Posted on 01/27/2014 11:50:04 AM PST by Nachum
Less than a year after raising $1.5 million for his Bitcoin exchange start-up BitInstant, CEO Charlie Shrem has been charged with money laundering. A news release from U.S. prosecutors in Manhattan said that Shrem knowingly facilitated illegal purchases on the now-shuttered underground drug marketplace Silk Road. Silk Road was a Web site that allowed users to buy everything from heroin to fake IDs. To help preserve users´ anonymity, the site required all transactions to be conducted in bitcoins. According to the government, a man named Robert Faiella worked with Shrem to sell bitcoins to Silk Road users. The two men
(Excerpt) Read more at washingtonpost.com ...
Gee there’s a surprise.
They sold a product for money and paid tax on their gain.
How is this “laundering”? Because the customers re-sold what they bought?
Not sure I understand.
If I sell a guy my airplane and he (unbeknownst to me) used drug money to buy it, am I in trouble?
Seriously, do not understand.
Seems like the key word is “knowingly”. Wonder how they’re going to prove that.
Not much to understand here. The government cannot have anything economically that they cannot control, regulate and take their cut from.
Amazing they were able to have a complete, in depth story ready to go in just a couple hours.
This is being done to “Poison the bitcoin well” because they see it as a threat.
I thought this could go one of two ways -
they’d see bitcoin as a threat to their schemes and bring out the guns,
or they’d figure out a way to take it over and REQUIRE it to be used instead of currency.
I can see activities being illegal, but not the currency or means of a measure of value being illegal.
Maybe it’s just that the Government doesn’t have a way to control or tax it yet and that bothers them.
I remember seeing a few days ago that the Government was planning to sell the BitCoins they seized when they closed down the Silk Road. Who in their right mind would by a BitCoin directly from the Government?
are they not getting their fair share
I see two avenues of government attack. First, the government is required to create money and have it accepted for all debts, private and public. That's the competition angle. Second, and probably more important, bitcoin enables barter. Barterers are supposed to convert back into dollars and report income, but many don't. Wouldn't bitcoin make it even harder to track transactions?
So, if I were a greedy government rep, I would also accuse the exchange operators of fostering anonymous transactions and thereby facilitating illegal hiding of income on the part of their customers.
Rather than lose the value of what they have come into, I think the Feds will rather regulate it and like a good mafia type of organization will take it over and move out all who had control over it before.
But, I doubt highly that the money involved would influence any high-level policy decision. The amount is too small for our government, which wastes many billions without a care(see Solyndra or Fiskar, prevailing wage contracting, minority set-asides, welfare and tax overpayments, EPA regs, etc, etc).
“If I sell a guy my airplane and he (unbeknownst to me) used drug money to buy it, am I in trouble?”
The corrupt gov’t will charge you as an accessory, and make you *prove* you didn’t know that it wasn’t drug money. Proving a double negative is always problematic. The gov’t JBTs do it all the time.
They are afraid. They always tell you what they are scared of and digital transaction outside of governmental manipulation are very taboo. Screw the fed I hope we see a growth in Bitcoin.
The Federal Reserve Bank members and chairperson, along with most elected politicians should be charged with the same offense,
The way I understand it is that BitInstant is effectively a money changing operation. They would convert Bitcoins to dollars and vice versa. From the story, it appears that moneychangers (like banks) are required to report large cash transactions to the Feds. BitInstant apparently failed to do so, and was intentionally facilitating illegal drug transactions as well.
Why anyone would be surprised that the government would step in under those circumstances eludes me.
Furthermore, after reading the story about BitInstant’s operations, I can’t see how anyone would trust them with either cash or bitcoins. One guy actually said he wouldn’t send them any more money than he could afford to lose. That’s sure not the attitude I have when I send a deposit to my local bank.
Also, the story mentioned the “fees” charged to convert cash to bitcoins. Why not just spend dollars and avoid the fees? Unless you’re purchasing something illegally I suppose.
Quite few bitcoin supporters in here, some who are apparently enamored with the technology, and a lot who just don’t trust “fiat” currency. The latter bunch of you might consider adopting a bit of justified distrust of the bitcoin architecture as well, before you take a plunge and lose your shirts.
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