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Bitcoin Exchange CEO Charlie Shrem Arrested On Money Laundering Charge

samzenpus posted about 6 months ago | from the paying-the-price dept.

Crime 330

An anonymous reader writes "Charlie Shrem, the chief executive officer of bitcoin exchange BitInstant, has been arrested and charged with money laundering. 'In the federal criminal complaint, the Southern District of New York charges Shrem, the 24-year-old CEO of BitInstant, with three counts, including one count operating an unlicensed money transmitting business, one count of money laundering conspiracy and one count willful failure to file suspicious activity report. Robert Faiella, a Silk Road user who operated under the name “BTCKing,” was charged with one count of operating an unlicensed money transmitting business and one count money laundering conspiracy.'"

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BUTCOIN !! MONEY LAUNDERING ?? DUH !! (0)

Anonymous Coward | about 6 months ago | (#46084027)

No SHIT Sherlock !!

Re:BUTCOIN !! MONEY LAUNDERING ?? DUH !! (2, Funny)

Anonymous Coward | about 6 months ago | (#46084523)

Should have had Charlie Sheen as CEO. The business would've been running on tiger's blood!

And so it begins... (0)

Anonymous Coward | about 6 months ago | (#46084033)

The beginning of the end?

Re:And so it begins... (5, Informative)

lxs (131946) | about 6 months ago | (#46084229)

Not really. he allegedly did some shady deals which he failed to report. [wired.com] So business as usual in financial circles except he got caught.

Re:And so it begins... (5, Interesting)

tripleevenfall (1990004) | about 6 months ago | (#46084553)

since bitcoin isn't a currency so much as it is a ledger where everything is tracked and traceable, it does not seem like the ideal venue for illegal transactions. The "paper trail" is going to be out there.

One article I recently read described Bitcoins as "prosecution futures". I think they might have been right.

Re:And so it begins... (2)

bob_super (3391281) | about 6 months ago | (#46084589)

Death and taxes...

Re:And so it begins... (1)

MickyTheIdiot (1032226) | about 6 months ago | (#46084971)

I actually consider this a feature and not a bug.

Re:And so it begins... (4, Funny)

Blue Stone (582566) | about 6 months ago | (#46084855)

If they treat him the same as HSBC, he'll be OK. Slap a minor fine on him (5 weeks-worth of profit [globalpost.com] ) and the government take their cut of the proceedings.

Now, the government wouldn't treat individuals charged with wrongdoing differently to multi-million/billion dollar businesses, would they?

Re:And so it begins... (1)

i kan reed (749298) | about 6 months ago | (#46084291)

The beginning of the end?

Well, if you accept the premise that bitcoin's value is predominantly in libertarian imagination of circumventing laws, it is, maybe.

HSBC (5, Insightful)

The Atog Lord (230965) | about 6 months ago | (#46084035)

I'm sure that the HSBC executives will also be arrested for their money laundering soon. Any time now.

Re:HSBC (2, Funny)

torkus (1133985) | about 6 months ago | (#46084061)

No no no...as long as they strictly follow the "rules" they can do anything else that isn't specified without fear of recourse. There are some benefits to having a laundry list of stupid rules and regulations...you can easily play dumb about anything else. /sarcasm

Re:HSBC (5, Insightful)

lgw (121541) | about 6 months ago | (#46084087)

You were sarcastic, but that is the whole freaking point of the rule of law: a list of rules such that, if you follow those rules, you won't be arrested. It makes for a far better society than one where you can be arrested whenever you annoy someone important, regardless of the rules.

Re:HSBC (5, Insightful)

viperidaenz (2515578) | about 6 months ago | (#46084123)

You are under arrest on suspicion of treason!
What did I do that amounts to treason?
What ever the king decides!

Re:HSBC (1)

Sarten-X (1102295) | about 6 months ago | (#46084287)

Except the king can't decide it, because ex post facto laws are forbidden, and the king can't override that because of rule of law.

Re:HSBC (0)

NatasRevol (731260) | about 6 months ago | (#46084329)

ex post facto laws are forbidden

That's funny right there.

Or sad.

Not sure which.

Re:HSBC (5, Insightful)

pla (258480) | about 6 months ago | (#46084439)

"Sorry, matter of national security. No, you can't see the evidence against you. No, we don't have to physically present you to the court to stand trial".

And if you disagree with that... Better stay out of sight of the sky 24/7 or we might spot you "associating" with a terrorist leader and you know how that collateral drone damage works on you and your whole village... Er, neighborhood.

Re:HSBC (4, Interesting)

Anonymous Coward | about 6 months ago | (#46084201)

The problem is that the formulation of the rules enable them to be arbitrarily interpreted, which means that the rules don't really matter. It's up to the persons doing the interpretation. The recent revelations about NSA highlights this pretty well I think. The government clearly disregards the constitution but nothing happens.

Re:HSBC (3, Insightful)

lgw (121541) | about 6 months ago | (#46084597)

Yes, all quite true. I was merely highlighting that the rule of law is a good ideal to aspire to, not claiming that we had it today in America. The growing trend under by current and former presidents to simply ignore or change laws by "executive order" was proof enough of that, even before the NSA scandal.

You should be able to get away with doing something bad "merely" by following all the relevant laws, because the other way of doing things leads inevitably to dictatorial control of the state (what power has the legislative branch when laws don't matter?).

Re:HSBC (0)

Anonymous Coward | about 6 months ago | (#46084219)

Exactly what world are you living in??

That happens all the time.

The idea is to make the list of rules so large and vague that almost anyone can be caught out on something.

And if not...there is always good ol' lying and perjury.

Re:HSBC (1)

fahrbot-bot (874524) | about 6 months ago | (#46084555)

It makes for a far better society than one where you can be arrested whenever you annoy someone important, regardless of the rules.

Or in New Jersey, if not arrested, at least not punished by the Governor's staff...

Re:HSBC (-1)

Anonymous Coward | about 6 months ago | (#46084609)

It makes for a far better society than one where you can be arrested whenever you annoy someone important, regardless of the rules.

Nonsense, being arrested whenever you annoy someone important is better. That someone important is obviously a more industrious job creator than you are. It's his freedom to spend his own money on private mercenaries to come arrest you. If arresting you leads to more efficiency and profits, then the important person is correct, and he deserves all the money he earned from doing it.

If arresting you is bad for the market, then it'll eventually ruin that important person's business (nobody would do business with him, for fear of being arrested), and he won't be so important any more. This works better than the whole Rule of Law thing that people keep trying. Rule of Law is socialism. It's nothing but a bunch of restrictions on the strong, tying them down with obligations to the weak /sarcasm

Re:HSBC (2)

bloodhawk (813939) | about 6 months ago | (#46084133)

No no no...as long as they strictly follow the "rules" they can do anything else that isn't specified without fear of recourse. There are some benefits to having a laundry list of stupid rules and regulations...you can easily play dumb about anything else. /sarcasm

Why mark that as Sarcasm? the whole point of law enforcement is that you are ok as long as you play by the rules. If your business model is clearly outside the rules then expect them to come down hard on you. It doesn't matter how much of a scumbag you are or your business practises are as long as they are within the rules. The current laws are a mess, but it would be a far bigger mess if people got to pick and choose which laws they would follow.

Re:HSBC (1)

jythie (914043) | about 6 months ago | (#46084183)

Or at minimal, if you have a bank of lawyers who can outspend the prosecution to explain why they stayed 'within the rules', then you have no fear of recourse. Time and time again we see the little guy still fail even if they stay within the strict or literal interoperation of the rules if they violate the 'spirit' of them.

Re:HSBC (1)

omnichad (1198475) | about 6 months ago | (#46084635)

laundry list

I see what you did there.

Re:HSBC (-1)

Anonymous Coward | about 6 months ago | (#46084157)

I'm sure that the HSBC executives will also be arrested for their money laundering soon. Any time now.

Cute, but did HSBC:

Conspire to launder money?
Willfully fail to file Suspicious Activity Reports(SAR)?

You see, there is a difference between being an unwitting participant in a money laundering scheme and being a willful participant or organizer of a money laundering scheme. Thank fully the law, at least, is able to distinguish between the two.

Re:HSBC (5, Informative)

pla (258480) | about 6 months ago | (#46084493)

Cute, but did HSBC: Conspire to launder money? Willfully fail to file Suspicious Activity Reports(SAR)?

Yes, actually, they did; and further, they actively conspired with Iran to circumvent international sanctions.

And yet, we don't see any of their executives behind bars as a result...

Re:HSBC (1)

bill_mcgonigle (4333) | about 6 months ago | (#46084713)

And yet, we don't see any of their executives behind bars as a result...

Oh, but they had to pay *several* hours worth of profits in fines!

Can we stop pretending now that the banksters don't control the first world governments? I mean, Christ, the US, France and Britain went to war with Libya and had their soldiers anal rape their leader to death with a broomstick because he threatened to offer a better deal than the Bretton Woods regime.

Did people not get the message loud and clear?

Re:HSBC (2)

Ralph Wiggam (22354) | about 6 months ago | (#46084963)

HSBC paid fines equal to 5 weeks of total corporate profits- not just the unit that violated the regulations. If I was docked 5 weeks of income, that would sting really badly.

I like how you ignore the part of the story where Khaddafi murders tens of thousands of people, because it doesn't fit with your narrative.

Re:HSBC (1)

jythie (914043) | about 6 months ago | (#46084163)

Meh, the wealthy and well connected have always gotten a different brand of justice then the general population.

Re:HSBC (2)

JaredOfEuropa (526365) | about 6 months ago | (#46084217)

You get the same justice as they do. They avoided criminal charges by paying a fine from the coffers of the company they happened to be running. You can do the same thing when facing similar charges.

Re:HSBC (2)

jythie (914043) | about 6 months ago | (#46084275)

Only if I have enough lawyers and subtle political threats to explain why a corporate fine is more appropriate then jail time.

Re:HSBC (1)

just_a_monkey (1004343) | about 6 months ago | (#46084857)

Meh, the wealthy and well connected have always gotten a different brand of justice then the general population.

Only if I have enough lawyers and subtle political threats to explain why a corporate fine is more appropriate then jail time.

The word you are meaning to use is "than": "...than the general population." "...than jail time." "Then" means something else entirely.

Re: The Law (1)

Anonymous Coward | about 6 months ago | (#46084405)

The law, in its infinite wisdom, forbids both rich and poor alike from panhandling, digging through trashcans, and sleeping under bridges.

  Equality under the law, fuck yeah!

Re:HSBC (3, Informative)

Ralph Wiggam (22354) | about 6 months ago | (#46084193)

HSBC was not a party to the money laundering. They were fined for insufficient oversight, which allowed other people to launder money.

In this case, the guy is being charged with direct involvement in the money laundering.

Re:HSBC (-1)

Anonymous Coward | about 6 months ago | (#46084327)

Hongkong Shanghai Banking Corporation. Kind of makes me wonder what authority the US government has to regulate Chinese banking. Also kind of makes me wonder why a USian would want to invest in a bank in China. Then again if I was a member of the US ruling elite, I guess I would be a USian in name only and would invest in a bank that would allow me to launder my money.

To me this is kind of like to cops pulling over the stoners driving away in the '74 pinto, while ignoring the gang stars on the corner selling the drugs. They will go after low hanging fruit to make it appear as if they are fighting a good fight. When in reality the real gang stars control the drug, banking and law enforcement agencies and make trillions off the suffering of the populace.

Re:HSBC (2)

Ralph Wiggam (22354) | about 6 months ago | (#46085019)

Hongkong Shanghai Banking Corporation. Kind of makes me wonder what authority the US government has to regulate Chinese banking. Also kind of makes me wonder why a USian would want to invest in a bank in China.

HSBC has been just "HSBC" for 25 years, and it's headquartered in London. Maybe you should get a basic grasp of the facts before spouting conspiracy theories.

Re:HSBC (1)

gatfirls (1315141) | about 6 months ago | (#46084359)

If they were sending messages back and forth with the launderers and fellow executives about their direct involvement in it, you are probably right.

Re:HSBC (1)

wiredlogic (135348) | about 6 months ago | (#46084491)

They should really use the non-prosecution of HSBC execs during their sentencing phase to point out that any jail time would constitute cruel and unusual punishment.

Re:HSBC (1)

MaWeiTao (908546) | about 6 months ago | (#46084915)

Guys at that level get out of jail by writing a letter to the government stating that they'll be good next time and that they really, really mean it.

Bitcoin vs Banks (0)

Anonymous Coward | about 6 months ago | (#46084083)

Here is how the banks get their competition shut down.

I was wondering when that would happen (3, Insightful)

erroneus (253617) | about 6 months ago | (#46084091)

It's a competing currency. The marketplace says "we have no faith in your dollars." Government says "so?" The marketplace says "we will replace the dollar." Government says "no."

I just wonder how it took so long.

Re:I was wondering when that would happen (0)

vikingpower (768921) | about 6 months ago | (#46084127)

The thing is, however, that Bitcoin spreads by the same mechanisms that allow(ed) FOSS to become so enormously successful. Hence and ergo: Bitcoin can not be stopped. Certainly not by some rednecks paid by the US government.

Re:I was wondering when that would happen (1, Funny)

mirix (1649853) | about 6 months ago | (#46084245)

Unless people want to turn bitcoins into actual money, of course.

Re:I was wondering when that would happen (1)

Cro Magnon (467622) | about 6 months ago | (#46084347)

Or even money into bitcoins.

Doesn't scratch any itches (3, Insightful)

sjbe (173966) | about 6 months ago | (#46084459)

Bitcoin can not be stopped

Bitcoin doesn't have to be stopped. It just has to be ignored which is what most people are doing. For 99%+ of people out here in the real world, bitcoin does not solve any real world problems for them. Bitcoin does not allow me (or anyone I know) to do any transactions I currently do easier, cheaper, faster or safer. Most people who use it are either doing so for ideological reasons (hate the Fed, etc) or because they are looking to avoid legal scrutiny of their transactions (money laundering). It's probably of some minor interest to economic academics.

Re:Doesn't scratch any itches (4, Informative)

melchoir55 (218842) | about 6 months ago | (#46084735)

It actually does let you do stuff cheaper, faster, and safer. Cheaper because you don't have to pay money transfer fees. It is WAY faster than most forms of sending payment. It is also much safer insofar as a business cannot arbitrarily reverse the transfer.

Crypto currency is clearly better. The problem is that bitcoin is abstract. Most people don't realize that the money system they are using has no underlying foundation. Those pieces have paper are valuable because people agree they are, not because they are backed by any product or valuable ore. Bitcoin is no different in that respect. Only, it is very clearly abstract while people are able to lie to themselves (or just be ignorant) about the US dollar. People are uncomfortable with bartering using stuff they thing is "worthless" (not backed by anything). Bitcoin hasn't hit the threshold of adoption which most people require to believe something is safe.

This is entirely separate from all the other problems such as volatility, the 51% exploit, and etc.

Re:I was wondering when that would happen (1, Insightful)

gangien (151940) | about 6 months ago | (#46084615)

Bitcoin can not be stopped.

Is this where I'm supposed to laugh?

Will bitcoin last? I have zero clue. But the amount of absolutes I see used by people describing bitcoin and how it works, makes my bullshit detector go off.

Re:I was wondering when that would happen (3, Funny)

TsuruchiBrian (2731979) | about 6 months ago | (#46085021)

I guess there is no point in actually knowing anything when you have a bullshit detector. Nothing in life is ever counter-intuitive.

Re:I was wondering when that would happen (5, Interesting)

jratcliffe (208809) | about 6 months ago | (#46084137)

If they were doing what they are alleged to have been doing using Yen, or Dollars, or Pounds, or whatever, it would still have been money laundering. Bitcoin doesn't change that.

Re:I was wondering when that would happen (3, Insightful)

Ralph Wiggam (22354) | about 6 months ago | (#46084227)

Those money laundering rules apply to any currencies handled by US businesses, including casino chips. The government is not trying to shut down the casino industry. They just require you to record information from your customers.

Re:I was wondering when that would happen (1)

Anonymous Coward | about 6 months ago | (#46084611)

They just require you to record information from your customers.

Which is bullshit.

Re:I was wondering when that would happen (1)

Ralph Wiggam (22354) | about 6 months ago | (#46084777)

Those rules have been in place for decades. If you don't like them, then don't start a business in America. The fact that BitInstant was incorporated in New York is shocking.

Re:I was wondering when that would happen (3, Insightful)

bloodhawk (813939) | about 6 months ago | (#46084253)

Actually what they have done is the opposite of what your claiming, they are treating it just like any other currency. If you move currencies around there are very strict reporting and tracking rules that apply to transactions and breaching those rules results in what you see happening here. You get charged!

Faith (1, Informative)

sjbe (173966) | about 6 months ago | (#46084341)

It's a competing currency. The marketplace says "we have no faith in your dollars.

Nonsense. The marketplace has mostly yawned and ignored bitcoin - and rightfully so. There is plenty of evidence that the market has lots of faith in dollars and very little in bitcoin.

Re:Faith (0)

radarskiy (2874255) | about 6 months ago | (#46084871)

The real problem is that the kind of people who think there is no faith in the dollar are the kind of people who are trying to run bitcoin exchanges, i.e. people that have no idea what they are talking about. In that light the failures seem inevitable

Re:Faith (1, Informative)

dkleinsc (563838) | about 6 months ago | (#46085033)

More to the point, the market has very good reason to have faith in dollars and very little in Bitcoin: Dollars are quite stable, and backed by one of the largest organizations of any kind on the planet. Bitcoins are extremely volatile, and backed by nobody. Which would you pick?

Re:I was wondering when that would happen (3, Informative)

Anonymous Coward | about 6 months ago | (#46084445)

Who the fuck is modding this moron up?

Do you even realise this action agaist specific people who provided Bitcoin exchange services for Silkroad, not Bitcoin per se? Did you even read the complaint?

It's not some vague accusation, the guy - who was in charge of money-laundering laws compliance - and his boss had pretty much literally talk like this: "Hey, this guy's from Silkroad, shall we ban him again?" - "He brings a lot of business" - "Maybe we should just drop an advertisement at Silkroad?" - "Just leave it like that".

P.S.: It fucking says "Bitcoin is not inherently illegal and has many legitimate uses" as a part of explanatory paragraphs, FFS. OMG GUBMINT HAETS BITCOINS

P.P.S: Read the complaint - it's plain English and quite readable.

Not one single action... (4, Interesting)

gatfirls (1315141) | about 6 months ago | (#46084451)

..has been proposed or enacted by the federal government on bitcoin.

The problem is that this marketplace doesn't want a competing currency, they want a way to electronically move money around "anonymously".

The government is saying no to sidestepping financial regulations and other laws. You're right about one thing. I seemed to take much longer than expected.

Re:Not one single action... (5, Informative)

Animats (122034) | about 6 months ago | (#46084771)

Mod parent up. A U.S. Senate commitee held a hearing on Bitcoin a few months ago. All the regulatory agencies were there.

FinCen: We're watching it, no big deal.
DEA: the big cartels aren't using it, the street dealers aren't using it.
FBI: We took down Silk Road, which was using Bitcoin, and Bitcoin didn't make it harder to do that.
Secret Service: No big deal.
Homeland Security: terrorists don't seem to be using it.
IRS: Taxable income is taxable income; we'll deal with it.
SEC: Trading Bitcoin is just like trading anything else. We busted one guy running a Ponzi scheme with Bitcoins and the judge agreed that using Bitcoins didn't make it special.

Conclusion of the Senate committee: no need for special Bitcoin legislation.

All the US law enforcement action involving Bitcoins has been for doing routine crook stuff. Now, China is cracking down on Bitcoins, but they have exchange controls; you have to get permission to swap yuan for dollars or euros. The US has an open market in foreign currencies; you can swap dollars for yen without asking anyone's permission. There are reports to make to FinCen, but they just log the info.

Tin foil hat time (1)

Zontar_Thing_From_Ve (949321) | about 6 months ago | (#46084485)

It's a competing currency. The marketplace says "we have no faith in your dollars." Government says "so?" The marketplace says "we will replace the dollar." Government says "no."

I just wonder how it took so long.

There are a finite number of bit coins. You can only get more by getting them from other people. Let me guess - you're one of those gold standard people too, right? The dollar is in no danger of being replaced by bitcoin, as if such could ever happen. Shrem seems to have believed that he could act as an intermediary for transactions that he knew were in violation of US law and not be held responsible. He can test that assertion in a court of law. When bitcoin exchanges that don't have ties to Silk Road start get closed down on trumped up charges you might have a point, but right now your "evil government took them down because it feared them" hypothesis isn't strong.

Re:I was wondering when that would happen (1)

mlw4428 (1029576) | about 6 months ago | (#46084525)

The marketplace shouldn't have much faith in a currency with no real backing, no accountability, no stability, and a lack of history to prove trust. The government says "no" because there's no proof that bitcoin is some sort of viable currency, despite all of the anti-government circle jerking.

Re:I was wondering when that would happen (1)

pla (258480) | about 6 months ago | (#46084545)

I just wonder how it took so long.

You mean, "How much longer it will take", since this has nothing to do with Bitcoin except as a buzzword tangentially related to the case, and has no bearing on the current or future viability of Bitcoin as a currency.

You would have heard the exact same story if he had helped Silk Road exchange Yen for Dollars... Well, except that you wouldn't have heard of it because run-of-the-mill laundering doesn't make the news, but HURP BITCOIN DURP!

Re:I was wondering when that would happen (4, Informative)

phantomfive (622387) | about 6 months ago | (#46084739)

I'm not sure this is an attack on bitcoin itself, it looks like this is related to the Silk Road dragnet. We can expect to see more arrests related to Silk Road as the FBI goes through documents they've confiscated.

All the same, if I were operating an exchange, right now I would be looking through and making sure I'm complying with the law exactly. Just like bankers do.

Re:I was wondering when that would happen (1)

DrXym (126579) | about 6 months ago | (#46084779)

Bitcoin is a financial instrument and subject to the same laws that govern taxation, property and money laundering as other forms of financial instruments. Anyone running an exchange from the US is obligated to follow those laws. The general attitude so far has been "la la these laws don't apply to me" and strangely enough the authorities seem to have an issue with that, particularly when the exchange is laundering criminal proceeds.

FTFA (0)

Anonymous Coward | about 6 months ago | (#46084159)

“Charlie wears the [passwords] to his bitcoin account imprinted on a ring around his finger"

Now, that's the most stupid thing I've ever seen. Adverticing your services on SilkRoad, and letting the government know how to seize your money.

Citizen's United (0)

guibaby (192136) | about 6 months ago | (#46084169)

Isn't money laundering just another form of anonymous speech and therefore a protected activity?

Re:Citizen's United (1)

TheCarp (96830) | about 6 months ago | (#46084209)

Maybe you missed the comment "If the price keeps going up, he could have a million dollars in that ring!â

If he doesn't even have a few 10s of millions of dollars, why would he have free speech? What country do you think he lives in? Seriously, when they said money is speech, they certainly didn't have anyone like him in mind.

Re:Citizen's United (1)

CanHasDIY (1672858) | about 6 months ago | (#46084541)

Seriously, when they said money is speech, they certainly didn't have anyone like him in mind.

Holy Federal Reserve, Batman, if that's not one of the most damn insightful statements I've seen in some time...

Re:Citizen's United (1)

Sarten-X (1102295) | about 6 months ago | (#46084475)

No, it isn't.

Free speech is the right to express any opinion. You do not get to break other laws in order to exercise your rights. Murder is not free speech. Racial discrimination is not free speech. Slander is not free speech.

In fact, the currently-held test for whether an expression is protected is whether it directly causes lawless action. If the expression is lawless in itself, that counts, too. What you can do, however, is write essays and stage legal protests announcing that you feel money laundering (and the anonymity it provides) should be legal. Of course, someone might take offense at your speech, and law enforcement might get suspicious and start looking more closely at your tax forms, but Congress can make no law abridging your ability to (lawfully) express that opinion.

Re:Citizen's United (1)

TWiTfan (2887093) | about 6 months ago | (#46084505)

Isn't money laundering just another form of anonymous speech and therefore a protected activity?

Only if you're a corporation.

WINNING (0)

Anonymous Coward | about 6 months ago | (#46084187)

NSA, FBI and fiat, sadly.

Read the full complaint before comparing to HSBC (2, Informative)

Anonymous Coward | about 6 months ago | (#46084189)

I recommend reading the full complaint before quickly firing off a reply comparing Shrem to HSBC. Shrem was deeply involved in avoiding AML controls.

Full complaint here:
http://www.justice.gov/usao/nys/pressreleases/January14/SchremFaiellaChargesPR/Faiella,%20Robert%20M.%20and%20Charlie%20Shrem%20Complaint.pdf

Re:Read the full complaint before comparing to HSB (3, Insightful)

funwithBSD (245349) | about 6 months ago | (#46084269)

Indeed.

When BofA and HSBC, etc. screw you over, they do it by the book.

The book they helped to write.

Re:Read the full complaint before comparing to HSB (0)

Anonymous Coward | about 6 months ago | (#46084457)

Because "AML controls" are specially crafted to suppress new business and reinforce monopolies. They never were about stopping money laundering. Money laundering is necessary to the relationship between politician and the corporate/criminal ruling class that make the decision behind close doors.

Re:Read the full complaint before comparing to HSB (2, Informative)

Anonymous Coward | about 6 months ago | (#46084761)

Seriously, read the fucking complaint.

They were operating fine with "AML controls", and would be still operating fine - just like any other fucking Bitcoin service that is not shut down by "jackbooted thugs stomping on little man" and all despite boldly operating in Totally-Sticking-It-To-The-Man currency - but they didn't even try to pretend they didn't know they're dealing with Silkroad.

Yes, it's in there, with all the subpoenaed emails about how it's ok working with drug dealers, just tell them to keep it under reportable limit.

Re:Read the full complaint before comparing to HSB (0)

Anonymous Coward | about 6 months ago | (#46084891)

What is wrong with silkroad? Oh right, the war-on-free-market. I had forgot about those fascist..

The US government is profiting from drug trafficking, I guess that make them drug dealers [wikipedia.org] . By using the US dollar you are accessory to money laundering.

Charlie Sheen arrested?! (1, Funny)

funwithBSD (245349) | about 6 months ago | (#46084255)

WINNI...

Nevermind.

Money Laundering? (1)

McGregorMortis (536146) | about 6 months ago | (#46084315)

Perhaps I just don't understand what "money laundering" means, but I don't really see how bit-coin is of any use whatsoever for money laundering.

Money-laundering, as I understand it, means to disguise the true origin of ill-gotten funds, so as to make the income appear legitimate.

I think there's confusion in the two different means of the word "disguise". In one sense, it means simply to hide or obscure. In another sense, it means to make something or someone appear to be something else.

Bank robbers wear a disguise in the first sense. A bank-robber doesn't wear a Richard Nixon mask because he wants people to think Richard Nixon robbed the bank. He just doesn't want to be identified in a line-up. This is the same kind of disguise that bit-coin offers. And even in that, it doesn't really stand up.

But I think people interested in money-laundering are using the other sense of the word: they want to be able to actually spend their ill-gotten gains without arousing suspicion. They need to make it look like legitimate income. That is why Walter White bought a car-wash.

Merely obscuring the true origin of your money is useless. If the government is even a tiny bit curious about the true origin of your money, you're already well and truly fucked, whether or not they can ever figure it out.

Re:Money Laundering? (4, Insightful)

JDG1980 (2438906) | about 6 months ago | (#46084423)

What you need to understand is very simple: financial privacy is illegal in the United States. If you run a bank, or any other form of money-transmission service, then you are legally required to report all transactions over a certain amount (I think it might be $10,000, but I'm not sure) to the U.S. government. You are also required to obtain and keep personally-identifiable information on all of your customers, and to report if someone is "structuring" transactions to get in under the limit.

If you don't do these things, you can get arrested even if you knew nothing about the illegal activity your customers were involved in.

Re:Money Laundering? (0, Insightful)

Anonymous Coward | about 6 months ago | (#46084577)

If you don't do these things, you can get arrested even if you knew nothing about the illegal activity your customers were involved in.

Unless you are HSBC. Laws only apply to peasants trying to get out of poverty by seizing new business opportunity that challenge established monopolies held by rich noblemen.

Re:Money Laundering? (0)

Anonymous Coward | about 6 months ago | (#46084875)

HSBC got charged with poor oversight, This is a clearcut case of direct involvement in money laundering. If HSBC execs had had that same involvement they would also be rotting in Jail. this has nothing to do with poor vs rich. This is a case of a criminal getting caught doing something blatantly illegal, there is nothing heroic in what he was doing.

Re:Money Laundering? (1)

Anonymous Coward | about 6 months ago | (#46084477)

convert cash to bitcoins through an exchange. Take bitcoins and convert them back into cash. If the exchange isn't tracking your purchase of the bitcoins you suddenly have a coins that are not linked back to your funds and have in effect "laundered" your money as you can now sell them for cash with no record of where those bitcoins came from it makes it almost impossible to prove ill gotten gains (i.e. did they earn them, mine them, steal them, get given them, buy them etc).

Re:Money Laundering? (1)

McGregorMortis (536146) | about 6 months ago | (#46084837)

Sure, I can hide the origin so it's not obvious where the money came from. So, if I'm a high-school chemistry teacher, and I used this bit-coin trick to "launder" the millions of dollars I made selling meth, then can I just go out and buy a mansion and fleet of Lamborghinis, and expect to stay out of jail? I think not...

there is only one real law (0)

Anonymous Coward | about 6 months ago | (#46084351)

"thou shalt not do anything someone with power over you disagrees with"

everything else is a facade covering up this truth

this guy was handling money and not giving the right people a cut, government is no different than any other kind of protection racket

Drunk and groggy (0)

Anonymous Coward | about 6 months ago | (#46084413)

I thought this was about Charlie Sheen. FUCK, what a waste of time

Bitcoin exchanges are run by flakes. (4, Interesting)

Animats (122034) | about 6 months ago | (#46084415)

This is about normal for Bitcoin exchanges. All of them are flaky. Most of them don't even have a legit business address. About half of all Bitcoin "exchanges" so far have failed. The problem is that they're not just exchanges, they're also deposit-taking institutions holding customer funds. With no regulation. A sizable number of Bitcoin "exchanges" just took the money and ran. With the arrest of the CEO, "bitinstant.com" dropped offline.

Right now, the formerly biggest Bitcoin exchange, Mt. Gox, in Tokyo, is tanking. They stopped US dollar withdrawals back in June 2013, then EUR withdrawals slowed down, then JPY withdrawals, and now Bitcoin withdrawals. There's much discussion over whether they're broke, crooked, or merely incompetent. Right now, Bitcoins on Mt. Gox are priced 25% higher than on the other exchanges, because if you sell Bitcoins on Mt. Gox, you can't get the money out, and that spread has been climbing rapidly for the last few days.

Irrevocable anonymous remote transactions are the scammer's dream. Scammers can rip people off without ever meeting the marks and with a low chance of getting caught. That's Bitcoin's big problem. It takes ten honest people to support one crook, and Bitcoin's ratio of crooks is much higher than that.

Re: Bitcoin exchanges are run by flakes. (0)

Anonymous Coward | about 6 months ago | (#46084599)

Don't you see that it's a self-fulfilling prophecy? So long as bitcoin exchanges are forced to the fringe they will remain there.

Re:Bitcoin exchanges are run by flakes. (0)

Anonymous Coward | about 6 months ago | (#46084649)

bitinstant.com has pretty much been offline since last summer. I've met them and they seemed like a good group of guys. However, I couldn't see the point of their service... a front end to mtgox that didn't add any additional value, so might as well just go to mtgox (if you dare).

Re:Bitcoin exchanges are run by flakes. (0)

Anonymous Coward | about 6 months ago | (#46084695)

Irrevocable anonymous remote transactions are the scammer's dream.

Protip: Bitcoin is not "anonymous".

It's completely anonymous (-1)

Anonymous Coward | about 6 months ago | (#46084943)

until dumb-shits such as yourself attempt to convert it into jew dollars

Re:Bitcoin exchanges are run by flakes. (3, Insightful)

Anonymous Coward | about 6 months ago | (#46084773)

Exactly - bitcoin is always talking about how it is anonymous blah blah blah - well, what do you think happens when people can start moving money around, across international borders, with anonymity? It doesn't take a rocket scientist to predict who is going to flock to it. And since when is it a good idea to put ones money into completely anonymous 'banks' (read - 'bitcoin exchanges') which are who knows where, run by who knows whom with no oversight or recourse for fraud? When the sheep decide to go sleep in a wolf den because they are afraid the trees may drop acorns on them, how surprised can you be when they become dinner?

Re:Bitcoin exchanges are run by flakes. (0)

Anonymous Coward | about 6 months ago | (#46084865)

This is about normal for Bitcoin exchanges. All of them are flaky

I recently sold all the bitcoin in my personal wallet (a whopping ~0.32BTC) via coinbase.com and got a nice ~USD$260 deposit into a personal checking account I own. This was real USD that I was then able to spend on beer.

I point this out not to dispute the veracity of your claim (as coinbase may be flaky on the whole) but merely to offer one data point that I at least got my money out and they were not at all flaky for me. YMMV.

Re:Bitcoin exchanges are run by flakes. (0)

Anonymous Coward | about 6 months ago | (#46085003)

Bernie Madoff paid off incredible returns for his first investors too.

Bitcoin yes HSBC no (0)

mehtars (655511) | about 6 months ago | (#46084565)

They arrest this guy on money laundering, but let HSBC http://www.bloomberg.com/news/... [bloomberg.com] off the hook.

The real reason (0)

kevingnet (3491229) | about 6 months ago | (#46084579)

The real reason why this happened was that he did not purchase the detergent with bitcoin. Apparently there was a slight misspelling and he used bitcon.

Bitcoin, gold or Belize take your choice (1)

deviated_prevert (1146403) | about 6 months ago | (#46084585)

Invest in the country of Belize, one of the last countries that is banking friendly, or so the sly adds on TV tell us. I guess the banks in the Caymans now have competition. I am sure that the investors in the banking sector of the Caymans are the very same group that are screwing over the economies of the USA and Canada in the first place. As usual the real estate and banking sector controlled by the rich is still hosing the economies of North America and the rich are busy taking their capital off shore or buying gold as they are want to do whenever it seems that the majority are start getting tired of working for them for nothing. "go on take the money and run" seems to have become a credo.

GREED IS GREED and it will lead to a state of affairs that will make the dirty thirties look like good times. As long as economies can be effected by a few controlling a growing majority of the wealth then there will intentional economic down turns to lower wages. This time around because the obvious stampede of the rich to get their capital out of the economy of the US and Canada the ensuing depression will be catastrophic. Starvation for some is only a few pay checks away as it is and the majority of the population realizes this fact. Bitcoin is not the answer to this. Now we have the rich accusing the poor of being prejudiced against them and creating an economic holocaust for them by design when the truth is, it is their manipulation of the economy that is causing the chaos in the first place.

Upset banking industry (1)

kevingnet (3491229) | about 6 months ago | (#46084633)

The banks were very upset by this insidious event because they like bitcoin a lot.

Bitcoin is another FAIT currency, fake (1)

Anonymous Coward | about 6 months ago | (#46084645)

It has no real backing behind it, no metals, nothing of value, the only thing backing it is past tense, history, computation time.

What is to prevent CLONING (copying) bitcoins?

What we need is what Colnl Kadaffe was promising before they offed him too, A GOLD CURRENCY (MADE FROM GOLD NO LESS).
Or gems, or silver. something with real tangable value.None of this digital fake shit.

More... (1)

kevingnet (3491229) | about 6 months ago | (#46084681)

The banks were very upset by this insidious event because they like bitcoin a lot. Now the banks are worried because their money might also be laundered by the bad criminal elements.
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