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Bitcoin Exchange CEO Charlie Shrem Arrested On Money Laundering Charge 330

Posted by samzenpus
from the paying-the-price dept.
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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Bitcoin Exchange CEO Charlie Shrem Arrested On Money Laundering Charge

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  • HSBC (Score:5, Insightful)

    by The Atog Lord (230965) on Monday January 27, 2014 @03:52PM (#46084035)

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

  • Re:HSBC (Score:5, Insightful)

    by lgw (121541) on Monday January 27, 2014 @03:57PM (#46084087) Journal

    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.

  • by erroneus (253617) on Monday January 27, 2014 @03:57PM (#46084091) Homepage

    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:HSBC (Score:5, Insightful)

    by viperidaenz (2515578) on Monday January 27, 2014 @04:00PM (#46084123)

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

  • by Ralph Wiggam (22354) on Monday January 27, 2014 @04:07PM (#46084227) Homepage

    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.

  • by bloodhawk (813939) on Monday January 27, 2014 @04:09PM (#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!
  • by funwithBSD (245349) on Monday January 27, 2014 @04:10PM (#46084269)

    Indeed.

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

    The book they helped to write.

  • by JDG1980 (2438906) on Monday January 27, 2014 @04:20PM (#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:HSBC (Score:5, Insightful)

    by pla (258480) on Monday January 27, 2014 @04:21PM (#46084439) Journal
    "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.
  • by sjbe (173966) on Monday January 27, 2014 @04:22PM (#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.

  • by Anonymous Coward on Monday January 27, 2014 @04:31PM (#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:HSBC (Score:4, Insightful)

    by lgw (121541) on Monday January 27, 2014 @04:34PM (#46084597) Journal

    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?).

  • by gangien (151940) on Monday January 27, 2014 @04:35PM (#46084615) Homepage

    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.

  • by Anonymous Coward on Monday January 27, 2014 @04:46PM (#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:HSBC (Score:5, Insightful)

    by Dahamma (304068) on Monday January 27, 2014 @05:18PM (#46085155)

    Stop trying to pretend this is a used car deal ("don't worry about the total, it's just $179 a month!"), let's just put the actual numbers out there - they were fined $1.9B for laundering $680B. The government isn't punishing them by "taking their future profits", it's giving them a massive break by forcing them to give up a small fraction of the profits they already made on illegal activities.

    If you were fined 5 weeks of income (and no jail time) after having made a shit-ton of money in the last 4 years doing something illegal, it wouldn't sting at all. In fact, you'd almost be motivated to try it again...

  • by Dahamma (304068) on Monday January 27, 2014 @05:27PM (#46085263)

    Cheaper because you don't have to pay money transfer fees.

    Until you can pay 100% your housing, utilities, food, and other expenses in BTC, there will always be a price (direct or indirect) to exchange them.

  • Re:HSBC (Score:4, Insightful)

    by CodeArtisan (795142) on Monday January 27, 2014 @05:29PM (#46085283)

    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.

    Except the ones regarding telecoms companies and illegal wire tapping you mean?

  • by idontgno (624372) on Monday January 27, 2014 @05:54PM (#46085579) Journal

    Clearly? Care to back that up?

    Why? It's clearly better.

    Clearly. Better.

    Evidence would be redundant.

    </sarcasm>

  • by lgw (121541) on Monday January 27, 2014 @08:02PM (#46086761) Journal

    You completely bypassed the point I was making.

    The money supply has almost nothing to do with the amount of physical currency, because of fractional-reserve banking (and other games without handy names). Do you think inflation in America has anything to do with the umber of printed dollar bills in circulation?

    For bitcoin to be mainstream, used by ordinary people for shopping, there will need to be BTC-denominated savings accounts, CDs, and credit cards (and likely insurance policies as well). In other words: fractional-reserve banking.

  • by Eskarel (565631) on Monday January 27, 2014 @11:00PM (#46087839)

    Our big challenge isn't to get the 1st and 4th amendments applied to the internet. The problem we have to resolve is how to expand our 1st and 4th amendment protections to cover all the information that can now be collected without making it illegal to walk down the street.

    What the NSA is doing for the most part is collecting all the information that sits outside of what is actually protected by law, most of it has always been legal because it wasn't possible to use that mass of information to actually determine anything, now it is.

    It's always been perfectly legal for the police to follow you everywhere you go on public property and write it down, it just wasn't cost effective to do it and the cops stuck out like a sore thumb, today we've all quite happily placed GPS tracking devices in our pockets so the police can get all that information without having to actually do any work and with modern computers they can actually process it.

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