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Ask HN: Bitcoin business unexpectedly taking off, help!

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Re: Ask HN: Bitcoin business unexpectedly taking off, help!

#81

Post by sumedh »

will_brown wrote: post #78

Taking the service offline was a good move. You can request an administrative ruling from FinCEN. It would be prudent to meet with an attorney first and have the attorney draft and send the letter (it may receive a quicker response on attorney letterhead). As a side note attorneys can not contact you, they can send you advertisements or return your calls but they can not directly contact you, you must contact an atto…

> As a side note attorneys can not contact you, they can send you advertisements or return your calls but they can not directly contact you,

As someone who does not have much idea about laws, why can't an attorney contact him?

Re: Ask HN: Bitcoin business unexpectedly taking off, help!

#82

Post by humanrebar »

jbigelow76 wrote: post #67
humanrebar wrote: post #32

Earlier quoted context omitted.

> 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.

Can you expand on this? Because the way I'm reading it it sounds like since it "could" be a tool for money laundering the OP shouldn't be doing it. But by that logic a car "could" be used to facilitate a bank robbery and therefore the salesman needs to consider those ethical ramifications.

Just because someone can do something (technically and legally), it doesn't mean he should do it. I was trying to comment on the course of the discussion here -- there are a lot of comments about regulations and criminal liability but not many about ethical responsibility.

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.

Re: Ask HN: Bitcoin business unexpectedly taking off, help!

#83

Post by 0xdeadbeefbabe »

orik wrote: post #71
jbigelow76 wrote: post #67

Earlier quoted context omitted.

Can you expand on this? Because the way I'm reading it it sounds like since it "could" be a tool for money laundering the OP shouldn't be doing it. But by that logic a car "could" be used to facilitate a bank robbery and therefore the salesman needs to consider those ethical ramifications.

There's a huge difference between this and a car salesman. 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.

I think he's asking about ethics. Just because this could be used for money laundering doesn't mean it must be used for money laundering.

Re: Ask HN: Bitcoin business unexpectedly taking off, help!

#84

Post by ekanes »

patio11 wrote: post #15

I would strongly consider not running a money transmitter as a side business. If you do not understand that you are running a money transmitter, I will be happy to elaborate. I would also mention, on the assumption you're not aware of it, that you are offering fairly effective money laundering for credit card thieves at below-market rates for that service, and you can expect heavy dedicated adversarial interest. I ra…

patio11 is right, you're about to have a major problem with gift cards going bad, which were bought with stolen credit cards. Happy to give more advice, you can reach me via my HN profile. Source: In a similar business for 16 months. (We sell gift cards for $ or BTC, but don't buy gift cards with bitcoin)

Re: Ask HN: Bitcoin business unexpectedly taking off, help!

#85

Post by will_brown »

sumedh wrote: post #81
will_brown wrote: post #78

Taking the service offline was a good move. You can request an administrative ruling from FinCEN. It would be prudent to meet with an attorney first and have the attorney draft and send the letter (it may receive a quicker response on attorney letterhead). As a side note attorneys can not contact you, they can send you advertisements or return your calls but they can not directly contact you, you must contact an atto…

> As a side note attorneys can not contact you, they can send you advertisements or return your calls but they can not directly contact you, As someone who does not have much idea about laws, why can't an attorney contact him?

Well the answer as to why is because the Model Rules of Professional Conduct prohibit said conduct. Specifically Rule 7.3, Direct Contact with Prospective Clients, reads as follows:

(a) A lawyer shall not by in‑person, live telephone or real-time electronic contact solicit professional employment when a significant motive for the lawyer's doing so is the lawyer's pecuniary gain, unless the person contacted:

(1) is a lawyer; or

(2) has a family, close personal, or prior professional relationship with the lawyer.

Now you may be curious about the justification of the rule...ever hear of the term ambulance chaser? It is a nasty term for attorneys who preyed on prospective clients in very vulnerable states who otherwise would not be able to make a voluntary and informed decision. The rule is meant to protect the public and profession from said behavior.

Re: Ask HN: Bitcoin business unexpectedly taking off, help!

#86

Post by redthrowaway »

jbigelow76 wrote: post #67
humanrebar wrote: post #32

Earlier quoted context omitted.

> 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.

Can you expand on this? Because the way I'm reading it it sounds like since it "could" be a tool for money laundering the OP shouldn't be doing it. But by that logic a car "could" be used to facilitate a bank robbery and therefore the salesman needs to consider those ethical ramifications.

It's far more akin to a guy who sells guns out of his trunk in a dark alley. Chances are, it's being used for crime, even if there are legitimate uses for it.

Re: Ask HN: Bitcoin business unexpectedly taking off, help!

#88

Post by andrewfong »

foobarqux wrote: post #79
andrewfong wrote: post #76

Earlier quoted context omitted.

The short answer is (in California at least) it's a huge pain in the ass to comply with money transmission laws. You definitely need a lawyer. You might need a large amount of capital to backstop the business. You should also keep in mind that there is some uncertainty over what the law entails right now (hence the need for a lawyer), especially with respect to bitcoin. There is at least one ongoing lawsuit over Cali…

Are there any small companies that may superficially appear to be money transmitters but are not?

The law here is uncertain and differs between states. Until we get some definitive court rulings or clarification from regulatory agencies, it's hard to say.

There is one reading of California's law where practically anything that takes money from A and gives money to B is a money transmitter. Therefore, Uber (which takes money from passengers and gives it to drivers) or iTunes (which takes money from customers and gives it to artists) could be money transmitters. This is probably not the case (or at least, the law isn't being enforced that way), but it's far from settled. See http://www.businessinsider.com/california-rethinks-money-tra....

Re: Ask HN: Bitcoin business unexpectedly taking off, help!

#90

Post by 0xdeadbeefbabe »

patio11 wrote: post #72
mhluongo wrote: post #50

Earlier quoted context omitted.

Ha, thanks, I'm looking forward to the docs. Re: fraud I've definitely been disillusioned that I can handle the tide myself, but OTOH I imagine fraud prevention is a lot like security- make sure the wall is higher than the water. I'll just have to figure out how to do that in a way that's safe, economical, and keeps the core idea behind the service working. It will almost certainly involve hiring people, or cutting o…

Here you go: http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&sid=d5570d7646c5... [(5) Money transmitter (i) In general. (A) A person that provides money transmission services. The term “money transmission services” means the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location o…

But this is so general that lots of business would fit.

A bitcoin pool ambiguously, perhaps, transfers value too.

Why are they so non-neutral about this, and does it help us that they are?

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