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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!

#31

Post by mhluongo »

axefrog wrote: post #22
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…

How is he a money transmitter? His business is buying a product (Starbucks gift cards) and paying for them with Bitcoin. By your definition, a used car dealership that buys cars from the public and pays for them with cash is also a money transmitter.

That was my thought too, but this is a common reaction so I'm definitely seeking clarification.

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

#32

Post by humanrebar »

brd wrote: post #20
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…

This is exactly why I am horrified by the number of bitcoin companies cropping up. I can only assume many of them have no idea what they are potentially exposing themselves to from a legal perspective.

> 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.

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

#33

Post by jstalin »

axefrog wrote: post #22
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…

How is he a money transmitter? His business is buying a product (Starbucks gift cards) and paying for them with Bitcoin. By your definition, a used car dealership that buys cars from the public and pays for them with cash is also a money transmitter.

http://fincen.gov/statutes_regs/guidance/pdf/FIN-2013-G001.p...

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

#34

Post by rwhitman »

axefrog wrote: post #22
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…

How is he a money transmitter? His business is buying a product (Starbucks gift cards) and paying for them with Bitcoin. By your definition, a used car dealership that buys cars from the public and pays for them with cash is also a money transmitter.

Starbucks gift cards are relatively anonymous, can store varying amounts of money without being suspicious and are easily transferred and sold. They are a fantastic vector for transfering dirty cash

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

#35

Post by mhluongo »

acangiano wrote: post #17

I think part of your success comes from having created the ability to, de facto, buy Bitcoins via credit card. Any credit card (e.g., stolen ones). That's also your biggest legal challenge. That's what should scare you. But if you can sort out those details and regulations with a good lawyer, you shouldn't be afraid of success and taking projects as far as they'll go.

One of the steps to de-risk the cards will be a waiting period- new cards won't be accepted unless they've been activated X days/months. That should seriously lower the chance of stolen cards getting through.

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

#36

Post by lucaspiller »

TomGullen wrote: post #4

How automated is it? Any parts that could be automated that aren't? That would be step 1 I think. Secondly, don't panic! Thirdly, consider if I sell you my Starbucks card balance and I was evil, could I some how phone Starbucks up and say my card was lost/stolen? What happens in this instance? It's the biggest risk you need to look at from what I can see at first glance. Perhaps test this. Fourthly, is there a differ…

> could I some how phone Starbucks up and say my card was lost/stolen? What happens in this instance? It's the biggest risk you need to look at from what I can see at first glance. Perhaps test this.

I lost my Starbucks card and somebody used it. I had auto topup, so they kept using it :) After I reported it, Starbucks replied two days later, cancelled it and transferred the remaining balance. Still I lost about £15 from the auto topup.

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

#39

Post by mcherm »

bencollier49 wrote: post #8

Aren't most gift cards "non-transferable"?

Most gift cards can be used in person for purchases without any sort of ID -- which means that they can be effectively "transferred" to anyone. In fact, that's rather the point. They're called "gift" cards because you're expected to transfer ("give") them to someone else!

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

#40

Post by ilamont »

ChuckMcM wrote: post #25

Advice: Shut it down before you get raided and shut down and your "side business" becomes "going to court and defending yourself." What you clearly didn't realize is that long before BitCoin was popular, gift cards were one of the ways criminals laundered money. There are even discussions about which gift cards can be sold for the least discount. Gift cards can be sold for cash, so you are in effect, operating a bitc…

From the New York Times (1):

"In March, the Financial Crimes Enforcement Network, part of the Treasury Department, issued guidelines (2) telling businesses involved in the exchange of digital currencies that they needed to register as money services businesses and comply with a variety of rules to prevent money laundering. New York’s Department of Financial services began an inquiry in August to determine guidelines for digital currency businesses, issuing nearly two dozen subpoenas (3) to start-ups, investors and others involved in the emerging field."

1. http://www.nytimes.com/2013/10/31/technology/bitcoin-pursues...

2. http://www.fincen.gov/news_room/nr/pdf/20130318.pdf

3. http://www.dfs.ny.gov/about/press2013/memo1308121.pdf

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