The operators of two exchanges for the virtual "currency" Bitcoin have been arrested in the US. - Polidicks

[img]http://news.bbcimg.co.uk/media/images/72557000/png/_72557159_shot.png[/img] [i]The BitInstant Bitcoin exchange is based in New York[/i] [quote]The operators of two exchanges for the virtual currency Bitcoin have been arrested in the US. The Department of Justice said Robert Faiella, known as BTCKing, and Charlie Shrem from BitInstant.com have both been charged with money laundering. The authorities said the pair were engaged in a scheme to sell more than $1m (£603,000) in bitcoins to users of online drug marketplace the Silk Road. The site was shut down last year and its alleged owner was arrested. Mr Shrem, 24, was arrested on Sunday at New York's JFK airport. He was expected to appear in court on Monday, prosecutors said. Mr Faiella, 52, was arrested on Monday at his home in Cape Coral, Florida. Mr Shrem is accused of allowing Mr Faiella to use BitInstant to purchase large quantities of bitcoins to sell on to Silk Road users who wanted to anonymously buy drugs. The authorities said Mr Shrem was aware that the bitcoins were being used for such purchases, and therefore he was in violation of the Bank Secrecy Act. The Act requires financial institutions in the US to alert authorities to any suspicious activity that may suggest money laundering is taking place.[/quote] [url]http://www.bbc.co.uk/news/technology-25919482[/url]

oh boy, more bitcoin news.....

Suppose people turn to Dogecoin, will they arrest them for that too?

The US also distributes money that can be used to buy drugs.

[QUOTE=Zonesylvania;43690370]Suppose people turn to Dogecoin, will they arrest them for that too?[/QUOTE] I suppose if money start money laundering with it.

[QUOTE=Zonesylvania;43690370]Suppose people turn to Dogecoin, will they arrest them for that too?[/QUOTE] I don't think muche people would take suche a currency seriously I mean, the fact that these guys got arrested for having many bitcoin might be a step in that direction but if they actually start arresting for dogecoin I'll be saying "wowe" in disbelief

Didn't HSBC do the exact same thing and got away with it?

Seems like some piss-weak charges based on vague laws. They probably wouldn't have a problem with getting assistance from EFF's top-dog lawyers.

[QUOTE=SPESSMEHREN;43690552]Didn't HSBC do the exact same thing and got away with it?[/QUOTE] And they're going to pay the US government $1.9 Billion for that.

This was bound to happen sooner or later. Bitcoin aka the perfect medium for those who wish to clean their money, buy illegal drugs, weapons & porn. If you are cunning, feel free to rip everyone off with a good old ponzi scheme. Once the scheme is no longer profitable, just disappear with all the money and tell the people that a unknown "hacker" stole it.

Damn, bitinstant was the best, aside from LocalBTC

[quote]The authorities said the pair were engaged in a scheme to sell more than $1m (£603,000) in bitcoins to users of online drug marketplace the Silk Road.[/quote] So by selling bitcoins, at an exchange, am I laundering money? May as well search everyones computers and if there is any Bitcoin wallets on their computer we better charge them.

[QUOTE=Tengil;43691958]This was bound to happen sooner or later. Bitcoin aka the perfect medium for those who wish to clean their money, buy illegal drugs, weapons & porn. If you are cunning, feel free to rip everyone off with a good old ponzi scheme. Once the scheme is no longer profitable, just disappear with all the money and tell the people that a unknown "hacker" stole it.[/QUOTE] Bitcoins are both private but very public. For instance, some redditor found the guy who stole 40,000 BTC from Sheet Market place by tracking him through a BTC tumbler.

People like to say that Bitcoin's evil because it allows people to launder money, but honestly, it's a lot harder to launder money through Bitcoin than it is with fiat. Every transaction is on a public ledger, recording who sent it, when, and to whom. The only way to erase these records is to put them in to a Bitcoin tumbler, which is basically a pool of a bunch of people's Bitcoins, held by a central controller. It's basically a shell corporation in regular money laundering. Zerocoin accomplishes decentralized tumblers through some complex cryptography that very few people understand, but not many people use Zerocoin.

As I have said before, if people want Bitcoin to be taken seriously then people who handle it (ie banks) need to stand up to the same scrutiny and regulations as banks.

[QUOTE=Jsm;43692898]As I have said before, if people want Bitcoin to be taken seriously then people who handle it (ie banks) need to stand up to the same scrutiny and regulations as banks.[/QUOTE] lol, banks are held up to scrutiny? If they do anything wrong they just give the government a cut of their profits and are sent on their way.

[QUOTE=Jsm;43692898]As I have said before, if people want Bitcoin to be taken seriously then people who handle it (ie banks) need to stand up to the same scrutiny and regulations as banks.[/QUOTE] Bitcoin banks? I don't think you understand the concept of Bitcoin.

[QUOTE=Falubii;43690373]The US also distributes money that can be used to buy drugs.[/QUOTE] Well if it's true that he knew they were being used to buy drugs then it's a completely different story. The US government doesn't give people money for the singular purpose of buying drugs, this guy on the other hand apparently was.

The charges are bullshit. They're trying to make the value of the Bitcoin crash, in classic US govt. style - Waving their dick around.

Do people seriously not know what money laundering is? [QUOTE=Period;43692491]So by selling bitcoins, at an exchange, am I laundering money? May as well search everyones computers and if there is any Bitcoin wallets on their computer we better charge them.[/QUOTE] No, if you are selling bitcoins at an exchange you are not laundering money. If you are buying bitcoins so that you can buy illegal drugs, then both you and the person you are buying bitcoins from are engaging in money laundering. You're converting one currency into another for the explicit purpose of obscuring the original source of the money when it is used for illegal purposes. People use Bitcoin for illegal purchases because it's decentralized and essentially anonymous. They convert conventional currency into a different medium of exchange to deliberately hide the actual flow of money. That is laundering by definition.

No surprises here really

[QUOTE=supersnail11;43692976]Bitcoin banks? I don't think you understand the concept of Bitcoin.[/QUOTE] Perhaps bank isn't the best term, but they are acting as a financial institute. They are no different to anyone else who deals with large amounts of money, they have the same duties (such as to report suspicious transactions).

[QUOTE=Jsm;43693691]An organisation that does wire transfers (amongst other things) for people is a bank. I don't think you understand what a bank is.[/QUOTE] But a Bitcoin exchange isn't a bank. It's an exchange. You can say they should be regulated like any other exchange, and we could argue about that, but they're not a bank.

Exchanges still need to follow anti-laundering laws among other things

[QUOTE=Lonestriper;43693739]Exchanges still need to follow anti-laundering laws among other things[/QUOTE] The thing is, as far as the law's concerned, these aren't exchanges. Bitcoin is - in the eyes of the law, at least - a commodity. They're buying a commodity from one person and selling it for cash to another, or vice versa. [editline]27th January 2014[/editline] Not to say they shouldn't be regulated, but they aren't until Bitcoin is recognized as a currency. [editline]27th January 2014[/editline] [URL="http://rt.com/usa/bitcoin-sec-shavers-texas-231/"]Except in Texas, apparently.[/URL]

I don't know the intricacies of the anti-laundering regulations in place, but transferring illegally gained commodities for legal cash screams 'I'm laundered'. If I conducted my drug dealing business exclusively in gold only to transfer that gold into cash I don't get off scot-free because of some loophole.

[QUOTE=supersnail11;43693716]But a Bitcoin exchange isn't a bank. It's an exchange. You can say they should be regulated like any other exchange, and we could argue about that, but they're not a bank.[/QUOTE] Yeah bank was completely the wrong word to use, you caught me before I corrected myself :(

Why is this getting so many funnies and winners? FP really does have a hateboner for Cryptocurrencies.

[QUOTE=Lonestriper;43693807]I don't know the intricacies of the anti-laundering regulations in place, but transferring illegally gained commodities for legal cash screams 'I'm laundered'. If I conducted my drug dealing business exclusively in gold only to transfer that gold into cash I don't get off scot-free because of some loophole.[/QUOTE] Not trying to argue that it being a commodity makes it legal, just that being legally classified as an exchange is dubious until Bitcoin is recognized as a currency.

The DoJ is right Bitcoin is evil drugmoney because: - uh a drug website used it once, - etc More like bitchcoin amirite guise