California Sends a Cease and Desist Order To the Bitcoin Foundation

An anonymous reader writes in with bad news for the Bitcoin Foundation. "California's Department of Financial Institutions has issued a cease and desist letter to the Bitcoin Foundation for "allegedly engaging in the business of money transmission without a license or proper authorization," according to Forbes. The news comes after Bitcoin held its "Future of Payments" conference in San Jose last month. If found in violation, penalties range from $1,000 to $2,500 per violation per day plus criminal prosecution (which could lead to more fines and possibly imprisonment). Under federal law, it's also a felony "to engage in the business of money transmission without the appropriate state license or failure to register with the US Treasury Department," according to Forbes. Penalties under that law could be up to five years in prison and a $250,000 fine."

Comments

Uh

[Anonymous Coward]

When did the foundation become a money transmitter? Oh yeah, it didn't.

Re:Uh

[NFN_NLN]

“I believe that banking institutions are more dangerous to our liberties than standing armies.” – Thomas Jefferson

History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance. -James Madison

Re:Uh

[sFurbo]

Don't think they thought it through? The foundation is theoretically unable to comply, so they have no way to avoid being closed and the executives put in jail. What part of that seems not thought through?

Re:Uh

[Osgeld]

"Hemp is of first necessity to the wealth & protection of the country." – Thomas Jefferson

"What prudent merchant will hazard his fortunes in any new branch of commerce when he knows not that his plans may be rendered unlawful before they can be executed?" -James Madison

dont fucking pick and choose, it makes you look like a nut

Re:Uh

[davester666]

And once that happens...California's problems are finally solved.

Re:Uh

[Kell Bengal]

Actually, I'd argue both Jefferson and Madison are talking sense here. Jefferson points out that a valuable commercial product should be exploited. Madison says that risk amelioration is important to encouraging business innovation.

How does failing to mention them (valid statements, if unrelated to the GPs point) constitute picking and choosing?

Re:Uh

[Anonymous Coward]

It's Slashdot, the truth tends to piss people off around here.

Re:Uh

[Kell Bengal]

And if the Bitcoin Foundation actually transmitted monetary value you might actually have a point.

Re:Uh

[magic maverick]

Quite.
I think that the foundation could send back a nicely worded letter to the effect that they write software/sponsor the writing of software (delete as applicable). They do not sell cars, sell drugs, or engage in money transfer. They should not be held any more responsible for the use their software is put to, than Microsoft is responsible for MS Word being used to write threatening letters to people.

Also, dear the editors, specifically samzenpus, please link to the original source, in this case Forbes, rather than to some random other website. You might also link to the cease and desist letter itself.

Re:Uh

[bluefoxlucid]

If this country built a strong cannabis industry, right now, what would the benefits be?

Cannabis in the Industrial Hemp strain does not produce enough THC to get you high. The THC-production-ready strains represent an emerging market thanks to recent changes in the legislative climate.

All cannabis will grow in less-ideal conditions. It is easily grown and harvested on land unfit for the growth of more sensitive crops. See discussions about switchgrass for this concept; the benefits here are the same. Better land utilization means increases in economic wealth, as land is a wealth-bearing asset which holds less value when unused (You own land, but produce nothing? You can SELL it, but you're not gaining wealth by PRODUCING on it).

Industrial Hemp provides strong fibers which you can blend with clothes in 30% hemp 70% cotton to make cotton-like fabric of extremely light weight--sort of like silk--with high durability. Higher hemp content would be perfect for labor-clothes (i.e. denim), as it's ridiculously hard to cut and tear. Hemp is also very smooth and so very comfortable. Spun hemp fiber, being that hemp has better tensile strength, doesn't break down as easily under the stresses of wash and wear, and so produces less lint, so the clothing lasts longer.

Longer lasting, higher-quality clothing made from lower-cost materials means poor people can purchase clothing at a discount price and less often. They are then able to more effectively manage their money, improving their economic situation. The middle class and the rich similarly benefit, ending up with more money to spend elsewhere and stimulate other economic sectors. This represents an increase in wealth via a decrease in the destructive turn-over of goods (i.e. things don't wear out as fast, so are not destroyed as often; and the lower resource intensiveness of production reduces the amount of wealth sunk into creating the good, thus greatly increasing the wealth of society by replacing a high-cost good with a low-cost good of equal or greater value).

Hemp seed is highly nutritious and can be used for feed or food. Hemp seed oil can be processed into biodiesel fuel. Again, this allows for the use of unsuitable land toward a valuable economic end, thus increasing the wealth of society.

Hemp damages the cotton industry. The cotton industry, being large and powerful in the time of slave-negros, thus lobbied congress as is American tradition to produce protectionist laws. Hemp was, for a time, heavily regulated; moving onto hemp production would today require some relatively large start-up costs, despite that the process of spinning plant fibers into thread and yarn is largely the same. It would also incur a frightening amount of risk due to the risk of accidentally growing recreational cannabis (the plant is the same, the seeds look the same, and pollen on bees and in the wind from nearby grow operations could taint your crop and produce high-THC seeds). Government regulation of recreational cannabis would require regular DEA inspections, meaning expensive permits to cover the cost of these inspections, as well as the risk of determining that cross-pollination has created a hybrid and your entire crop can give folks a weak buzz--so you must now raze and burn it at your own expense, a huge loss of wealth.

We would have been better off if we didn't ban the stuff. Jefferson was, in a way, right. Maybe a little overzealous--it's a great crop with wonderful uses and a huge amount of economic benefit, but it's not the absolute top-priority of anything--but he was right.

Penalties/fines

[Sooner Boomer]

Can they pay those with bitcoin?

Re:Penalties/fines

[Anonymous Coward]

All your bitcoin are belong to US

Future regulation

[cold fjord]

As Bitcoin grows more successful, there will be increasing interest in subjecting it to regulation, just like any other financial instrument.

Re:Future regulation

[Cenan]

They were not jailed for failing to predict it, but for giving (provably) false assurances that no earthquake was eminent. Subtle difference, and one the "science community" seems to conveniently forget when bringing this story up.

The seven defendants, who belonged to the National Commission for the Forecast and Prevention of Major Risks, were accused of offering an unjustifiably optimistic assessment to the local population a week before the disaster. By then, the area had been hit by some 400 tremors over a period of four months and a local researcher had warned of the risk of a major earthquake, largely on the basis of abnormal radon emissions.

But after an extraordinary meeting of the commission in L'Aquila, one of the experts told a press conference that the situation was "normal" and even "favourable" because potentially destructive energy was being released through the tremors. The prosecution, which brought charges of multiple manslaughter, maintained that lives could have been saved had people not been persuaded by the assurances to remain in the area.

They were in a position of authority on the subject, yet they failed to exercise due diligence with respect to their own research. They ignored evidence that did not fit their own world view, and they presented their own as fact. The correct answer would have been "we don't know, take precautions", when asked. They didn't give that answer, and because of that 307 people died and 1,500 were injured. 80,000 lost their homes, but that would have happened regardless.

XBox Live Points

[Anonymous Coward]

Next up they'll send a Cease and Desist order to the makers of the Bittorrent protocol. That will stop piracy dead in its tracks!

Are XBox Live Points money?

http://www.xbox.com/en-US/Live/MicrosoftPoints
"Microsoft Points are the coin of the Xbox LIVE Marketplace realm. Microsoft Points is a universal system that works across international borders, and is even available if you don't have a credit card. "

Context is everything

[Camael]

"Hemp is of first necessity to the wealth & protection of the country." – Thomas Jefferson

Jefferson was right, and that statement far from painting him as a cokehead actually shows that he was a shrewd businessman.

These are the facts :-

1) Botanically, marijuana equals hemp. These are basically two names for the same plant.

2) Hemp was historically useful for rope, paper, and clothing, and was long promoted in Virginia as an alternative cash crop.

3) Jefferson farmed grew hemp on his Virginia farm commercially.

4) No great social stigma was attached to smoking pot in the late 1700s and early 1800s — pot use wasn't considered a problem until the early 1900s.

So, what was the problem with Jefferson's comment again?

Re:Context is everything

[Attila Dimedici]

4) No great social stigma was attached to smoking pot in the late 1700s and early 1800s — pot use wasn't considered a problem until the early 1900s.

You forgot to mention that the main reason that pot became an object of opprobrium in the western U.S. was because it was the intoxicant of choice among Mexican immigrants. In the Eastern U.S., it was its association with jazz musicians (a group which was primarily black and Latin American at the time). The fact of the matter is that smoking pot came to be viewed as a problem because it was attributed as the cause of certain minorities forgetting their place.

Re:Context is everything

[TheCarp]

> 1) Botanically, marijuana equals hemp. These are basically two
> names for the same plant.

Yup. Adding to this, few people had even heard the term "marijuana" (which, if it arose new today, would be considered an ethic slur) when it was made illegal.

It wasn't until much later, 70s/80s when French botanists bred a low THC strain of cannabis and began pushing for a legal distinction between the two; enshrining into the law the use of a plant which could only be obtained from them (talk about shrewd business)

> 3) Jefferson farmed grew hemp on his Virginia farm
> commercially.

Not only that, but look at his buddy George (thats Washington) and the instructions that he gave is slaves. Specifically they had been instructed to sew hemp seed and collect it for several crops, and then, once a large enough seed stock was available, to kill the males on the next crop.

I am aware of no claims of benefit to removing the males on in a crop intended strictly for rope or canvas use. GW grew the sticky icky for the head.

> 4) No great social stigma was attached to smoking pot in
> the late 1700s and early 1800s â" pot use wasn't
> considered a problem until the early 1900s.

There are some interesting connections between this and both Alcohol prohibition AND the mormon church. The first state to ban cannabis was actually Utah, an event which followed the return of many still polygamist mormons back to the area after having left to mexico years earlier. The story goes that some had picked up cannabis smoking in Mexico and this was an attempt to make them unwelcome. Texas then apparently picked up on this and decided to ban it on the supposition that they should prevent the problem from coming there.

Around this same time we saw Alcohol prohibition end, and the newly created "Federal Bureau of Narcotics" (precursor to the DEA) which had been created partially to fight illegal alcohol, had precious little left to do, and their main man Harry Anslinger went on his crusade to give his agency a purpose, and to deamonize the weed.

I highly recomend checking out the Senate testimony at the time, including the portion where a Doctor from the AMA is told to go home because he stood against making cannabis illegal, calling it an important medicine.

Re:Context is everything

[Archangel Michael]

"newly created "Federal Bureau of Narcotics" (precursor to the DEA) which had been created partially to fight illegal alcohol, had precious little left to do"

And people expect the IRS to disappear if/when we get rid of Income taxes. Once created, no government entity willingly disappears. Which is why we should be VERY careful about assigning new powers to a government agency. That beast will never cease to eat.