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.'"

Comments

Far from harmless fun... but

[Infestedkudzu]

the government is still just trying to maintain control. bitcoins going physical would be huge.

Re:Far from harmless fun... but

[Anonymous Coward]

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.

When a bitcoin moves from one wallet to another, a public record is made. Bitcoins are the least anonymous money system imaginable; the morons who claimed that bitcoins are anonymous because money laundering would be legal with bitcoins are morons.

But this guy has found a way of anonymously transferring bitcoins without explicit money laundering.

That means he needs to keep records.

If instead he was a 7-11 and handing out those things as change from transactions, he would not be engaged in money transferring, and would not need to keep records.

Re:Far from harmless fun... but

[gatfirls]

Exactly. Why would we want this currency that only moves in value only .5% a month. We want a currency that moves 20-50% in hours.

Imagine the fun of grocery shopping with it by the time you get done shopping you have to either take out 1/2 of it or you get 50% off!

Written in a biased way

[earlzdotnet]

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

Re:Written in a biased way

[maxwell demon]

I know it's fun to bitch about corporate power, but corporations won't be shooting a pregnant wife in her own house (ruby ridge),

If there were not a government making sure that such an action would be punished, I'd not be sure about that. After all, illegal corporations (also known as organized crime) are known to have no qualms to do such things.

putting you in a cage for taking pictures,

They don't need to because they know they can just call a government agency to do it for them. Otherwise, see my previous point.

or forcibly taking everything you own because they decided they have the power.

Oh, they do so as much as they can (see statuatory copyright infringement). Also, see my first point.

This isn't money transmitting how?

[Anonymous Coward]

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?

Re:This isn't money transmitting how?

[Charliemopps]

Because he doesn't believe any of the stuff you just said. Neither do I. Why do I need to be regulated? Why, when I got to the bank and deposit over $10,000 to I have to explain to the government how and where I got it? Why is that any of their business? This idea of money laundering is ludicrous. The idea that year after year, we need to give up more and more of our rights and privacy just to make the feds job of catching criminals easier baffles me. If we want to trade dollars for pounds or goldfish, fuck the government. They do not have a need to know about our transaction. And before you start talking about tax collection, there are a lot easier ways to collect taxes that are completely unavoidable. But if they implemented them, people would quickly become aware of just how much they were paying in taxes and likely revolt. This diffuse mess we have now serves to obfuscate just how much of your paycheck the feds end up with, and they like it that way.

Re:This isn't money transmitting how?

[Anonymous Coward]

Because you drove there on a road that requires taxes, and have a reasonable amount of saftey, that requires taxes, and the bankers are regulated to not steal from you, which takes taxes.

So your large money movements need to be tracked to make sure you aren't in a cash business and trying to avoid taxes.

If you don't buy into that idea, stop posting on the internet that was created with... taxes.

Re:This isn't money transmitting how?

[Kogun]

In each of these scenarios, what regulations do you expect, specifically, and for what purpose? Please explain as you offer nothing but your expectation as opinion. Regulation is not the default expectation any of us should have. It must be justified in all cases.

You can't have your cake and eat it too....

[Anonymous Coward]

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.

Re:You can't have your cake and eat it too....

[radish]

Because we, as a civilized society, look down on things like human trafficking, organized crime, extortion and so on. These activities require the ability to transact large amounts of value in untraceable ways, and so to the best of their ability the government try to prevent that.

This isn't about stopping this guy from doing what he was doing, it was about making him follow the same rules that everyone else who does similar things follow, which is more about keeping records than anything else. If he doesn't want to follow the rules, then fine, he can stop doing the business. His call - but no one MADE him stop.

It's amazing to me to hear the constant screams about Wall St "criminals" who need to be regulated even more than they already are, but heaven forbid the bitcoin freedom fighters get caught up in some of that regulation! The hypocrisy is truly breathtaking.

Re:Stock Certificates

[Anonymous Coward]

because stock isn't money...

Feds, pick one or the other!

[DaveAtFraud]

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

it's more like bearer bonds

[YesIAmAScript]

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.

Is money laundering the problem?

[Okian Warrior]

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?

Re:Is money laundering the problem?

[lgw]

The only form of "money transfer" that isn't so heavily monitored is the flow of funds into campaign coffers. Funny how that works.

Re:Is money laundering the problem?

[tomhath]

After much public outrage and senate hearings, the justice department settled on a $1.92 billion penalty [crainsnewyork.com] (against HSBC $18 billion annual profits).

A $2 Billion fine is hardly trivial. And comparing it to the bank's annual profit is irrelevant, they do lots and lots of legitimate business. Their crime was not monitoring some money transfers, same as this guy. But he was just told to stop instead of being fined a couple of billion.

how did this become illegal?

[stenvar]

What he is doing is, in fact, money transferring. He takes money and transfers it

OMG! The horror of it! People transferring money! What is the world coming to!

But this guy has found a way of anonymously transferring bitcoins without explicit money laundering. That means he needs to keep records.

Perhaps we should be rethinking this; it seems to have gone too far.

It's not even to the stage of 'stocks'

[Taco Cowboy]

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.

Re:The *LAWS* still do not recognize Bitcoin !!

[Goaway]

Do the LAWS of the United States of America recognize the entity by the name of "BITCOIN" ?

No, just like how they don't recognise an entity by the name of "Google". Absurdly, they still claim Google has to follow the law!