I'd argue that Bitcoin owns it's meteoric rise to SilkRoad and drugs in general.
Many people 'got into' bitcoin in order to be able to purchase stuff on SilkRoad or similar. I know I'm one of them and I'm really thankful for those 3 hits of acid which cost me 3.3 BTC at the time. The transaction worked so I've decided to invest a lot more in Bitcoin. Up to this day I'm living off that investment and able to work on my dream projects. And the acid was very good as well ;).
Absolutely. Silk Road was a mostly (not completely) illicit marketplace and the characteristics of illicit markets is that money transfer has tons of friction. You can't use regular bank accounts, cash works but sending cash around the country or the world is problematic, risky, expensive, slow.
So bitcoin was a perfect solution to that problem. It naturally gravitated towards a market with very little competition and shitty alternatives. Of course it thrived.
Bitcoin could never have taken off if it had tried to become a currency in stores first. It needed a proof-of-concept. And the only market it could do that in, was a market with no competition.
So bitcoin blew up there, and now it's slowly making the transition into the mainstream where it faces much more elegant, entrenched, competitive players like debit/credit/ach/cash etc. Despite these being far from perfect, it's a big battle. But without Silk Road, bitcoin would never have had the momentum, the interest, userbase, hype or infrastructure to even think about competing for mainstream use.
Bitcoin owns its meteoric rise to the fact that it provides real value that other currencies can't - partly, that it's pseudonymous and doesn't require going through a 3rd party like a bank.
Silk road was just a demonstration of these practical attributes in the real world. It helped to add some demand for the currency, but not a majority of it. Mostly, it bolstered public awareness. At the same time it was being used on SR, it was being widely derided by the majority of the media as only having one specific illegal purpose and should be shut down for that reason, causing others who may have taken a look out of interest to write it off completely. You could argue that the effect of SR was neutral, if not negative.
Bitcoin was being traded before SR and it's being traded after. The most recent big bubble happened partly as a result of SR actually collapsing. The day it went down, the price dipped from ~$125 to ~$85 and it was back up in about a week.
Combined with the government hearings at the time, the facts that bitcoin were (1) legal to use, and (2) still had value outside of drug trade, made it explode.
To make matters worse, while Shrem was CEO he was simultaneously BitInstant’s compliance officer, responsible for ensuring that his company followed the law.
With respect: I know you're a professional at this, but I work with many startups who need named compliance officers for HIPAA or AML purposes, and it is the CEO virtually everywhere. This decision is generally made less out of hubris and more because a) the position has a very high ratio of requiredness to actual duties and b) legal advisors recommended that naming the CEO as opposed to a summer intern would suggest enthusiastic compliance.
Who gets tapped for this sort of thing in your world?
Oh, I didn't mean it was hubristic being the compliance officer! I meant shoveling all the BTC around while knowing he didn't have even a figleaf of deniability (eg blaming an internal miscommunication with someone else who was in charge of compliance). He had to know it was enormously risky.
Likely but it doesn't take a trained compliance officer to not do the things Shrem did choose to do.
Look I'm not against drugs (born & raised in Amsterdam, never used but understanding of it) and Silk Road was mostly a voluntary marketplace without victims that reduced violence and crime involved with drugs being sold at night illegally on every streetcorner instead of anonymously online. It's a product of a system that ignores research and examples (like my country) that legalized markets provide more oversight, opportunity for regulation, for consumer safety, usage-limits, child-free zones etc, than a completely illegal unregulated market. And all Shrem did was enable people to participate in this market (which a priori is not illegal, as it traded baseball caps and hamburgers, too, Shrem was agnostic about what the bitcoins were used for, and did not even sell them to Silk Road users, but to someone who resold them to Silk Road users).
So I'm not against Shrem. BUT, he broke laws. And he did it knowingly and willingly. All the emails released by the court show he sent emails telling this guy of whom he knew was selling on the SR, to use different email addresses so that he wouldn't have to ban him (as his cofounder didn't like it), limit bank deposits to X amount per time (so that he wouldn't have to file a report to Fincen) etc etc. And then he didn't report anything even though in the emails he spoke of the need to do these reports, and told his cofounder of this responsibility. He literally instructed a customer how to avoid and evade the law over email secretly from his co-founder, and then chose not to do the due diligence he's legally required to do in terms of reporting large orders, despite communicating he was aware of this duty.
My point is, had nothing to do with being under staffed or having too little money to hire competence. Every 15 year old could have not made these mistakes. (if that is even true, they raised quite a bit of money and generated significant revenues very quickly, too)
Still, got nothing against the guy. The whole case is rooted on a non-sense drug policy.
I agree. Regardless of one's stance on drugs and their respective online black markets (the latter of which I had a sizable knowledge), I don't really see what Shrem's expected outcome of this could have been other than, well, what happened.
There is no provision in the constitution for the federal government to regulate money exchange. Thus the law he was convicted under is itself a criminal act (and under USC 18-242 everyone enforcing it is a felon).
The constitution is the highest law of the land. If you think this guy belongs in jail, then you need to amend it.
The supreme court has already ruled that unconstitutional laws are null and void the moment they are passed. They do not need to be struck down by the supreme court.
Remember the legislature, executive and judicial branches all derive their power from the constitution, thus none of them have the power to exceed the power it gives them, by definition.
The real problem here is not that people haven't changed the law (which they can't since the people are not in power).
The problem is we have a criminal syndicate for a government.
This is why there are no prosecutions for spying on the NSA's part, despite breaking the law. This is why the TSA violates the fourth amendment with impunity (again, a violation of USC 18-242) without ever there being charges filed.
Hell, the TSA is violating state criminal statutes in most states when they molest minors who opt out of having their nude photos taken (which itself is child pornography).
No charges have been filed. Why is that?
So, we can't really say we have the "rule of law" here.
The law only is used against people like Charlie, never against the rulers.
The Constitution granted the Federal Government limited powers. But included in those powers is the power to self-define and self-regulate.
Thus, should the legislature pass a law, and should the Supreme Court uphold that law, it is deemed Constitutional by the body specifically-empowered to make that determination.
The Money Laundering Control Act made the laundering of money a crime. It was passed by the Legislative branch of the Federal Government as prescribed by the Constitution.
The MLCA has been upheld by the Supreme Court, or rather, cases have been brought before in which the government's prosecution has rested on enforcement of the law, and the Justices have upheld it by interpreting the law, as written, without deeming it unconstitutional (Santos, Schueller, etc.)
Thus, the law is Constitutional pending some future case.
In order to rebut what I said, you would need to show where the federal government is given this power in the enumerated powers clause. You have not.
What you have merely done is engage, effectively in ad hominem along with a string of irrelevant assertions that to an in unformed, or unthinking reader might sound like an argument.
And of course, in grand hacker news tradition, downvote me so that people cannot see my comment, for the "crime" of making an argument that undermines your political ideology.
Something isn't 'Constitutional pending some future case'; it either is or is not constitutional, period. It may be recognised as or presumed constitutional or not which I think is what you mean.
Regarding money transfer, I think it's clear that the Congress has the ability to regulate interstate and international money transfers. Whether it should or not is an entirely different matter.
Despite the current (ludicrous) interpretation of the commerce clause, the Congress has no authority over intrastate money transfers whatsoever; that authority rests with the states.
PS- you're using the term "money laundering" wrong. The same way that anyone the government doesn't like is labeled a terrorist, perfectly legal and innocent activities not associated with any crime are called "money laundering" under this law.
This is how propaganda is used to cause people to tell lies without even realizing it.
When you pay your credit card off from your checking account, but took money from your savings account first, that is "money laundering" under the law.
Simply stating that the Commerce Clause and the Coinage Clause are dead letter law not intended to regulate the exchange of money doesn't make it true. Your interpretation of the law disagrees with more than 200 years of legal consensus on the federal government's power to regulate money exchange within the U.S.--including those of the Founding Fathers themselves.
Counterfeiting has a long and sordid history, and was very much a problem when the Constitution was written. It was, in fact, one of (but not the only) impetuses for the Coinage Clause. See http://www.history.org/Foundation/journal/Summer07/counterfe.... There are plenty of other sources to support this, though this is the only one I found online in my 30 second search. If you want more sources, you're free to visit a library yourself.
>There is no provision in the constitution for the federal government to regulate money exchange.
Er, what? If you fund or help fund a criminal enterprise, you can be prosecuted for it. If someone was funnelling millions of dollars to, say, a child sex slave ring, you think that the constitution protects their sending of that money and they can't be charged for it?
I don't personally think drugs should be illegal at all, but I do think that funding crimes in general should be illegal, which is essentially what Shrem was charged with here.
Without taking a position on whether I think <MCRed> is right as a policy matter, you're responding to a different point.
<MCRed> is arguing (admittedly in a rant-y kind of way) that the U.S. Constitution is a document that grants limited and specific powers to the federal government and reserves the rest for the states and the people. That argument says those powers do not include the ability to regulate money exchange. An implication of that argument is that nearly all law enforcement would be left to the states -- so your hypothetical sex slave ring would be prosecuted by the states, and in fact every state currently has a law on its books making such a conspiracy illegal. And in fact most criminal prosecutions are already done by state governments.
Again, I'm not saying what I would prefer as a normative matter, just that it looks like you're talking past each other to some extent.
You're right, I am responding to a completely different point because I didn't really want to argue about what kind of powers are and aren't granted to the federal government by the Constitution. etchalon did a great job at that: https://news.ycombinator.com/item?id=8277608
Ignoring the legal system and the Constitution entirely though (purely for the sake of argument), it makes practical sense that for offenses that constitute multistate or multinational money laundering, the federal government would be the most appropriate enforcer of the law.
It's sad that you don't care about the quality of arguments or what the truth is. You just seem to care about what fits your ideology, which I'm sorry to say is fascist. (I await the time that another term is coined for this ideology so that I can stop using that one which people presume is a cheap insult rather than a precise description of an ostensible capitals society where the government has unlimited regulatory power.)
I submit to you that the "crime" of money laundering is one you're guilty of. I know for a fact, under the law, the way it is written you are guilty of it.
Thus you are advocating for your own incarceration.
Ok, well you consider what was done here "funding crimes", by the law, is it is written, you are guilty of both funding drug sales AND child sex slavery. IT doesn't have to be millions of dollars, all that's necessary is that money that crossed your hands was used for those purposes.
Therefore, by your argument you're a felon.
That's why I'm saying the law is illegal. I'm saying you're not a felon.
But of course, I get down voted to hell here, just convincing me that there is no intelligent life to be found on hacker news.
I sympathise with your (rare) regard for the Constitution, but money transmission is a forum of commerce, and thus the Congress may regulate it when it occurs across state or national borders. Just as not all good ideas are constitutional, not all bad ones are unconstitutional.
I would personally like to see the money-laundering laws repealed, as the activity they proscribe is not itself a true crime. They are prone to abuse, and appear fundamentally unjust to me. But they are at least in principle constitutional.
The NSA is not breaking the law. Again, not all good things are mandated and not all bad things are forbidden. There's a difference between pushing to the very edge of what the law permits and pushing further. In many ways, it's a hacker's mindset.
I think that there's an excellent argument that the TSA is violating the 4th Amendment. It's not at all obvious how stripping me naked with X-rays is consistent with the security of my person, nor is it clear that it is reasonable to be searched before boarding transportation. Additionally, I fail to see how disarmament of travellers is consistent with the 2nd Amendment.
I would probably support an amendment to permit searches for explosive devices, were it properly worded.
5: To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
6: To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
Section 8, clause 5: Defines the weight of money.
Section 8, clause 6: Allows for the punishment of counterfeiting.
Neither of these have anything to do with trading money between people.
I think that is why you did not quote them, you merely cited them expecting that most people would not bother to look them up and thus you would appear to have presented a slam dunk.
The commerce clause merely requires that no tariffs can be placed between commerce of the states. I find the phrase "currently accepted" in place of "criminal in practice" to be a convenient bit of spin.
I'm glad that you can cite the constitution. Maybe you should also have cited clause 3: "[The Congress shall have Power] To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes", which has been interpreted by the Supreme Court on multiple occasions as applicable to the instruments of commerce, even in intrastate commerce.
No, it's not that its imperfect, its that it is non existent.
We have the rule of men who can do pretty much whatever they want, without repercussions.
Imperfection would be if %10 of the TSA employees prosecuted got off without punishment.
Criminality is the situation where none of them will ever be prosecuted.
But just like Germans in the 40s who couldn't believe the holocaust happened because they couldn't comprehend the possibility that their government could be that evil... american kids, indoctrinated in state worship in state schools can't conceive of the possibility that their government is nothing more than a gang of violent criminal thugs.
I don't see why you think it's a dishonest characterization. You don't think the regulation of money exchange is constitutional, I think it is because it's a commercial activity and the commerce clause of the constitution empowers Congress to legislate on such things - it's one of the enumerated powers, as popposed to being inferred by courts. As I'm sure you're aware of the commerce clause the only logical basis I can see for your position is if you don't think money exchange is a commercial activity.
Also ad hominem means something other than what you seem to think it means. That's when you dismiss someone's argument by saying there's something bad about the person making the argument, eg 'ignore what Alice said because she's a communist.'
For a bitcoin exchange, only half of the business is in bitcoin. The other half is in fiat, and I think that's why exchanges need a money transmitter license.
Nah, a business that's 100% bitcoin-based with no fiat on or off-ramps will still need a money transmitter license.
For example an exchange to trade one cryptocurrency for another (bitcoin to litecoin). So even a non-fiat company can indeed be a MSB.
It's completely true to say that the IRS deems it property, not currency, and Fincen deems it a money-like product or a money-substitute. It doesn't outright call it currency though, but the implication is there.
Well imagine the police arrests you because it says drugs are illegal, but the courts say they're not. But you still go to jail, because the police says it's illegal. That would be pretty strange.
Similarly, it's strange for the IRS to say you need to pay X taxes because the IRS says it's not a currency, but the courts say it is. But you still need to pay the taxes.
There are reasons for why this might make sense, sure, but it's also easy to see why some people find it strange or confusing.
Sure, but you can use anything a currency. And being able to avoid the laws just by using something that isn't officially recognized would be rather dumb.
You might as well be using cows as a currency, it'd be no different from bitcoins.
You might as well be using cows as a currency, it'd be no different from bitcoins.
Characteristics are much more important than arbitrary definitions because what we want to call something is mostly subjective, characteristics aren't so much. i.e. a fork can be called a utensil or a weapon, but its characteristics are the same: sharp, pointy, rigid etc.
For example, you could say 'anything is a weapon', and thereby we're not allowed to bring clothing on to an airplane, because someone could use a tshirt to strangle a person. That would be completely true, and there certainly will have been people who've been strangled by a tshirt in the past 20 years. But that doesn't mean we should ban it and call it a weapon, because it doesn't have the characteristics or use of a weapon ordinarily and is barely a weapon.
Same for cows. Yes you could use it as a currency, but it doesn't have the characteristics of a currency (fungible? no, divisible? no, portable? no, long term store of value? no, precise unit of account? no) while bitcoins are divisible (up to 100 millionth of a bitcoin), portable (obviously), precise unit of account (yes), store of value (possibly, in my opinion probably but time will have to tell). So indeed cows are treated very differently for the right reasons, as it's not a good form of money and thereby isn't used as money generally. If cows had good characteristics as money, it'd be used a lot, and we'd see people try to use cows to launder money on a massive scale naturally (because any legal money will be used illegally too, and that must find its way back into the system at some point), and then you'd see money transmission laws include cows as a 'money-substitute' just like bitcoin. But they aren't, because they aren't actually a money-substitute, because cows suck as money.
Sure, but you can use anything a currency. And being able to avoid the laws just by using something that isn't officially recognized would be rather dumb.
I agree which is why US institutions have moved to officially recognize bitcoin as a certain thing, so the laws that apply to those things apply to bitcoin, too. For the IRS that's taxation law on property, for Fincen that's money-like products.
