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Bitfloor Indefinitely Suspends Bitcoin Trading
PerformanceDude writes "Bitfloor (a New York-based online exchange for Bitcoin) yesterday made the following announcement on their website: I am sorry to announce that due to circumstances outside of our control BitFloor must cease all trading operations indefinitely. Unfortunately, our US bank account is scheduled to be closed and we can no longer provide the same level of USD deposits and withdrawals as we have in the past. As such, I have made the decision to halt operations and return all funds. Over the next days we will be working with all clients to ensure that everyone receives their funds. Please be patient as we process your request. Roman — bitfloor.com" According to the company's Twitter account, money should be returned to users' bank accounts shortly.
>> US bank account is scheduled to be closed
Clearly this is the work of the Illuminati Lizard People.
> Unfortunately, our US bank account is scheduled to be closed and we can no longer provide the same level of USD deposits and withdrawals as we have in the past.
Is it me or is that the most understated sentence ever written?
Sounds like the govenrment finally decided they didn't like money outside their control.
Sounds to me like they were a US company not following already existing US Anti-Money Laundering regulations.
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There is no conspiracy here. No one cares about this toy money. They broke already existing federal anti-laundering laws so this happened. They could have followed the law and been able to stay open.
Sounds like the govenrment finally decided they didn't like money outside their control.
Maybe. Or maybe their bank just wasn't comfortable with them. Where I work we sometimes will pass on working with potential customers just because we get a bad business feel for them. Whatever bank they're dealing with may not want to risk being negatively associated in the press with any of a variety of bad things that could potentially happen with this bitcoin exchange if they aren't an important enough customer to justify that risk.
The other thing I think is interesting is the degree to which this matters. The whole point of bitcoin is that it is supposed to be some independent currency. But it seems to rise and fall an awful lot depending on the degree to which you can exchange it for dollars. Which would tend to indicate that it does require backing at some level from dollars.
What's is the story here?
This is Slashdot: The story is "bitcoin something something".
Sheesh, evil *and* a jerk. -- Jade
Never. Why on earth would it? Crypto-currencies are a fascinating concept and Bitcoin is one of the greatest experiments ever. Whether it ultimately succeeds or fails is irrelevant, it will be written into the history books forever.
You can tell how powerful someone is by the magnitude of the crime they can commit and be able to get away with.
How would money laundering provide tax evasion? The point of money laundering is to convert dirty money (e.g. money gained from selling drugs, gambling, bankruptcy fraud) into clean money that you're "supposed" to have. Clean money by its nature is taxed.
Careful with names containing L slashdot.org/~AiphaWolf_HK slashdot.org/~AlphaWoif_HK slashdot.org/~AiphaWoif_HK
Bitcoin is already down to $90, where is that $1000 bitcoin troll at now?
$1000? If the Bitcoin theory becomes true some day in the future (a huge if) and it were to replace national currencies for the entire world (an even huger if), it might end up valued at more than $3.4 million each (at 2013 valuation). The math is simple. Current global GDP is about $72 trillion, BTCs are capped at about 21 million, hence $72 trillion / 21 million BTC ~= $3.4 million per BTC at cap time. If this were today then people would use it at 6 decimal places (microBTCs) as the day to day currency, equivalent to about $3.40, and the maximum divisibility of 8 places, equivalent to about ~$0.034, as the corresponding "cents", said valuations adjusting upwards (in terms of purchasing power) at roughly 4% per year accompanying the increase in global GDP.
I doubt any of that'll happen though. For one, governments don't want monetary power outside their hands. For another, most economists around are convinced ("convinced" as in "I believe in it from the bottom of my heart!" and "My preferred theorist said so and his equations are so pretty and I have tons of faith in him!") that deflation is evil. And third, drugs, porn, drugs, weapons, drugs, tax, drugs, pedophilia, and won't anyone please think of the children!?
Conservatism: (n.) love of the existing evils. Liberalism: (n.) desire to substitute new evils for the existing ones.
you still end up holding the cash you had in the first place with no good explanation of why you had that wealth...
There are plenty of reasons to be holding cash that you didn't pay tax on. For instance:
1. Set up a shell corporation in a tax haven (e.g. The Cayman Islands).
2. Transfer your IP assets (patents, copyrights, trademarks) to this corporation.
3. Pay a license fee to this corporation for the use of that IP. Make sure the amount of the fee matches your profits.
4. Pay no income tax, because you have no profit.
5. Borrow the money back from the shell corp. Loans are not considered income and are not taxable.
6. Life a nice life while going deeper and deeper into debt to yourself .
7. Eventually you die, and all the debts are cancelled.
Of course, this is not tax evasion because it is perfectly legal.
For another, most economists around are convinced ... that deflation is evil.
Those egghead economists have several good reasons to think that deflation is a problem:
1. It strongly encourages everyone to stuff their money in the mattress rather than spend it. This may seem like a great idea, but without people buying stuff, nobody is needed to make stuff, which means people lose their jobs, so they buy even less, and so on.
2. It means that anyone who is saving is more likely to stuff the money in the mattress than they are to invest it. For example, if cash is gaining value at 1.5% a year, you're less likely to take the risk on an investment with 4% return than you will if cash is losing value at 1.5% a year. Which again causes people to lose their jobs, so they buy less, so others lose their jobs, so they buy less, and so on.
3. Bank lending would grind to a halt, for two reasons: First, banks have to add the deflation into the interest rates of any loans, to account for their opportunity cost compared to just keeping onto the money. Second, borrowers know that they have to repay the loan using progressively more and more valuable dollars, and are rightly concerned that this is a really bad idea.
4. Behavioral research suggests that wages and prices do not deflate as they should - workers have a strong resistance to taking what appears to be wage cuts every year, and businesses have a strong resistance to showing what appears to be lower profits on the same product.
5. People, businesses, and governments who are currently borrowing money get crushed, because their debt becomes progressively more pricey to pay off. That's exactly the problem that was motivating the bimetalism movement back in the 1890's, after the dollar was in deflation for about 2 decades.
It's not just equations: There are several historical examples of deflation, and many of the theorized problems with deflation have in fact turned up.
I am officially gone from
1. Set up a shell corporation in a tax haven (e.g. The Cayman Islands).
2. Transfer your IP assets (patents, copyrights, trademarks) to this corporation.
3. Pay a license fee to this corporation for the use of that IP. Make sure the amount of the fee matches your profits.
4. Pay no income tax, because you have no profit.
5. Borrow the money back from the shell corp. Loans are not considered income and are not taxable.
6. Life a nice life while going deeper and deeper into debt to yourself .
7. Eventually you die, and all the debts are cancelled.
Of course, this is not tax evasion because it is perfectly legal.
This is not true. See IRS Form 5471. The rules are exceptionally complex, even by the standards of US tax law, but in general a US person cannot control a foreign investment corporation (such as your Cayman shell corp) and not pay tax on its income, because its income is US income (income from licensing the IP in the US). Loans from a controlled company back into the US to the controller can be considered distributions of income in some circumstances, such as these.
Note - what Google et al are doing in its Irish/Bermuda company is accumulating foreign (non-US) income from intellectual property. This is different.