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Bitcoin accidentally solved my startup's international banking problem

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Re: Bitcoin accidentally solved my startup's international banking problem

#31

Post by dobbsbob »

conformal wrote: post #19
zorked wrote: post #10

Earlier quoted context omitted.

That's very nice, congratulations. Isn't there a way to work around the risk of chargebacks? Requiring an "insurance" deposit and passing charges on to your customers, or holding payment for some amount of time?

i've run a few other businesses in the past that had some serious credit card and paypal fraud problems. to give you an idea of how bad it can get, i have been charged back USD 30K in credit card charges by a single customer who was running an extremely creative fraud system. the secret service ending up getting him, which was vindicating, but you can't get blood from a stone... i'll have another think about it, but…

You could always try an informal payment scheme. Find existing storefronts that have MSB licenses that do currency exchange, ask them to take payments for you. End of the day they deposit to your business account. Now you can have cash accepting storefronts. Find an easy yet secure method for these stores to notify you of cash payment and release the coins.

This is better than cash deposit directly to your bank account because of MITM fraud attacks, and because banks hate people coming in to deposit cash and quickly try to shut down the account. Again I'm not a lawyer so I don't know if you'd need a license for this in the USA but overseas it would work in countries that need this service, like Pakistan/Philippines/India.

EDIT: I would imagine, if you do quite well, you could sign a 1:1 agreement with companies like Bitpay who are looking for USD, and have BTC, and you have USD and are looking for BTC. win/win

Re: Bitcoin accidentally solved my startup's international banking problem

#32

Post by Brig303 »

dobbsbob wrote: post #16
csomar wrote: post #13

How is it legal for someone based in the US to setup a UK company to run his business? Isn't this a recipe to get the IRS to investigate this as a tax evasion scheme? I mean if it's possible, then every online business should incorporate in HongKong and avoid Taxes, VAT and several other complications that the IRS put.

It's legal as long as you report any income you make from it personally. There's nothing stopping you from incorporating in the Seychelles, and getting a bank account in Latvia, Belize, or Panama/St Vincent. Just so long as you report foreign income paid out to yourself. The foreign corporation doesn't have to report anything (this might have changed, i'm not a lawyer). That's why you see all those shady collector co…

But what if you end up "working" for your company? Let's assume that you are in the US and might have to put in hours to hack together a product or a service. And none of your "employees" are in Latvia or Belize. Is it still legal?

Re: Bitcoin accidentally solved my startup's international banking problem

#33

Post by mjn »

conformal wrote: post #21
dobbsbob wrote: post #16

Earlier quoted context omitted.

It's legal as long as you report any income you make from it personally. There's nothing stopping you from incorporating in the Seychelles, and getting a bank account in Latvia, Belize, or Panama/St Vincent. Just so long as you report foreign income paid out to yourself. The foreign corporation doesn't have to report anything (this might have changed, i'm not a lawyer). That's why you see all those shady collector co…

just to elaborate here: the OP will likely need to file subpart F income for his UK-based controlled foreign corporation (CFC). this means that any income he generates from the UK entity passes through to his US taxes. additionally, he will need to file a TD 90-22.1 with the department of treasury by june 30th of the year after the account has more than USD 50K in it. tax avoidance is a complex beast and simply incor…

> additionally, he will need to file a TD 90-22.1 with the department of treasury by june 30th of the year after the account has more than USD 50K in it.

Nitpick, but the TD 90-22.1 threshold ("FBAR") is $10,000. As an expat with a foreign bank account, I only really know about it because TurboTax flagged it, which was pretty fortunate.

Re: Bitcoin accidentally solved my startup's international banking problem

#34

Post by dobbsbob »

mschuster91 wrote: post #30
dobbsbob wrote: post #28

Earlier quoted context omitted.

Fees all depend on volume of course, so you have to weasel around with sales guys to lock them down. For Inpay I was paying 7% or so fees, and it was free to receive wires in my Okpay account because I am an exchanger with them. To become an exchanger you just buy $1,000 worth of Okpay and fill out the application/send in passport copies. Now all internal transfers, and bank fees are free. If you want a surreal exper…

Interesting. Can you share the name of that bank and the minimum requirements of opening an account in Belarus?

http://www.priorbank.by/e/ or infobank.

Min deposit was 25,000 Euros but I was told other banks it's a lot smaller, like 5,000 Euros but this is the best bank. Be aware this is Belarus, and it's a dictatorship so you're flying by the seat of your pants finances there's nothing to stop the government just taking your money but then again, US does this all the time too. If you want to open a mega bitcoin exchange there ya go. Getting permanent residency in Belarus is easy too. Plus there's no tax on worldwide income there. I hired a Belorussian lawyer to set this up.

Privatbank in Ukraine will also open for non residents if you visit in person and english is widely spoken. Small minimum deposit $100 http://old.privatbank.ua/info/index3.stm?fileName=5_2_35e.ht... however any transfer over $5,000 is reported to the tax police.

Belarus seems to have no financial police whatsoever if you wanted to withdraw a million in cash they would do it no questions asked. In fact, they didn't even ask me the source of the income when I opened the account. While getting the account you wait in a lounge while somebody pours you free drinks and watch shady Russian businessmen walk out with bags of cash and private security to take back to Moscow.

Re: Bitcoin accidentally solved my startup's international banking problem

#35

Post by deeths »

There are a few potential issues with this business model, and I'm curious if/how you've addressed them: 1) if you're taking software IP from one country and moving it into another, aren't you then becoming an importer/exporter of the software? That would make you liable for duties/taxes as well as export restrictions. In particular, exporting certain encryption algorithms in software can be legally problematic (http://www.fosterswift.com/publications-Software-Downloads-E...) 2) Some vendors have geographically limited software or licenses (http://www.microsoft.com/en-us/howtotell/geoinfo.aspx). In some cases the license may not allow you to run, for instance, a US version of the software primarily outside the US. Even if Germany lets you transfer the license, if the the license doesn't let you run the software in Germany, I suspect German law would agree you can't run it.

Re: Bitcoin accidentally solved my startup's international banking problem

#36

Post by deeths »

deeths wrote: post #35

There are a few potential issues with this business model, and I'm curious if/how you've addressed them: 1) if you're taking software IP from one country and moving it into another, aren't you then becoming an importer/exporter of the software? That would make you liable for duties/taxes as well as export restrictions. In particular, exporting certain encryption algorithms in software can be legally problematic ( htt…

To clarify, I'm not trying to turn this banking/bitcoin discussion into a discussion about the business model, just point out that "solving" a legal problem problem in one way (moving the transaction) may introduce new problems (import/export). Also, software companies seem to have put some thought into how to restrict these sort of maneuvers.

Re: Bitcoin accidentally solved my startup's international banking problem

#37

Post by dobbsbob »

deeths wrote: post #36
deeths wrote: post #35

There are a few potential issues with this business model, and I'm curious if/how you've addressed them: 1) if you're taking software IP from one country and moving it into another, aren't you then becoming an importer/exporter of the software? That would make you liable for duties/taxes as well as export restrictions. In particular, exporting certain encryption algorithms in software can be legally problematic ( htt…

To clarify, I'm not trying to turn this banking/bitcoin discussion into a discussion about the business model, just point out that "solving" a legal problem problem in one way (moving the transaction) may introduce new problems (import/export). Also, software companies seem to have put some thought into how to restrict these sort of maneuvers.

I could see Adobe and Microsoft sicking their army of lawyers on this site. I also see it is US domain/hosted which could be yoinked regardless of German law.

I would recommend a more bulletproof domain, and hosting in Germany or with PRQ in Sweden, who has lawyers to defend DRM claims. A good German host is BS web run by Henning Brauer an OpenBSD developer. http://www.bsws.de/en/

Also I think you're right this might fall under import/export laws

Re: Bitcoin accidentally solved my startup's international banking problem

#38

Post by rhubarbquid »

conformal wrote: post #27
sillysaurus2 wrote: post #25

Earlier quoted context omitted.

Would you mind describing his method of swindling you out of $30K? Surely it wasn't a single transaction... Was it a single credit card? Did he use multiple cards with different names? Or we're they all same name + same address?

he was using many cards with many addresses and billing names. i didn't have a system in place to catch this behavior at the time, and it was totally on me for not having proper countermeasures in place. iirc there were like 15 different billing addresses and card numbers in a few month period. once i saw that i knew i was going to get fucked on chargebacks. his fraud scheme was so creative i'm not going to describe…

Could you describe the countermeasures without giving away the scheme?

Re: Bitcoin accidentally solved my startup's international banking problem

#39

Post by HalfPriceDigi »

deeths wrote: post #36
deeths wrote: post #35

There are a few potential issues with this business model, and I'm curious if/how you've addressed them: 1) if you're taking software IP from one country and moving it into another, aren't you then becoming an importer/exporter of the software? That would make you liable for duties/taxes as well as export restrictions. In particular, exporting certain encryption algorithms in software can be legally problematic ( htt…

To clarify, I'm not trying to turn this banking/bitcoin discussion into a discussion about the business model, just point out that "solving" a legal problem problem in one way (moving the transaction) may introduce new problems (import/export). Also, software companies seem to have put some thought into how to restrict these sort of maneuvers.

Hi deeths, my site leaves it up to the seller (or buyer) to comply with restrictions on the usage of software. This seems to be how ebay deals with this issue as well. For example, there is a lot of used software on ebay that has restrictions regarding where software can be used (only in N. America, etc.)

The difference between my site and ebay is that because my company is based exclusively in Europe, my site isn't bound by the Vernor v Autodesk ruling and instead relies on the UsedSoft v Oracle ruling, at least when it comes to EU citizens. This is what allows my site to let EU citizens resell their used iOS apps or even their used Steam games. Other than the UsedSoft v Oracle issue, my site operates pretty much like ebay regarding software usage restrictions.

Re: Bitcoin accidentally solved my startup's international banking problem

#40

Post by HalfPriceDigi »

dobbsbob wrote: post #37
deeths wrote: post #36

Earlier quoted context omitted.

To clarify, I'm not trying to turn this banking/bitcoin discussion into a discussion about the business model, just point out that "solving" a legal problem problem in one way (moving the transaction) may introduce new problems (import/export). Also, software companies seem to have put some thought into how to restrict these sort of maneuvers.

I could see Adobe and Microsoft sicking their army of lawyers on this site. I also see it is US domain/hosted which could be yoinked regardless of German law. I would recommend a more bulletproof domain, and hosting in Germany or with PRQ in Sweden, who has lawyers to defend DRM claims. A good German host is BS web run by Henning Brauer an OpenBSD developer. http://www.bsws.de/en/ Also I think you're right this might…

My .com domain actually redirects to a .co.uk for the very reason that you mention :) And I made sure to host the site on servers in the UK as well!

Adobe has moved to a subscription based model, which makes the UsedSoft v Oracle ruling irrelevant. Microsoft may actually let you resell your used software, many companies do. In fact Adobe actually used to let you resell your used software so long as you didn't keep a copy of it.

The main companies that don't let you resell your used software are Valve (Steam), Apple (App Store), Google (Google Play) and Autodesk. I think that all of these companies are violating the UsedSoft v Oracle ruling by not allowing EU users to resell their apps, games and software, which is why I started halfpricedigital.com

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