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Bitcoin Token Maker Suspends Operation After Hearing From Federal Gov't
First time accepted submitter Austrian Anarchy writes with this story via Reason (and based on a
report at Wired) about a maker of physical Bitcoin tokens. Quoting from Reason's take: "Mike Caldwell ran a business called Casascius that printed physical tokens with a bitcoin digital key on it, key hidden behind a tamper proof strip. He'd charge $50 worth of bitcoin to print a bitcoin key you sent him via computer on this token. Cool stuff--a good friend of mine found one sitting unnoticed in her tip jar from an event at which she sold her artisan lamps from 2011 and was naturally delighted given the nearly 1000x increase in value of a bitcoin since then. So, you're making something fun, useful, interesting, harmless--naturally the federal government is very concerned and wants to hobble you. 'Just before Thanksgiving, [Caldwell] received a letter from the Financial Crimes Enforcement Network, or FINCEN, the arm of the Treasury Department that dictates how the nation’s anti-money-laundering and financial crime regulations are interpreted. According to FINCEN,
Caldwell needs to rethink his business. "They considered my activity to be money transmitting," Caldwell says. And if you want to transmit money, you must first jump through a lot of state and federal regulatory hoops Caldwell hasn't jumped through.'"
How is what he was doing different from printing a stock certificate?
the government is still just trying to maintain control. bitcoins going physical would be huge.
Congress shall make no law.. abridging the freedom speech or of the press...
-- First Amendment to the Constitution of the United States
This aside from the fact that according to the Supreme Court of the United States, money is speech.
So if they rule Bitcoin is money, it's legal under the First Amendment's right to free speech, and if they rule it isn't money, it's legal under the First Amendment's right to a free press.
Case dismissed.
you statists deserve every bit of the totalitarian soviet gulag you've been voting for.
now the machine has the critical mass and demand of millions of free-and-reduced lunche-eating kids, it can do what-ever it wants.
it WAS called an experiment, and now we know the results are in: Liberty can last about 200 years. Tops.
Karma be damned. Artisan Lamps? What the fuck good is that without an Artisan light bulb, an artisan table, or an artisan fluffy hipster cat to sit next to it? Artisan lettuce with my heirloom artisan tomatoes and my artisan bacon with some artisan cheese on my artisan bread. Shove that artisan BLT down my artisan throat and wash it down with my artisan spring water.
....That it took this long for the feds to come in to play. No matter how neato your new currency is; if it's heavily used to electronically launder money and/or buy illegal items the days are numbered. Bitcoin -> Currency has and always will be the choke point the government(s) control. Unless they somehow setup a 100% bitcoin society but I don't know how that would work.
This summary is written as if the government does nothing but enforce/give monopolies and is only out to serve the big companies... oh wait
If I make giftcards to Amazon, say (I mean stupidly duplicating what Amazon already has in gift cards but you pay me and I sell you an Amazon gift code,) I'd expect to be regulated.
If I take your $50 bill and give you $100 british pounds, that's actually changing of money, but you can bet I'd expect to be regulated.
If you give me $25 and I give you a physical wood plaque with a bearer bond attached to it...I'd expect to be regulated.
If I manufacture casino chips suitable for trade in a casino and sell them, I'd expect to be regulated.
So, tell me again why this guy doesn't think what he's doing falls under any kind of regulatory enforcement?
Just move your business to a free country.
Bitcoin proponents want the benefits of recognition and legitimacy as a real currency. Yet when they finally start getting it, they don't want the responsibilities that come with it. You can't pick and choose!
If bitcoin is a currency, then yes, he is transmitting money by accepting bitcoins and sending back a physical manifestation of it.
I am planning on distributing US dollar currency in the form of toilet paper "tokens"
Regards,
- Ben Bernanke
So if it is named "Financial Crimes Enforcement Network", then obviously its aim is to enforce financial crimes. So, not only does it not fight crime, nor does it simply ignore crime, it isn't even just promoting crime, no, it enforces crime! :-)
The Tao of math: The numbers you can count are not the real numbers.
Couldn't he simply print the bitcoin given to him (no transaction, though it does require you trust him not to spend it) and take payment from another bitcoin transaction? That way, he isn't actually taking control of the BitCoin he's printing off (no transaction, no laundering) and his business is straight up printing?
http://burn-notice.djmed.net/summaries/quoteEpisode.html
Another random federal agency has decided that they are the law-making body with authority over some aspect of our lives. Discretionary enforcement(*) allows them to pick-and-choose whoever they want.
The DHS regulates model rocketry, the DEA regulates chemistry sets, the ATF manages the second amendment, and so on and so on and so on.
Weren't we supposed to elect the lawmakers? I seem to recall a forum or meeting place of some sort where we could send people to make laws on our behalf.
Is this "regulation without representation"?
(*) This same federal agency doesn't suppress Starbucks cards, online gaming gold, or frequent flyer miles, all of which are just as much a currency.
Choice one: BitCoins are a legitimate currency and are recognized as such by the U.S. government. What he's doing isn't illegal unless they are.
Choice two: Physical BitCoins are novelties sort of like the commemorative coins minted by Franklin Mint. What he's doing isn't illegal unless what Franklin Mint does is illegal.
You can't have it both ways.
Cheers,
Dave
They that can give up essential liberty to obtain a little temporary safety deserve neither safety nor liberty.
Ben
fiatleak.com not working this afternoon!
Domain Name: FIATLEAK.COM
Registrar: ENOM, INC.
Whois Server: whois.enom.com
Referral URL: http://www.enom.com
Name Server: DNS1.REGISTRAR-SERVERS.COM
Name Server: DNS2.REGISTRAR-SERVERS.COM
Name Server: DNS3.REGISTRAR-SERVERS.COM
Name Server: DNS4.REGISTRAR-SERVERS.COM
Name Server: DNS5.REGISTRAR-SERVERS.COM
Status: clientTransferProhibited
Updated Date: 09-nov-2013
Creation Date: 09-nov-2013
Expiration Date: 09-nov-2014
And issuance of stock certificates. This person is allowed to continue his work if he works according to the regulations.
Same with those who issue stock certificates.
Bearer bonds are so heavily regulated that you never see them anymore in the US, some say they are essentially illegal in the US now.
http://lkml.org/lkml/2005/8/20/95
If you email me your secret code, I will engrave your secret code onto a piece of metal and delete the email. Then I will physically mail your code-bearing metal to you and I also promise that I will forget it and not keep a record of it. I will provide this service for $50.
This is exactly what the clueless spooks consider to be "money transmitting".
The truth is, bitcoins do not physically exist at all. You could transmit the key to a wallet containing 1 bitcoin to 1 million people, but you have not transmitted 1 million bitcoins. The only time bitcoins are ever actually "transmitted" is in transactions recorded in the block chain, because that is the only place bitcoins "exist"
Accept credit cards, use the money to buy bitcoin and send people their coin... doesn't have the free market appeal like what he was doing but would get people the product they want.
love is just extroverted narcissism
You could just as easily print the the key as a qr code and put it in a tampber evident envelope
funny, I thought that bitcoins weren't considered to be money by the federal government. Only a government can create money, private institutions create coupons. So, he is really making wallets that hold coupons that certain people use as money. Much as I could make a binder that holds garbage pale kids that certain people use as money...
anything could be used for money laundering if all parties involved agree that it holds true as a metric of value.
What he is doing is, in fact, money transferring. He takes money and transfers it. That defines his activity. Which means he needs to keep records. Why do people involved in money transferring need to keep records? To prevent money laundering.
HSBC laundered hundreds of billions of dollars and admitted as such, yet the justice department decided to forego criminal prosecution.
After much public outrage and senate hearings, the justice department settled on a $1.92 billion penalty (against HSBC $18 billion annual profits).
How strongly do you agree with the federal government's stance on money laundering? From over here, it seems that the money laundering laws are only applied to the small players, used as "discretionary enforcement" as a tool of oppression. It's rule by thugs.
What's so bad about money laundering then?
There's hardly a time of the year you can pick that won't be a bad time. Except maybe right before tax day.
Every month has holidays, memorials, observances.
look them up. they tried it with gold and the fed s stole their gold.
OMG! The horror of it! People transferring money! What is the world coming to!
Perhaps we should be rethinking this; it seems to have gone too far.
What we need to understand is the World banking machine isn't going to tolerate *anything* that may be a threat to its hegemony.
Too give you an idea of just how powerful they are, and how concerned they are by things like some have gone so far as to say that WW2 was more the fact that Germany had decided to rid it's self of World bankers after WW1 and go to their own system, no longer paying interest to the World banks.
Because you will miss it below:
""The war wasn't only about abolishing fascism, but to conquer sales markets. We could have, if we had intended to, prevented this war from breaking out without firing one shot, but we didn't want to". - Winston Churchill to Truman (Fultun, USA March 1946). ""
""Germany's unforgivable crime before WW2 was its attempt to loosen its economy out of the world trade system and to build up an independent exchange system from which the world-finance couldn't profit any more. ...We butchered the wrong pig". - Winston Churchill "
The right pig would have been all the bankers.
Here is one excerpt from a fabulous Wikipedia Talk forum. ...We butchered the wrong pig". - Winston Churchill (The Second World War - Bern, 1960). The 'RIGHT PIG' would have been the bankers! How does one explain this statement, to all those who lost love ones? "The war wasn't only about abolishing fascism, but to conquer sales markets. We could have, if we had intended to, prevented this war from breaking out without firing one shot, but we didn't want to". - Winston Churchill to Truman (Fultun, USA March 1946). "
"Also take into consideration what the British press said of Lincoln, when he tried to escape the clutches; "If this mischievous financial policy, which has its origin in North America, becomes entrenched, then that Government will issue it’s own money without cost. It will pay off debts and be without debt. It will have all the money necessary to carry on it’s commerce. It will become prosperous to a degree which is without precedent in the history of the world. The brains, and wealth of all countries will migrate to North America. That country must be destroyed or it will destroy every monarchy on the globe". -- The London Times responding to Lincoln's decision to issue government Greenbacks to finance the Civil War, rather than agree to private banker's loans at 30% interest. Something we, in the UK, should consider NOW! How many US Presidents have been assassinated, trying to reclaim their monetary control? I believe Kennedy was assassinated for the same thing, he signed Executive Order 11110! To nationalise the Bank of America. The British government went to war with Hitler, because........"When the Weimar Republic collapsed economically, it opened the door for the National Socialists to take power. Their first financial move was to issue their own state currency which was not borrowed from private central bankers. Freed from having to pay interest on the money in circulation, Germany blossomed and quickly began to rebuild its industry. The media called it "The German Miracle". TIME magazine lionized Hitler for the amazing improvement in life for the German people and the explosion of German industry, and even named him TIME Magazine's “Man Of The Year” in 1938. Churchill made several statements on the fact, non more honest than this; "Germany's unforgivable crime before WW2 was its attempt to loosen its economy out of the world trade system and to build up an independent exchange system from which the world-finance couldn't profit any more.
"If any question why we died, Tell them because our fathers lied."
I'm failing to see the difference between this and putting dollars into a machine (or trading with a cashier) at Las Vegas, Chuck-E-Cheese, Mr. Gattis, Disneyworld, Arcades, etc. to win coins (where as in Las Vegas, they'll go back and forth between dollars to chips, and chips to dollars; since gambling is legal there), credits (e.g. if you hit a match on a pinball game in an arcade), or tickets at most (if not all) of the aforementioned?
All he's offering with these tokens is the same that an arcade down the street is offering: put dollars in, get tokens out; and he's not even up to the level of what CoinBase is doing, for example.
Haterz gonna hate...
In Soviet Washington the swamp drains you.
This is money transmitting "in general". Specifically, it falls under the money order rules of Title 31. Money order rules really don't give flip about amounts under $3,000 (or equivalent).
31 CFR 1010.415 Purchases of bank checks and drafts, cashier's checks, money orders and traveler's checks.
(a) No financial institution may issue or sell a bank check or draft, cashier's check, money order or traveler's check for $3,000 or more in currency unless it maintains records of the following information...
Bitcoin, until now, is still an UNREGISTERED and totally UNRECOGNIZED entity, according to the laws of the United States of America (since it's the US treasury we are talking, let's limit the discussion to the US laws).
Stocks, on the other hand, are items that are recognized under the United States' laws, and the issuance of stock, the printing of stock certs, and so forth, have to abide by the LAWS, as they were written when the certs were being printed.
In other words, the authority actually has NO JURISDICTION WHATSOEVER to interfere with the activities of that maker of Bitcoin Token since what he did was akin to making some toy coins, use for arcade machines.
It's true that he has less lawyers than the stock cert printers, but still, the authority just does not have ANY RIGHT to interfere with an LAWFUL ACTIVITY (making toy coin) of a LAWFUL COMPANY (which is dully registered according to the laws where the company is located).
The United States of America of today is becoming more and more like the China that I ran away from, back in the early 1970's.
Back when I first reached the U. S. of A., it was a country in which the LAWS were still obeyed.
Back when I ran away from China, it was a country where LAWS WERE MEANINGLESS.
Now it looks like the United States of America is trying very hard to change role with that of China.
While China is getting more and more civilized (they still have a VERY LONG WAY TO GO), America is behaving more and more rogue.
It saddens me a lot watching my adopted country slowly turns into the country where I was born.
Muchas Gracias, Señor Edward Snowden !
Anyone can legally create money in the US, except state governments (or their political sub-divisions such as counties, parishes, or cities). You cannot name your money similar to any nation's currency (so no dollars, pounds, yen, euros, etc.).
If you mint coins, production is regulated by the Federal Government (arcade tokens are okay, but freely transferable coins are frowned upon).
The Department of Justice and Securities and Exchange Commission are telling a U.S. Senate committee that Bitcoins are legitimate financial instruments, boosting prospects for wider acceptance of the virtual currency.
Representatives from the agencies told the U.S. Senate Committee on Homeland Security and Governmental Affairs ahead of a hearing Monday that the digital money offers benefits and carries risks, like any other online-payment system, according to letters they released before the meeting.
That was just last month and that is the problem.
No, it's NOT a problem.
Everything boils down to the LAWS.
Do the LAWS of the United States of America recognize the entity by the name of "BITCOIN" ?
Yes or No ?
Whatever department of the government can "endorse" anything they like, but if the *LAWS* do not recognize that very thing, the "endorsement" amounts to nothing.
What the GP has stated was correct. They have absolutely NO jurisdiction over the coin maker.
And I am reading some asshats' post below saying about "minting coins with other people's money", I mean, WTF is that?
Someone can write an IOU on a piece of paper and that IOU may mean "MONEY" to someone.
Just because someone making a wallet with an embedded IOU does not mean that that guy is trespassing the laws.
Do they even understand the basic concept of LAWS to begin with ??
Every time you see "artisan" or worse "artisanal", read it as "art is anal": anal lettuce, anal tomatoes, anal bacon, anal cheese, anal bread, etc. Worse yet, some self-proclaimed artisans have embraced "anal".
YES it is really hard to transmit money and you must first jump through a lot of state and federal regulatory hoops Caldwell hasn't jumped through. Like i buy some hermes birkin
hermes belts , i have to pay the money travelling miles
You know why that is, don't you? The Christians banned Jews from owning land, so rather than being able to buy a home with income, they had very limited options. So they invested in banks, since real estate investments were illegal from their repressive overlords. Now, the problems caused by their oppressors have been called a strength. You have only Christians to blame. If Christians weren't so evil, the Jew wouldn't have been essentially required by law to be a lender.
Learn to love Alaska
The government doesn't care when you trade bitcoins amongst yourselves, but if you *exchange* them either way for government currency, there are problems. In this case, you can trade USD for Bitcoins, and that's a big red flag.
Why not just print bitcoin blanks that allow the bitcoin digital key to be written once to it then it becomes read only. Selling blanks with no value beyond the novelty wouldn't be an issue.
*It's not what you can do for the Dark Side but what the Dark Side can do for you!*
If I understand correctly he essentially takes a string of characters from the client, stamps (whatever) them onto a physical medium, and sends them out to whereever the client wants... and this means he has to have extra books kept to track all of this.... so if my friend Vinny asks to send some flowers to his Godfather Joey and happens to ask the card to have a weird string of alphanumeric characters on it, does that make the florist a money launderer?
The problem is that bitcoins are openly transferred, rather than being encrypted for who is sending, to whom - that is the next logical step in a truly useful digital currency. That will remove the ability of a rogue nation state (in this case the US) to unlawfully interfere in commerce by two individuals who may, or may not be located within their borders. The encryption needs to be upped with at least two levels of encryption - which are arbitrarily applied and can only be "read" by the two people who are doing business. This needs to be coupled to a network which obfuscates the locations of the sender and receiver - a Tor-like network could be useful for this.
I'd call the government's bluff on this one, there is no 'transmission' since the owner ship of the bitcoin never changes hands - it remains with the original owner. The physical object created is not a payment instrument either since it can't be used as a bitcoin, only the information stored on it can be used and that makes it more like a wallet, a device that stores currency.
1000X increase in value ??? Better redeem it immediately before it suddenly loses .999 of its value then.
Poker chip with a box code hidden under a sticker - hmm sounds like a deal to trade the cow for.
So anyway .... I have these BSs (Bridge Shares) Im offering for sale to a few farsighted investors ready to make their huge fortunes.
These BSs are GUARANTEED to be potentially 10X as profitable as any BitCoin and 10X as secure in holding their value.
This is a limited time offer. Get your BS now !!!
If he started making wodden coins and charged USD100 for them and then others (some/most of them drug dealers) exchanged it back to USD100 then he would still get in trouble.
REALLY ?
In that case, all the famous artists would be in deep shit.
People buy artsy stuffs from artists, paintings, wood carvings, potteries, stone figures, and so on, and later on many of them sell those artsy stuffs for handsome profits.
How come the U.S. government never go after them artists ?
How come ?
If the physical object itself was a legal form of currency, then I could get behind what the Government are doing... but as the Government has only just started to recognise Bitcoin as a commodity with value, I fail to see the rationale behind this unless either the Government people behind the idea are crazy for power or they actually think that the physical "coin" this guy makes is what carries the value.
As it stands, I would say that the physical object here is closer to being an ornament, perhaps a small piggy bank - for example, he charges $50 for these items, and people send him $100, so he returns an item with a $50 note inside it. He has sold them a container, not a representation of money. Because in the case of the Bitcoins, the representation of money is the cryptographic key which is inside the item he has made, and the value of the item he has made is that of the materials used in its construction plus his time and effort.
...just that be play by the rules.
Seems reasonable.
I am very small, utmostly microscopic.
I'm an avid supporter of bitcoin, but I gotta side with the Gov on this one. I mean, whats to stop him from recording the wallets, monitoring them for if money goes in them, and stealing the funds? What's to stop him from money laundering? Sorry, these types of businesses do need rules and regulations.
What's the actual requires to come into compliance? Are the requirements really that ridiculous?
The perspective given on this story is crazy. People cannot operate as dependable one-person defacto mints. The "tamper-proof " claim is worthless . People exchange cash for the claimed value of the coins. They do not have that value. This isn't baseball cards where you want the thing for its intrinsic value. It's more like a car , where you want the thing to safely transport you from point A to point B or stock certificates or things whose value is instrumental. It has to actually have the advertised value.
Ok, let's go back to basics: why is money laundering illegal? Why are banks required to report transactions over $10000; and why is structuring (making multiple transactions just below this threshold) illegal?
These are all laws designed to make the job of law enforcement easier. There's nothing inherently wrong with depositing $9999 into your back account, but do it twice and you may be up on charges even if your transactions were perfectly innocent. Similarly laws against money laundering are vague, and trip up more innocent people than guilty ones. All money laundering mean, at its root, is having a series of transactions: Buy yacht, trade it for a diamond ring, sell the ring. There's nothing wrong with that series of transactions, but because they are hard for the government to track, it is somehow your fault.
Enjoy life! This is not a dress rehearsal.
I have yet to see a single action by the Feds showing they are treating BitCoins as Choice Two. They are treating BitCoins as choice #1. Which means, like any currency, he has to abide by the laws regarding the trading of currency. This is a very straightforward applicaton of money-laundering laws.
of the Jewish-controlled Federal Reserve trying to destroy America.
Credit cards are just as much "currency" as bitcoins and paper money. If you think about it for 30 seconds, you will realize that credit cards are used in financial transactions more frequently than Dollars are in this country. Bitcoins are no different. The real difference is no one charges anyone for using Bitcoins, which will change. Figure out what percentage of our GDP is paid for with Credit cards. Then take roughly 2% of that number, and that is what the Banks that issue credit cards are making as a minimum for allowing you to use their card. Even if you pay it off completely every month, the Bank still gets their revenue from the Merchants that accept their card as a form of payment. Stores that accept credit cards at checkout already have the fee built into their pricing structure. So, if you pay cash at these locations, you are contributing that 2% straight to the profit-line of the store unless they give you a discount for paying in cash.