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Bitcoin Exchange CEO Pleads Guilty to Enabling Silk Road Drug Deals

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Re: Bitcoin Exchange CEO Pleads Guilty to Enabling Silk Road Drug Deals

#21

Post by patio11 »

anigbrowl wrote: post #20
patio11 wrote: post #18

Earlier quoted context omitted.

With respect: I know you're a professional at this, but I work with many startups who need named compliance officers for HIPAA or AML purposes, and it is the CEO virtually everywhere. This decision is generally made less out of hubris and more because a) the position has a very high ratio of requiredness to actual duties and b) legal advisors recommended that naming the CEO as opposed to a summer intern would suggest…

Oh, I didn't mean it was hubristic being the compliance officer! I meant shoveling all the BTC around while knowing he didn't have even a figleaf of deniability (eg blaming an internal miscommunication with someone else who was in charge of compliance). He had to know it was enormously risky.

Oh, my bad. Yep, total agreement. Did you read the complaint? Comedy gold abounded.

Re: Bitcoin Exchange CEO Pleads Guilty to Enabling Silk Road Drug Deals

#22

Post by stepstep »

cridenour wrote: post #11

It's interesting that Bitcoin is not classified as a currency by some parts of the government but it was considered a money-transmitting business.

For a bitcoin exchange, only half of the business is in bitcoin. The other half is in fiat, and I think that's why exchanges need a money transmitter license.

Re: Bitcoin Exchange CEO Pleads Guilty to Enabling Silk Road Drug Deals

#23

Post by codeshaman »

I'd argue that Bitcoin owns it's meteoric rise to SilkRoad and drugs in general. Many people 'got into' bitcoin in order to be able to purchase stuff on SilkRoad or similar. I know I'm one of them and I'm really thankful for those 3 hits of acid which cost me 3.3 BTC at the time. The transaction worked so I've decided to invest a lot more in Bitcoin. Up to this day I'm living off that investment and able to work on my dream projects. And the acid was very good as well ;).

Re: Bitcoin Exchange CEO Pleads Guilty to Enabling Silk Road Drug Deals

#25

Post by dmm »

codeshaman wrote: post #23

I'd argue that Bitcoin owns it's meteoric rise to SilkRoad and drugs in general. Many people 'got into' bitcoin in order to be able to purchase stuff on SilkRoad or similar. I know I'm one of them and I'm really thankful for those 3 hits of acid which cost me 3.3 BTC at the time. The transaction worked so I've decided to invest a lot more in Bitcoin. Up to this day I'm living off that investment and able to work on m…

It's hard to say yet how much of an effect MtGox price manipulation had too. Have you seen this report?

http://willyreport.wordpress.com/2014/05/25/the-willy-report...

Re: Bitcoin Exchange CEO Pleads Guilty to Enabling Silk Road Drug Deals

#26

Post by IkmoIkmo »

dmm wrote: post #25
codeshaman wrote: post #23

I'd argue that Bitcoin owns it's meteoric rise to SilkRoad and drugs in general. Many people 'got into' bitcoin in order to be able to purchase stuff on SilkRoad or similar. I know I'm one of them and I'm really thankful for those 3 hits of acid which cost me 3.3 BTC at the time. The transaction worked so I've decided to invest a lot more in Bitcoin. Up to this day I'm living off that investment and able to work on m…

It's hard to say yet how much of an effect MtGox price manipulation had too. Have you seen this report? http://willyreport.wordpress.com/2014/05/25/the-willy-report...

It's a very contested report, see for example a post in a broader discussion on it here:

http://www.reddit.com/r/Bitcoin/comments/26g46e/the_willy_re...

Re: Bitcoin Exchange CEO Pleads Guilty to Enabling Silk Road Drug Deals

#27

Post by IkmoIkmo »

codeshaman wrote: post #23

I'd argue that Bitcoin owns it's meteoric rise to SilkRoad and drugs in general. Many people 'got into' bitcoin in order to be able to purchase stuff on SilkRoad or similar. I know I'm one of them and I'm really thankful for those 3 hits of acid which cost me 3.3 BTC at the time. The transaction worked so I've decided to invest a lot more in Bitcoin. Up to this day I'm living off that investment and able to work on m…

Absolutely. Silk Road was a mostly (not completely) illicit marketplace and the characteristics of illicit markets is that money transfer has tons of friction. You can't use regular bank accounts, cash works but sending cash around the country or the world is problematic, risky, expensive, slow.

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.

Re: Bitcoin Exchange CEO Pleads Guilty to Enabling Silk Road Drug Deals

#28

Post by IkmoIkmo »

stepstep wrote: post #22
cridenour wrote: post #11

It's interesting that Bitcoin is not classified as a currency by some parts of the government but it was considered a money-transmitting business.

For a bitcoin exchange, only half of the business is in bitcoin. The other half is in fiat, and I think that's why exchanges need a money transmitter license.

Nah, a business that's 100% bitcoin-based with no fiat on or off-ramps will still need a money transmitter license.

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.

Re: Bitcoin Exchange CEO Pleads Guilty to Enabling Silk Road Drug Deals

#29

Post by IkmoIkmo »

jdong wrote: post #24
cridenour wrote: post #11

It's interesting that Bitcoin is not classified as a currency by some parts of the government but it was considered a money-transmitting business.

Why should courts and IRS share the same definition of "currency"?

Well imagine the police arrests you because it says drugs are illegal, but the courts say they're not. But you still go to jail, because the police says it's illegal. That would be pretty strange.

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.

Re: Bitcoin Exchange CEO Pleads Guilty to Enabling Silk Road Drug Deals

#30

Post by jdong »

IkmoIkmo wrote: post #29
jdong wrote: post #24

Earlier quoted context omitted.

Why should courts and IRS share the same definition of "currency"?

Well imagine the police arrests you because it says drugs are illegal, but the courts say they're not. But you still go to jail, because the police says it's illegal. That would be pretty strange. 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, su…

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.

You might as well be using cows as a currency, it'd be no different from bitcoins.

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