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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.
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?
Money is speech in the same way that the Supreme Court ruled that education should be separate but equal, or that Dred Scott was property.
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.
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?
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
FINCEN is not some random federal agency.
You not knowing of it only speaks to your ignorance and not the unimportance of the agency.
"Spreading of a political message should be done without money."
Easy-Peasy!
When our name is on the back of your car, we're behind you all the way!
FINCEN is not some random federal agency.
You not knowing of it only speaks to your ignorance and not the unimportance of the agency.
That's a fair point.
I need to learn more about these agencies. Can you give me a list of of the ones that have law-making authority over our lives?
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
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
How should we know if you have been looking for one?
Here's a hint for you: A question mark marks a sentence as question (therefore the name "question mark"). If it is not meant as a question, don't put a question mark at the end.
The Tao of math: The numbers you can count are not the real numbers.
A crash course in Administrative Law for 'ya. Regulatory agencies have it, within their powers, to clarify laws with policy statements.
See: "Chevron"
http://en.wikipedia.org/wiki/Chevron_U.S.A.,_Inc._v._Natural_Resources_Defense_Council,_Inc.
Here's a simple example: Here in Arizona we have a thing called, "Smoke Free Arizona," a voter-initiated law that makes smoking illegal in most occupied public places. That law says some fairly big things about where you can and can't smoke, but there were no fine details.
Enter the Arizona Department of Health Services. They said, "No smoking within 20 feet of a public building entrance." Nowhere in "the law" does it say that. ...but you'll still (at least on paper) get a fine for it. [You'll actually just get a snotty look, unless you're blowing smoke in a cop's face or something...] Why? Chevron.
As long as these administrative departments aren't completely smoking crack when they write their substantive policy statements, then their word is "law," and your next stop for rebuttal is with an administrative law judge -- not with a "real" judge and jury. So, uh, good luck.
If you don't like it - talk to SCOTUS, and let them know they should reconsider Chevron -- which will sort of suck, because every first year law student's history will need erased.
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?
I don't think you deserved a -1 for that, but you do deserve to be woken up to the harsh reality of the world where the US courts do whatever the fuck pleases them at the time and the government doesn't give a shit about what they said the law was yesterday when your tax dollars come to arrest you today.
The judge would likely rule that bitcoin is money then imprison you for contempt of court until you stop talking about Citizens United.
If I have been able to see further than others, it is because I bought a pair of binoculars.
You should try North Korea, the statist paradise, idiot.
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.
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.
Money is certainly "political expression" when used to pay for political expression. You seem to think that's foolish, but fail to provide an alternative for consideration. Should political newspaper ads be outlawed, such that only those who can buy an entire newspaper company have freedom of the press? Where do you draw the line, without outright censorship of some means of political expression?
Socialism: a lie told by totalitarians and believed by fools.
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 !
Money is speech in the same way that the Supreme Court ruled that education should be separate but equal, or that Dred Scott was property.
No, spending money is speech. Coining money is covered in Article I of the Constitution. That said, people should be free to exchange in whatever they mutually define as money and save that dirty federal coined variety for the tax man.
Time Bomber the Book coming soon.
Money is speech in the same way that the Supreme Court ruled that education should be separate but equal, or that Dred Scott was property.
No, spending money is speech. Coining money is covered in Article I of the Constitution. That said, people should be free to exchange in whatever they mutually define as money and save that dirty federal coined variety for the tax man.
Oops, that was supposed to be a response to The Cat (19816).
Time Bomber the Book coming soon.
No, spending money is speech. Coining money is covered in Article I of the Constitution. That said, people should be free to exchange in whatever they mutually define as money and save that dirty federal coined variety for the tax man.
Time Bomber the Book coming soon.
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".
"Vote Ima Krook for Senate!" <-- political message
Did I just spread that message without spending money? I suppose it did cost something - an infinitesimally small depreciation on this workstation, plus a similarly tiny fraction of electricity, internet, & rent bills.
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!*
No, there is nothing "certain" about that assertion.
Money used for political purposes is bribery. There is no difference between "I will give you X dollars if you vote for bill Y" and "I will buy your campaign X dollars worth of advertising if you vote for bill Y." And there is no effective difference between "I will buy your campaign X dollars worth of advertising if you vote for bill Y" and "I'm thinking of buying your campaign X dollars worth of advertising. By the way, bill Y is cool. Wink wink nudge nudge," which is more or less the state of American politics today.
Even if outlawing bribery were getting close to censorship, I have no problem with censoring the fsck out of for-profit corporations. They have no rights, and by definition their only possible interest in speech is to improve their bottom line. Google, BP, Halliburton, whoever, shut your piehole. Real people are talking.
Tom Swiss | the infamous tms | my blog
You cannot wash away blood with blood
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.
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.
Your example is not comparable to the GP intention because the of the buyer. The GP is looking at those who deal illegal activities (i.e. drug dealers) but you are looking at regular people. In other words, the GP is pointing out at exploitation of the use; whereas, you are demonstrating the common-use point of view.
...just that be play by the rules.
Seems reasonable.
I am very small, utmostly microscopic.
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.
So if the evil druglords of world started to trade fine art back and forth as a means of exchanging wealth, then the Feds would lock up all the artists? Carrying around art paraphernalia would be illegal in most states and barred from federal buildings?
Again, you fail to prevent a reasonable alternative that doesn't restrict First Amendment freedoms. Do you just not like that amendment? You wave your hands a lot and repeat the same talking points we've heard ten thousand times, but that's not very interesting.
Where would you draw the line on my political speech, exactly? Can I not take out an ad to support a position I believe in. Heinlein once paid for a full page ad in the NYT warning of the dangers of the Communist Threat. Legal, or no? The likes of Forbes and Perot have self-financed runs for the presidency before, paying out of his own pocket to get their message hear - legal or no? If I'm the owner of a newspaper, can I use that paper to express my political opinions - yes or no? Can I print flyers on my home printer and distribute them - yes or no?
Have you actually thought any of this through, or are you a talking-points parrot?
Socialism: a lie told by totalitarians and believed by fools.
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.