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.

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?

[lgw]

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.

Always with this straw man. Enough with it - the strawman is dead, bereft of life it rests in peace. It has shuffled off this mortal coil and joined the straw choir invisible!

The amount of taxes needed to fund roads and regulate banks an such is a trivially small and unobjectionable fraction of current taxation. The majority of taxation is money collected from less-politically-favored groups and mailed directly to members of more-politically-favored groups, plus the military.

No one is trying to take your roads. No amount of cuts to road build and regulation could possibly balance the budget in the first place. That's not what the debate is even about.

Financial Crimes Enforcement Network?

[maxwell demon]

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! :-)

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.

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?

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.