Bitcoin Foundation's Response to California Cease & Desist • Hacker News Board

Re: Bitcoin Foundation's Response to California Cease & Desist

#21

Post by JoshTriplett » Wed, Jul 03, 2013, 2:11 AM UTC

anigbrowl wrote: post #13

Dylan16807 wrote: post #10

Earlier quoted context omitted.

They're still wrong because the foundation is not an exchange in the first place.

Maybe, maybe not. It depends what sort of agency relationship exists between the Foundation and its members, whether the members are considered beneficial owners and so on. It's not obvious from the website what corporate structure the Bitcoin Foundation has, for example. If it's a nonprofit, it has yet to file a 990 tax form. I find it understandable the the CA regulator wants to know what sort of entity it is deali…

> I find it understandable the the CA regulator wants to know what sort of entity it is dealing with.

That's the kind of thing a regulator should figure out before making legal threats.

Re: Bitcoin Foundation's Response to California Cease & Desist

#22

Post by Torgo » Wed, Jul 03, 2013, 2:27 AM UTC

thinkcomp wrote: post #14

Interesting hand-waving going on here. For some reason they're citing the California Commercial Code when they know full well than FinCEN Guidance FIN-2013-G001 ( http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.... ) takes precedence. Of course Bitcoin is a "payment instrument," that's the whole point, and the Department of the Treasury has already deemed that it is within the bounds of state regulators.…

Does federal law take precedence for state regulation? It just seems like California has a narrower definition of "money transmitter" for the purposes of regulation inside their own borders above and beyond the federal one. Also, if a business is in compliance by state law but out of compliance federally, is California obligated to do anything about that? They allow medical marijuana dispensaries to operate despite being illegal at the federal level. Not insinuating you're wrong, just legitimately curious since IANAL.

Re: Bitcoin Foundation's Response to California Cease & Desist

#23

Post by anigbrowl » Wed, Jul 03, 2013, 2:41 AM UTC

JoshTriplett wrote: post #21

anigbrowl wrote: post #13

Earlier quoted context omitted.

Maybe, maybe not. It depends what sort of agency relationship exists between the Foundation and its members, whether the members are considered beneficial owners and so on. It's not obvious from the website what corporate structure the Bitcoin Foundation has, for example. If it's a nonprofit, it has yet to file a 990 tax form. I find it understandable the the CA regulator wants to know what sort of entity it is deali…

> I find it understandable the the CA regulator wants to know what sort of entity it is dealing with. That's the kind of thing a regulator should figure out before making legal threats.

I could argue that this is the sort of thing a non-profit ought to figure out before soliciting donations. At present I can find no record of the Bitcoin Foundation having filed for nonprofit status, and they don't explain their corporate structure on their website. You can't just say you're a nonprofit entity, there are rules about how you must apply for that status and what sort of public declarations you must make.

How do you know, for example, that it's not a scam? According to the letter, BF it is incorporated in DC and has offices in Seattle, but good luck finding the address or any other information. Regulators are not psychic, and they're well within their rights to say 'stop soliciting money from the general public until you've made the requisite declarations,' because entities that solicit money without having their paperwork in order often turn out to be operating illegally.

Re: Bitcoin Foundation's Response to California Cease & Desist

#24

Post by nullc » Wed, Jul 03, 2013, 2:51 AM UTC

anigbrowl wrote: post #13

Dylan16807 wrote: post #10

Earlier quoted context omitted.

They're still wrong because the foundation is not an exchange in the first place.

Maybe, maybe not. It depends what sort of agency relationship exists between the Foundation and its members, whether the members are considered beneficial owners and so on. It's not obvious from the website what corporate structure the Bitcoin Foundation has, for example. If it's a nonprofit, it has yet to file a 990 tax form. I find it understandable the the CA regulator wants to know what sort of entity it is deali…

It's a 501(c)(6)— the fact that they are a non-profit is something you should have known in an instant if you bothered looking. Even their bylaws are online: (https://github.com/pmlaw/The-Bitcoin-Foundation-Legal-Repo/b...).

Re: Bitcoin Foundation's Response to California Cease & Desist

#25

Post by thinkcomp » Wed, Jul 03, 2013, 3:07 AM UTC

Torgo wrote: post #22

thinkcomp wrote: post #14

Interesting hand-waving going on here. For some reason they're citing the California Commercial Code when they know full well than FinCEN Guidance FIN-2013-G001 ( http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.... ) takes precedence. Of course Bitcoin is a "payment instrument," that's the whole point, and the Department of the Treasury has already deemed that it is within the bounds of state regulators.…

Does federal law take precedence for state regulation? It just seems like California has a narrower definition of "money transmitter" for the purposes of regulation inside their own borders above and beyond the federal one. Also, if a business is in compliance by state law but out of compliance federally, is California obligated to do anything about that? They allow medical marijuana dispensaries to operate despite b…

Federal law definitely would preempt state regulation. Here, FinCEN has issued a guidance with what I believe is the weight of federal regulation however. California typically ignores FinCEN rulings (except this one), but generally shouldn't.

Preemption is a complex business. Also, I'm not a lawyer, but this is one of the reasons why the issue is in federal court. The rules are so complex and contradictory as to be more of a burden on society than a help.

Re: Bitcoin Foundation's Response to California Cease & Desist

#26

Post by coingig » Wed, Jul 03, 2013, 3:17 AM UTC

csense wrote: post #19

quackerhacker wrote: post #18

Earlier quoted context omitted.

There's a link right under the blue FB login [ Sign up without Facebook ] that should allow you to download the pdf, that's worth a try.

I object in principle to giving them an email address, Facebook login or establishing any sort of account. I just want to anonymously download the PDF over HTTP. Because this doesn't seem to be possible, I'm probably going to stop clicking on links to them altogether.

here you go :) https://dl.dropboxusercontent.com/u/2877271/Bitcoin-Foundati...

Re: Bitcoin Foundation's Response to California Cease & Desist

#27

Post by anigbrowl » Wed, Jul 03, 2013, 3:25 AM UTC

nullc wrote: post #24

anigbrowl wrote: post #13

Earlier quoted context omitted.

Maybe, maybe not. It depends what sort of agency relationship exists between the Foundation and its members, whether the members are considered beneficial owners and so on. It's not obvious from the website what corporate structure the Bitcoin Foundation has, for example. If it's a nonprofit, it has yet to file a 990 tax form. I find it understandable the the CA regulator wants to know what sort of entity it is deali…

It's a 501(c)(6)— the fact that they are a non-profit is something you should have known in an instant if you bothered looking. Even their bylaws are online: ( https://github.com/pmlaw/The-Bitcoin-Foundation-Legal-Repo/b... ).

I did bother looking. Why isn't it conspicuously declared on their website? For that matter, why are you averse to supporting your argument with links?

As for their bylaws, I did find those before I wrote my remarks above. Besides the fact that github is not exactly a standard place for posting corporate information, it still doesn't include things like the address of the Seattle offices.

This is the entity data file with the Distict of Columbia: https://corp.dcra.dc.gov/BizEntity.aspx/ViewEntityData?entit... ...you may need to create an account to view this.

Map: https://www.google.com/maps/preview#!q=5431+41st+Pl+NW%2C+Wa...

The Bitcoin Foundation has not filed any documents with the SEC according to an SEC EDGAR search, nor can I find any existing IRS 990 record. I'm not a lawyer, and especially not a corporate lawyer, but I think you're required to file with those entities if you're a company and if you're claiming nonprofit status, respectively. Why haven't they done so, and why doesn't their website have any of that information available?

As for why the state of CA is involved, the fact that the BF has organized a conference in San Jose seems sufficient to establish minimum contact required to say that the company has operations in California.

Re: Bitcoin Foundation's Response to California Cease & Desist

#28

Post by anigbrowl » Wed, Jul 03, 2013, 3:32 AM UTC

zero_intp wrote: post #11

lucb1e wrote: post #5

It's nice to see they defend Bitcoin itself as well as themselves. But then this nice thing might happen that governments can do when they're said to be unjustified in a request: they just change the law and then close you down instead of warn. Might be interesting to try and see them seize Bitcoin itself, but the Bitcoin Foundation is a legal entity that _can_ be shut down.

But, as stipulated quiet extensively, not under the jurisdiction of the California legal system.

'Stipulated' means that both parties have already agreed about this (in a matter which is before a court), which I doubt to be the case. Here, that claim is argued, not stipulated.

Bear in mind that the Bitcoin Foundation already organized a conference in San Jose, CA, and solicits donations from a website accessible in CA. As I understand it, that is quite sufficient for the state of CA to assert some jurisdiction over its activities: http://en.wikipedia.org/wiki/Minimum_contacts#Activities_as_...

Re: Bitcoin Foundation's Response to California Cease & Desist

#29

Post by nullc » Wed, Jul 03, 2013, 4:48 AM UTC

anigbrowl wrote: post #27

nullc wrote: post #24

Earlier quoted context omitted.

It's a 501(c)(6)— the fact that they are a non-profit is something you should have known in an instant if you bothered looking. Even their bylaws are online: ( https://github.com/pmlaw/The-Bitcoin-Foundation-Legal-Repo/b... ).

I did bother looking. Why isn't it conspicuously declared on their website? For that matter, why are you averse to supporting your argument with links? As for their bylaws, I did find those before I wrote my remarks above. Besides the fact that github is not exactly a standard place for posting corporate information, it still doesn't include things like the address of the Seattle offices. This is the entity data file…

::shrugs:: The bylaws github page is linked on the Bitcoin foundation's website.

> The Bitcoin Foundation has not filed any documents with the SEC according to an SEC EDGAR search, nor can I find any existing IRS 990 record. I'm not a lawyer, and especially not a corporate lawyer, but I think you're required to file with those entities if you're a company and if you're claiming nonprofit status, respectively

No. SEC only deals with publicly traded corporations, and only some non-profit organizations must file a 990. Bitcoin foundation hasn't existed long enough for any 990s to be publicly available in any case— they're filed a year behind and there is usually a year lag before anyone posts them.

Re: Bitcoin Foundation's Response to California Cease & Desist

#30

Post by marco_salvatori » Wed, Jul 03, 2013, 11:55 AM UTC

I'm not sure I understand what advantages incorporating offers to the Bitcoin Foundation, when (a) it facilitates legal targeting by the government and (b) does not further their stated purpose beyond what they could achieve as an informal working body. If Bitcoin becomes successful, that success will threaten governments and they will seek to suppress or control the currency and its associated organizations. If the Bitcoin Foundation is in this for the long term, then, like bitcoin itself, they should be focused on establishing their legitimacy outside of the governmental sphere.

You didnt really think 'the government' was going to leave you alone, did you?