21–30 of 82 posts
Earlier quoted context omitted.
Licensure requires compliance with various laws. Liberty Reserve was structured to not comply with any of those laws or regulations. It's like anything else. If you operating a nightclub, and there's a crowd of people selling meth in the bathroom all night, you're facilitating a crime.
Crimes require victims.
Earlier quoted context omitted.
Well, lots of drugs are sold for cash. Cash is issued by the Fed. Can it be sued for facilitating drug crime?
The feds also actively try to combat drug sales. LR made little to no efforts to do so. I agree with what you're saying but I disagree with your example.
Why is it illegal to operate money transfer? Why founders are responsible for the crimes committed by its users? Are they guilty because the business was "unlicensed" or did they specifically promoted crime in some way?
Laws for MSB's anywhere require them to comply with legislation based on where their costumers are originated.
When you move money from your US account to your friends in the UK through say PayPal; PayPal has to comply with the regulations in both the US and the UK.
Amongst those things the MSB also needs to ensure that they do their due diligence to ensure that they do not provide a service to launder money or facilitate other illegal activities this often includes running background and credit checks on the costumers, providing notifications of transfers to the authorities, checking their costumer base against a list of known criminal organizations and suspect individuals, and in general even required to report any set of transactions which fit a certain pattern.
LR (just like say Megaupload with it's "reversed" payment model) was designed to circumvent all of this intentionally while there might be some legitimate use for it it's primary use was to transfer funds and exchange currency in an unregulated manner which makes it attractive to only a certain type of individuals which seek that intentionally, anyone else would not want to use it using an unlicensed MSB is a sure way of getting your funds frozen and putting you under investigation.
I don't even understand how people can support them, even if they did not do so intentionally they've put their entire costumer base under a microscope if people used this service thinking it was a legitimate MSB they were defrauded. Money laundering and tax evasion is tricky, many laws in many countries are often structured in such manner that the accused has to prove that those funds were acquired legitimately and that all taxes were paid as due. Even if LB did this out of sheer stupidity (which obviously they didn't) they deserve to get their asses handed out to them just for putting every person who ever used them at risk of going to jail or getting in debt due to financial irregularities.
Earlier quoted context omitted.
The feds also actively try to combat drug sales. LR made little to no efforts to do so. I agree with what you're saying but I disagree with your example.
I think op meant the Federal Reserve, who are not involved in the War on Drugs.
Earlier quoted context omitted.
Licensure requires compliance with various laws. Liberty Reserve was structured to not comply with any of those laws or regulations. It's like anything else. If you operating a nightclub, and there's a crowd of people selling meth in the bathroom all night, you're facilitating a crime.
Crimes require victims.
Earlier quoted context omitted.
I think op meant the Federal Reserve, who are not involved in the War on Drugs.
Federal Reserve does not issue cash, that is the job of the Treasury Department.
[1] http://economics.stackexchange.com/questions/8320/how-and-wh...
This is serious stuff, and I want to mention to anybody on HN who is thinking about running a business like this given the rise in cryptocurrency related platforms, please consult a lawyer before you embark on your quest. These are serious laws and it doesn't cost much to find out if you're in or outside of MSB regulations.
- Contract a legitimate 3rd party ID verification service like bitstamp does. You get API access where the entire verification process can be automated on your end, and it's out of your hands, so you have some kind of legal protection offloading the KYC risk to that party.
- Encrypt all internal employee messages, regardless if they are totally innocent looking a prosecutor will find some way to twist the emails and chats into a crime. Have a written data deletion policy for internal messaging so they are not saved forever, as deleting them to satisfy a business operations policy will prevent possible future obstruction or evidence tampering nonsense charges.
- Avoid any and all political ideology, don't call your service DownWithTheFedCoin. Notice how the prosecutors made a point about Liberty Reserve's name.
- If you create an asset pegged to a currency don't use USD.
Finally have clear, concise instructions to resolve disputes, and some kind of phone number escalation procedure for users to actually talk to somebody. Better yet have a disinterested 3rd party to help moderate customer disputes in a totally transparent way instead of merely freezing accounts and ignoring their emails. As soon as somebody has their funds seized or delayed they run to regulators and lawyers to complain which in turn spawns government attention on your little cryptocurrency related service.
. . . By Former Chief Foreign Exchange Dealer; Director of Credit Card Interchange @ Visa & Founding Director of the Bitcoin Foundation . . .