureaucracy--illegal, of course, but not necessarily a prelude to a different crime.
This method of sale represents ~40% of all gun sales in the US. It would be safe to assume that the majority of guns purchased with the intention to commit crime are purchased person-to-person. There's a good breakdown of nationwide person-to-person regulations here[1].
So is operating an unlicensed money transmission business -- in the US, this is likely to be both a state and federal crime -- or a licensed money transmission business without adhering to appropriate anti-money-laundering controls.
> This is a poor analogy.
Seems to be a spot-on analogy.
However, something like this is scary as it's basically one hit easy money laundering. Not a bad idea if you're running the service anonymously. You'll make a good profit for sure. Otherwise there could be substantial risks and it may be better off to shut it down before feds get involved.
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