How the Feds Can Take Even Legally Earned Bitcoins | Hacker News Reader

How the Feds Can Take Even Legally Earned Bitcoins

businessweek.com

17 pointsRougeFemme19 comments

What is the point of this article? If he is saying that anything that can be shown to have passed through the hands of a criminal in the past could be seized then absolutely nothing is safe even cash and especially any electronic transaction. That this is the case is sad but it's not unique to Bitcoin.

Legal tender and negotiable instruments, e.g. cheques, are exempt from the nemo dat rule [1].

[1] http://en.wikipedia.org/wiki/Nemo_dat_quod_non_habet#United_...

That Wikipedia article seems to be talking about goods that were stolen and then resold but the Bloomberg piece is talking about the government seizing things which they think were involved in a illegal transaction w/o claim that anything was stolen just that one of the goods exchanged might have been illegal in the eyes of the law.

Why repost? This was submitted and discussed several days ago.

How reliable are the anonymizers?

In the United States, there is not a single legal Bitcoin exchange. That's all you need to know.

Coinbase isn't really an exchange in the same way mtgox/etc. are. It's a hosted wallet and a USD/BTC market maker.

Coinbase are a broker.

What matters is that they are a money transmitter under U.S. law.

I doubt that. That's a pretty extraordinary claim care to back it up with some examples or facts.

Legal compliance requires money transmission licenses in 47 states and registration with FinCEN pursuant to 18 U.S.C. § 1960. No exchange fulfills all of these criteria; most haven't even bothered to try.

Have you checked on each of them? I'm pretty sure Kraken fulfills all the requirements in the jurisdictions in which they operate. CoinSetter also has a unique model which probably precludes them from the definition of money transmission. Not sure about Coinbase but I would be surprised if they weren't on the up and up.

Yes.

Kraken is Payward, Inc., and they're not on this list:

http://www.dbo.ca.gov/Licensees/money_transmitters/money_tra...

Neither is Coinbase. Neither has applied for a license, but since Coinbase and Payward have registered with FinCEN, they [know they] are required to.

Does kraken allow BTC / USD trading by customers located in CA? I didn't think they did.

Edit: Their FAQ even says their approval in CA and most other US states is pending and customers aren't allowed to trade until it is approved

https://www.kraken.com/help/faq#verification-tiers

How does coinbase operate?

It operates on Bitstamp's exchange to buy/sell when orders can't be satisfied with existing assets.

It relies on Andreessen Horowitz's connections to former regulators, such as William Haraf, the former Commissioner of the California Department of Financial Institutions, now employed by Promontory Financial Group, to convince the DFI (now DBO) look the other way while Silicon Valley Bank pretends that what it's doing doesn't pose any legal problems.

Coinbase knows exactly what's going on with the money transmission laws it chooses to ignore. See:

http://www.dfs.ny.gov/insurance/hearing/vchearing/ehrsam.pdf

Are you saying that a "former" regulator is capable of "looking the other way"?

Fixed.

To be more specific, three Andreessen companies (Dwolla, Coinbase, and Ripple) were supposed to be on a panel in San Francisco in October, 2013:

http://financialwomensf.org/virtual-currencies-are-they-the-...

Dwolla pulled out at the last minute, likely due to regulatory pressure from New York DFS, which had issued subpoenas in August, and less than two weeks later Dwolla renounced and stopped its involvement with Bitcoin. The moderator of the panel was none other than William Haraf of Promontory, the former Commissioner, but he wasn't the only one there. I met one of Promontory's former partners, who had just resigned to go work for one of the three companies. (I'm being intentionally vague.)

Robert Venchiarutti, the Deputy Commissioner of Money Transmission for California under Haraf is the same individual who is still the Deputy Commissioner of Money Transmission now, and has been for fourteen years. Connections matter in this world.

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