Bitcoin Exchange CEO Pleads Guilty to Enabling Silk Road Drug Deals
wired.com
wired.com
http://willyreport.wordpress.com/2014/05/25/the-willy-report...
http://www.reddit.com/r/Bitcoin/comments/26g46e/the_willy_re...
So bitcoin was a perfect solution to that problem. It naturally gravitated towards a market with very little competition and shitty alternatives. Of course it thrived.
Bitcoin could never have taken off if it had tried to become a currency in stores first. It needed a proof-of-concept. And the only market it could do that in, was a market with no competition.
So bitcoin blew up there, and now it's slowly making the transition into the mainstream where it faces much more elegant, entrenched, competitive players like debit/credit/ach/cash etc. Despite these being far from perfect, it's a big battle. But without Silk Road, bitcoin would never have had the momentum, the interest, userbase, hype or infrastructure to even think about competing for mainstream use.
Silk road was just a demonstration of these practical attributes in the real world. It helped to add some demand for the currency, but not a majority of it. Mostly, it bolstered public awareness. At the same time it was being used on SR, it was being widely derided by the majority of the media as only having one specific illegal purpose and should be shut down for that reason, causing others who may have taken a look out of interest to write it off completely. You could argue that the effect of SR was neutral, if not negative.
Bitcoin was being traded before SR and it's being traded after. The most recent big bubble happened partly as a result of SR actually collapsing. The day it went down, the price dipped from ~$125 to ~$85 and it was back up in about a week.
Combined with the government hearings at the time, the facts that bitcoin were (1) legal to use, and (2) still had value outside of drug trade, made it explode.
Impressive amount of hubris there.
Look I'm not against drugs (born & raised in Amsterdam, never used but understanding of it) and Silk Road was mostly a voluntary marketplace without victims that reduced violence and crime involved with drugs being sold at night illegally on every streetcorner instead of anonymously online. It's a product of a system that ignores research and examples (like my country) that legalized markets provide more oversight, opportunity for regulation, for consumer safety, usage-limits, child-free zones etc, than a completely illegal unregulated market. And all Shrem did was enable people to participate in this market (which a priori is not illegal, as it traded baseball caps and hamburgers, too, Shrem was agnostic about what the bitcoins were used for, and did not even sell them to Silk Road users, but to someone who resold them to Silk Road users).
So I'm not against Shrem. BUT, he broke laws. And he did it knowingly and willingly. All the emails released by the court show he sent emails telling this guy of whom he knew was selling on the SR, to use different email addresses so that he wouldn't have to ban him (as his cofounder didn't like it), limit bank deposits to X amount per time (so that he wouldn't have to file a report to Fincen) etc etc. And then he didn't report anything even though in the emails he spoke of the need to do these reports, and told his cofounder of this responsibility. He literally instructed a customer how to avoid and evade the law over email secretly from his co-founder, and then chose not to do the due diligence he's legally required to do in terms of reporting large orders, despite communicating he was aware of this duty.
My point is, had nothing to do with being under staffed or having too little money to hire competence. Every 15 year old could have not made these mistakes. (if that is even true, they raised quite a bit of money and generated significant revenues very quickly, too)
Still, got nothing against the guy. The whole case is rooted on a non-sense drug policy.
Who gets tapped for this sort of thing in your world?
If you think drugs should be illegal, then justice was served here. If you don't think drugs should be illegal, then it wasn't.
Either way, Shrem's behavior seems pretty idiotic to me, from start to finish.
The constitution is the highest law of the land. If you think this guy belongs in jail, then you need to amend it.
The supreme court has already ruled that unconstitutional laws are null and void the moment they are passed. They do not need to be struck down by the supreme court.
Remember the legislature, executive and judicial branches all derive their power from the constitution, thus none of them have the power to exceed the power it gives them, by definition.
The real problem here is not that people haven't changed the law (which they can't since the people are not in power).
The problem is we have a criminal syndicate for a government.
This is why there are no prosecutions for spying on the NSA's part, despite breaking the law. This is why the TSA violates the fourth amendment with impunity (again, a violation of USC 18-242) without ever there being charges filed.
Hell, the TSA is violating state criminal statutes in most states when they molest minors who opt out of having their nude photos taken (which itself is child pornography).
No charges have been filed. Why is that?
So, we can't really say we have the "rule of law" here.
The law only is used against people like Charlie, never against the rulers.
We do have a rule of law, it just ain't perfect. Otherwise, we would be like China.
We have the rule of men who can do pretty much whatever they want, without repercussions.
Imperfection would be if %10 of the TSA employees prosecuted got off without punishment.
Criminality is the situation where none of them will ever be prosecuted.
But just like Germans in the 40s who couldn't believe the holocaust happened because they couldn't comprehend the possibility that their government could be that evil... american kids, indoctrinated in state worship in state schools can't conceive of the possibility that their government is nothing more than a gang of violent criminal thugs.
Er, what? If you fund or help fund a criminal enterprise, you can be prosecuted for it. If someone was funnelling millions of dollars to, say, a child sex slave ring, you think that the constitution protects their sending of that money and they can't be charged for it?
I don't personally think drugs should be illegal at all, but I do think that funding crimes in general should be illegal, which is essentially what Shrem was charged with here.
<MCRed> is arguing (admittedly in a rant-y kind of way) that the U.S. Constitution is a document that grants limited and specific powers to the federal government and reserves the rest for the states and the people. That argument says those powers do not include the ability to regulate money exchange. An implication of that argument is that nearly all law enforcement would be left to the states -- so your hypothetical sex slave ring would be prosecuted by the states, and in fact every state currently has a law on its books making such a conspiracy illegal. And in fact most criminal prosecutions are already done by state governments.
Again, I'm not saying what I would prefer as a normative matter, just that it looks like you're talking past each other to some extent.
Ignoring the legal system and the Constitution entirely though (purely for the sake of argument), it makes practical sense that for offenses that constitute multistate or multinational money laundering, the federal government would be the most appropriate enforcer of the law.
I submit to you that the "crime" of money laundering is one you're guilty of. I know for a fact, under the law, the way it is written you are guilty of it.
Thus you are advocating for your own incarceration.
I'm not entirely sure you know what "truth" means either.
Therefore, by your argument you're a felon.
That's why I'm saying the law is illegal. I'm saying you're not a felon.
But of course, I get down voted to hell here, just convincing me that there is no intelligent life to be found on hacker news.
EG: ad hominem
Also ad hominem means something other than what you seem to think it means. That's when you dismiss someone's argument by saying there's something bad about the person making the argument, eg 'ignore what Alice said because she's a communist.'
Thus, should the legislature pass a law, and should the Supreme Court uphold that law, it is deemed Constitutional by the body specifically-empowered to make that determination.
The Money Laundering Control Act made the laundering of money a crime. It was passed by the Legislative branch of the Federal Government as prescribed by the Constitution.
The MLCA has been upheld by the Supreme Court, or rather, cases have been brought before in which the government's prosecution has rested on enforcement of the law, and the Justices have upheld it by interpreting the law, as written, without deeming it unconstitutional (Santos, Schueller, etc.)
Thus, the law is Constitutional pending some future case.
Thus everything you just said is nonsense words.
What you have merely done is engage, effectively in ad hominem along with a string of irrelevant assertions that to an in unformed, or unthinking reader might sound like an argument.
And of course, in grand hacker news tradition, downvote me so that people cannot see my comment, for the "crime" of making an argument that undermines your political ideology.
This is how propaganda is used to cause people to tell lies without even realizing it.
When you pay your credit card off from your checking account, but took money from your savings account first, that is "money laundering" under the law.
Regarding money transfer, I think it's clear that the Congress has the ability to regulate interstate and international money transfers. Whether it should or not is an entirely different matter.
Despite the current (ludicrous) interpretation of the commerce clause, the Congress has no authority over intrastate money transfers whatsoever; that authority rests with the states.
I guess it can be argued that the Section 8 clauses 5 and 6 do not grant the Federal Government the power to regulate the exchange of money.
Nevertheless, the currently accepted interpretation of the Commerce Clause pretty much settles the question [1].
[1] http://en.wikipedia.org/wiki/Commerce_Clause#The_Rehnquist_C...
6: To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
Section 8, clause 5: Defines the weight of money. Section 8, clause 6: Allows for the punishment of counterfeiting.
Neither of these have anything to do with trading money between people.
I think that is why you did not quote them, you merely cited them expecting that most people would not bother to look them up and thus you would appear to have presented a slam dunk.
The commerce clause merely requires that no tariffs can be placed between commerce of the states. I find the phrase "currently accepted" in place of "criminal in practice" to be a convenient bit of spin.
Counterfeiting has a long and sordid history, and was very much a problem when the Constitution was written. It was, in fact, one of (but not the only) impetuses for the Coinage Clause. See http://www.history.org/Foundation/journal/Summer07/counterfe.... There are plenty of other sources to support this, though this is the only one I found online in my 30 second search. If you want more sources, you're free to visit a library yourself.
I would personally like to see the money-laundering laws repealed, as the activity they proscribe is not itself a true crime. They are prone to abuse, and appear fundamentally unjust to me. But they are at least in principle constitutional.
The NSA is not breaking the law. Again, not all good things are mandated and not all bad things are forbidden. There's a difference between pushing to the very edge of what the law permits and pushing further. In many ways, it's a hacker's mindset.
I think that there's an excellent argument that the TSA is violating the 4th Amendment. It's not at all obvious how stripping me naked with X-rays is consistent with the security of my person, nor is it clear that it is reasonable to be searched before boarding transportation. Additionally, I fail to see how disarmament of travellers is consistent with the 2nd Amendment.
I would probably support an amendment to permit searches for explosive devices, were it properly worded.
For example an exchange to trade one cryptocurrency for another (bitcoin to litecoin). So even a non-fiat company can indeed be a MSB.
It's completely true to say that the IRS deems it property, not currency, and Fincen deems it a money-like product or a money-substitute. It doesn't outright call it currency though, but the implication is there.
Similarly, it's strange for the IRS to say you need to pay X taxes because the IRS says it's not a currency, but the courts say it is. But you still need to pay the taxes.
There are reasons for why this might make sense, sure, but it's also easy to see why some people find it strange or confusing.
You might as well be using cows as a currency, it'd be no different from bitcoins.
Characteristics are much more important than arbitrary definitions because what we want to call something is mostly subjective, characteristics aren't so much. i.e. a fork can be called a utensil or a weapon, but its characteristics are the same: sharp, pointy, rigid etc.
For example, you could say 'anything is a weapon', and thereby we're not allowed to bring clothing on to an airplane, because someone could use a tshirt to strangle a person. That would be completely true, and there certainly will have been people who've been strangled by a tshirt in the past 20 years. But that doesn't mean we should ban it and call it a weapon, because it doesn't have the characteristics or use of a weapon ordinarily and is barely a weapon.
Same for cows. Yes you could use it as a currency, but it doesn't have the characteristics of a currency (fungible? no, divisible? no, portable? no, long term store of value? no, precise unit of account? no) while bitcoins are divisible (up to 100 millionth of a bitcoin), portable (obviously), precise unit of account (yes), store of value (possibly, in my opinion probably but time will have to tell). So indeed cows are treated very differently for the right reasons, as it's not a good form of money and thereby isn't used as money generally. If cows had good characteristics as money, it'd be used a lot, and we'd see people try to use cows to launder money on a massive scale naturally (because any legal money will be used illegally too, and that must find its way back into the system at some point), and then you'd see money transmission laws include cows as a 'money-substitute' just like bitcoin. But they aren't, because they aren't actually a money-substitute, because cows suck as money.
Sure, but you can use anything a currency. And being able to avoid the laws just by using something that isn't officially recognized would be rather dumb.
I agree which is why US institutions have moved to officially recognize bitcoin as a certain thing, so the laws that apply to those things apply to bitcoin, too. For the IRS that's taxation law on property, for Fincen that's money-like products.