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Bitcoin Government News

Early Bitcoin User Interviewed By Federal Officers 92

Posted by Unknown Lamer
from the just-wasting-electricity-officer dept.
MrBingoBoingo (3481277) writes Recently a Bitcoin user reports being interviewed over their past use of a now defunct exchange service by agents from the FBI and Treasury Department. This encounter raises concerns that earlier Bitcoin users who entered the space inocuously and without ties to Dark Markets or The Silk Road might need to prepare for Law Enforcement questioning about their early Bitcoin related activities.
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Early Bitcoin User Interviewed By Federal Officers

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  • by rebelwarlock (1319465) on Tuesday August 26, 2014 @03:35AM (#47754609)
    Both the summary and headline (on slashdot - it's different on TFA) are a bunch of horseshit. Here's what the headline looks like on TFA:

    A Law Enforcement Encounter: If you ran a Bitcoin related service before the thing hit $100 you prolly ought to be somewhat concerned and/or prepared

    The rest of the article suggests he was only interviewed because of that service as well. So unless every single early user of bitcoin started up an exchange service, the part we have on slashdot is almost entirely fictional.

    • by Nyder (754090) on Tuesday August 26, 2014 @03:43AM (#47754637) Journal

      Both the summary and headline (on slashdot - it's different on TFA) are a bunch of horseshit. Here's what the headline looks like on TFA:

      A Law Enforcement Encounter: If you ran a Bitcoin related service before the thing hit $100 you prolly ought to be somewhat concerned and/or prepared

      The rest of the article suggests he was only interviewed because of that service as well. So unless every single early user of bitcoin started up an exchange service, the part we have on slashdot is almost entirely fictional.

      Yep, my take on the article was what you said, and that they have crappy records for that service, so they were on a fishing expedition to see if they could find anything good/relating to the silk road stuff. In all honesty, it sounded like due diligence to me, in other words, the Feds were doing the detective work they needed to be doing.

      • by gstoddart (321705) on Tuesday August 26, 2014 @08:32AM (#47755569) Homepage

        so they were on a fishing expedition to see if they could find anything good/relating to the silk road stuff. In all honesty, it sounded like due diligence to me

        No, as you say, it's a fishing expedition.

        Sorry, officer, do you have some evidence of wrong doing on my behalf, or are you just asking around to see if you can find out anything you can use?

        The answer, in both cases, is talk to my lawyer and come back with a warrant. Because when the police are on a fishing expedition, the last place you want to be is innocently answering questions they'll twist against you.

        With parallel construction and every other dirty trick law enforcement is using, you have to start from the premise they're either lying to you, or hoping you'll slip up. Because, quite frankly, they probably are.

        Even if there's no evidence you committed a crime or otherwise broke the law, you're still quite likely to get screwed over. Answering open ended questions is a terrible idea, because they're just as likely to use it to fabricate something about you.

        Law enforcement is no longer trustworthy. Stop treating them like they are. Even if they're smiling at you, they're probably hostile to your best interests.

        • by rmdingler (1955220) on Tuesday August 26, 2014 @09:18AM (#47755877)
          If you listen closely enough, most people will reveal their intentions.

          You have the right to remain silent.

          Anything you say or do may be held against you.

          • AND its worth noting.....should anything ever go to court....

            NOTHING you said can be used to help you. While anything you say can be considered a confession and used against you, anything you say that is not used against you is hearsay.

            So you have nothing to gain by speaking if it ever does go to court.

          • Anything you don't say may also be held against you. Once you become a target, all you can do is enjoy the ride.

            • Why won't you help us with the investigation if you have nothing to hide?

              This line of questioning is especially effective if the suspect is guilty. Oh shit, I better go in and talk to them or they'll think I did it. The thing is, they are interrogating you, often for hours on end, because they already believe you could be the guy they're looking for.

              It seems likely it is better to close your mouth and let them think you're guilty, rather than open it and remove all doubt.

              • It seems likely it is better to close your mouth and let them think you're guilty, rather than open it and remove all doubt.

                No, it really makes no difference one way or the other. If they want you, you are fucked ,the written law means squat.

            • What you don't say can't be used against you in court. There's a lot of unpleasant things the criminal justice system can do to somebody without an actual conviction (and there's really no way around that). When the authorities want to question you, get a lawyer.

        • by Dishevel (1105119)
          We must all remember this [youtube.com]. A thousand times. Never talk to the police. Ever.

          Ever!

      • by Anonymous Coward

        Both the summary and headline (on slashdot - it's different on TFA) are a bunch of horseshit. Here's what the headline looks like on TFA:

        A Law Enforcement Encounter: If you ran a Bitcoin related service before the thing hit $100 you prolly ought to be somewhat concerned and/or prepared

        The rest of the article suggests he was only interviewed because of that service as well. So unless every single early user of bitcoin started up an exchange service, the part we have on slashdot is almost entirely fictional.

        Yep, my take on the article was what you said, and that they have crappy records for that service, so they were on a fishing expedition to see if they could find anything good/relating to the silk road stuff. In all honesty, it sounded like due diligence to me, in other words, the Feds were doing the detective work they needed to be doing.

        Because the Feds have a weal case against Silk Road's founder. This is something that they do all the time to save face, when in reality you have moron juries that will falsely convict someone anyway. So it makes little to no sense to waste millions in tax payer money to go after this guy, and to keep investigating no-where leads.

    • by LordLimecat (1103839) on Tuesday August 26, 2014 @07:27AM (#47755285)

      If you werent aware, Slashdot is a game whereby you figure out WHICH pieces of the headline and summary are BS.

      Congrats on your first win!

  • by mvdwege (243851) <mvdwege@mail.com> on Tuesday August 26, 2014 @03:42AM (#47754633) Homepage Journal

    Let's not overstate this. The account given by Bingo is a good one, and on the facts it shows two law enforcement officers just doing their job: gathering background information, and they're doing it in a way to minimise the hassle for the ordinary member of public they're interviewing. Bingo mentions no powerplays beyond them identifying themselves as LEOs.

    And doing the research how Silk Road grew out of the early BitCoin scene (or if it even did) is a legitimate avenue of inquiry.

    I am not a fan of the bullies that populate far too many police forces, so this is a welcome change of pace.

    • Let's not overstate this. The account given by Bingo is a good one, and on the facts it shows two law enforcement officers just doing their job: gathering background information, and they're doing it in a way to minimise the hassle for the ordinary member of public they're interviewing. Bingo mentions no powerplays beyond them identifying themselves as LEOs.

      Yeah. And if I were just a small-time user of some bitcoin service, my "preparing" for questioning by law enforcement would be to get ready to tell them to get stuffed if they got pushy.

      • "tell them to get stuffed if they got pushy."
        Yes, of course... LOL!

      • Re: (Score:2, Interesting)

        by Anonymous Coward

        Yeah. And if I were just a small-time user of some bitcoin service, my "preparing" for questioning by law enforcement would be to get ready to tell them to get stuffed if they got pushy.

        So says an armchair warrior on the internet. In reality at the first suggestion of an IRS audit you'll be copying every log file you have or can download from an exchange onto a memory stick for them. You know why law enforcement gets pushy, because it works.

  • by perpenso (1613749) on Tuesday August 26, 2014 @03:51AM (#47754665)
    Every US based bitcoin user is going to be asked about their bitcoin activities ... by the IRS since the IRS has figured out how to tax bitcoins, as an asset.

    Seriously, this is no joke. As an asset you will be expected to declare a gain or loss on the coins you used to purchase that cup of coffee. The gain or loss with respect to the change of value between the day you received those coins and the day you used them in the purchase.

    This is why it is incredibly important whether the IRS considers bitcoins to be a currency or an asset. As an asset the reporting requirements would seem to become similar to that of buying, selling and trading stocks. Its not at all like spending dollars.
    • by pla (258480)
      Seriously, this is no joke. As an asset you will be expected to declare a gain or loss on the coins you used to purchase that cup of coffee. The gain or loss with respect to the change of value between the day you received those coins and the day you used them in the purchase.

      Very true, no joke at all! That ruling makes Bitcoins far better from a tax standpoint than than USD, although slightly less convenient. Instead of paying your normal income tax rate on BTC, you pay your capital gains rate. Hold
      • by perpenso (1613749)

        ... the IRS has decide to only allow gains, not losses ...

        Realized net gains and net losses. I believe virtual coin losses can be applied against virtual coin gains, even the IRS would not be so insane as to not allow this. I expect the problem is applying net virtual coin losses against regular income. The issue also appears with stocks, only up to $3,000 of realized net losses can be applied against regular income if I remember correctly.

  • All systems fight against change. In this case concepts concerning money and wealth are somewhat challenged and one would expect governments to push back hard. I'm not saying it is right it is simply predictable. If you sit down and figure out a way to have people email each other in such a way that the messages can not be had by spies you will find out suddenly just how deeply governments reject privacy in communications. There will be a knock at your door and they won't be kidding one bit. Anythi
  • No Sweat (Score:3, Insightful)

    by Anonymous Coward on Tuesday August 26, 2014 @04:24AM (#47754737)

    Preparing for Law Enforcement questioning is no big deal:

    Be unfailingly polite, and DON'T ANSWER ANY QUESTIONS! You are not required to answer any questions.

    Don't be Ein Dickus Maximus about it, don't stick a camera in their snouts, just don't answer.

    Freedom in action.

  • by bradley13 (1118935) on Tuesday August 26, 2014 @04:39AM (#47754771) Homepage

    This guy actually talked to the federal agents who came knocking on his door? Stupid, stupid...

    Assuming these were probably FBI or Secret Service agents, my understanding is that the only record allowed of the interview consists of their handwritten notes. You are not allowed to make a recording. This means that, afterwards, they can put any spin on the interview that they want. If you disagree, they can and will throw you in jail for lying to a federal officer.

    The only possible reply to these officers should be "I have nothing to say to you".

    • You are not allowed to make a recording.

      You are free to do exactly as they do, take notes, if you wish. A recording involves laws and regulations that handwritten notes do not, for example the consent of both parties in some jurisdictions. Write down their names and badge numbers and transcribe each question accurately before answering, asking them to repeat the question as necessary to get it right. If concerned fax these notes to your attorney immediately after they leave to document the time frame in which they were created.

      This and many other

      • Certainly there are times when talking to law enforcement makes sense. I'm about to write an email to the sheriff praising the deputies who came to my house the other day. That said, when police come to you with questions, keeping your mouth shut is NORMALLY the safer course of action. DON'T lie, just say you'd rather not discuss the matter without an attorney present. They'll say they want to hear your side of the story. Repeat that you'll talk to them only with your attorney present. If you call th

    • by qbast (1265706) on Tuesday August 26, 2014 @06:54AM (#47755163)
      Really? If as you suggest they are willing to lie in their notes, what exactly is stopping them from turning "I have nothing to say to you" into long and detailed confession?
      • by gstoddart (321705) on Tuesday August 26, 2014 @08:45AM (#47755657) Homepage

        In an age of "parallel construction", you more or less have to assume that law enforcement has tools available to them to do exactly that -- or at least concoct enough evidence to make the confession irrelevant.

        As soon as they started doing that, law enforcement became an entity which will lie and construct a new set of facts to match their story.

        I would suggest that you more or less have to assume they're not trustworthy, and are willing to perjure themselves in court to say "why yes, your honor, that's how we found this information".

        Parallel construction is basically a systematized way that law enforcement can illegally use information, and with no probably cause construct a scenario where it looks plausible on paper that they found it through legitimate means.

        Trusting law enforcement at this point would be madness.

        • by qbast (1265706)
          Ok, but how does it help me? Again, if they are willing to lie, then trusting or not trusting, talking or not talking does not matter any more - they can just write down whatever story they please without even bothering with question and you are fucked.
      • One presumes that while they may not be willing to commit outright perjury, they would have little problem with taking your words out of context. Subtle shifts in emphasis can make a huge difference sometimes, and there is nothing obligating them to write down the parts of your account which do not help their case. As unjust as it is, their notes from the meeting will be taken as fact, while your account would be considered mere hearsay.

        There really should be a requirement to fully document (with audio

      • by Anonymous Coward

        Really? If as you suggest they are willing to lie in their notes, what exactly is stopping them from turning "I have nothing to say to you" into long and detailed confession?

        Nothing, as such. You might limit the potential damage by sending a time stamped email to yourself or someone else, stating your version of the interview.

        If it's done promptly at least it puts your version of the story on the record at an early stage. It would show that you didn't suddenly reverse course weeks or months after the initial incident, and could provide some reasonable doubt in the minds of a judge or jury.

    • Im pretty sure you can have whatever you want in the way of recording in your house without needing anyone's consent. In public the rules are different sometimes, but I suggest you read here:

      http://www.aclupa.org/issues/p... [aclupa.org]

      Maybe you know of some law I do not that singles out FBI, but AFAIK there is none, and when you are on your property and they come unsolicited, I would be amazed if you could find a judge who would even entertain a federal lawsuit for the recording. Your property-- your rules.

    • by nbauman (624611)

      Assuming these were probably FBI or Secret Service agents, my understanding is that the only record allowed of the interview consists of their handwritten notes. You are not allowed to make a recording. This means that, afterwards, they can put any spin on the interview that they want. If you disagree, they can and will throw you in jail for lying to a federal officer.

      I thought you were allowed to make a recording. If I decided I wanted to talk to them, I would say, "I'd like to record this conversation so we have an accurate record. Can I do that?" If they say no, I would say, "I'm sorry then, I have nothing to say."

      But I don't think I would talk to them.

      I'm not even sure it's illegal to secretly record a conversation. There were state laws, like one in Massachusetts, that made it illegal, but they may have been overturned. IANAL, I don't know.

      I remember during the Viet

  • by gnasher719 (869701) on Tuesday August 26, 2014 @06:14AM (#47755019)
    If the police catches a car thief, they will likely visit anyone buying a car from him. They can't know that you bought his car that he purchased before he started his thieving career, or the car which he purchased himself with money he made from thieving (which would then be legally yours, unlike a stolen car that you bought off the thief), until they ask you.

    That's the purpose of interviewing that man - to figure out if he had anything to do with illegal activities or not. Apparently he didn't. So what's the problem?
    • by nbauman (624611) on Tuesday August 26, 2014 @09:11AM (#47755821) Homepage Journal

      If the police catches a car thief, they will likely visit anyone buying a car from him. They can't know that you bought his car that he purchased before he started his thieving career, or the car which he purchased himself with money he made from thieving (which would then be legally yours, unlike a stolen car that you bought off the thief), until they ask you.

      That's the purpose of interviewing that man - to figure out if he had anything to do with illegal activities or not. Apparently he didn't. So what's the problem?

      The problem is that very often someone who thinks he is (or is) completely innocent will talk to the cops, and as a result the cops decide he's committed a crime, prosecute him, and he goes to jail. Here's an example http://www.nytimes.com/2003/10... [nytimes.com] of the scientist Thomas Butler.

      Notice that the cops can lie to you, but if you lie to them, you're committing a crime (and a lot of people went to jail for lying to cops, including the roommates of the Boston bomber).

      On Youtube there's a lecture by a law professor about why you should never talk to the cops without a lawyer present, even if you're innocent (and certainly not if you're guilty). He gave many scenarios, based on real cases, about how that has gotten people convicted of crimes, even falsely.

      For example, suppose you go to Pigtown, buy a bottle of milk in the grocery store, and go home. Somebody gets shot around that time in Pigtown. The cops ask you whether you were in Pigtown that day. You say yes.

      Then the cops show your picture to Mary Misidentification, who honestly but wrongly thinks that she saw you shoot the guy. You go to court. The cops use your admission to prove that you were in Pigtown that day. They use Mary's testimony that she saw you shoot the guy. Put those together and they send you to jail.

      In the Bitcoin case, you may have done something that you think was legal, but was actually a crime. (Or something that they could interpret as a crime.) If you kept your mouth shut, the FBI wouldn't even know about it. But if you admit to doing it, that's a confession, and it's an easy conviction for them. You won't even get a chance to plea bargain.

      Unless a crime was committed against you or somebody you're concerned about, talking to the cops can't do you any good, and it can do you harm. So it's foolish to do it.

      It's too bad, but the cops are acting like pigs, so you can't do it.

      • The problem is that very often someone who thinks he is (or is) completely innocent will talk to the cops, and as a result the cops decide he's committed a crime, prosecute him, and he goes to jail. Here's an example http://www.nytimes.com/2003/10 [nytimes.com]... of the scientist Thomas Butler

        For those who don't want to click on the link, it describes a situation wherea man was prosecuted for lying to the FBI, after he caused a major alert by pretending some vials of plague bacteria had been stolen that, in fact, he'd

        • by nbauman (624611)

          For those who don't want to click on the link, it describes a situation wherea man was prosecuted for lying to the FBI, after he caused a major alert by pretending some vials of plague bacteria had been stolen that, in fact, he'd accidentally destroyed.

          I'm kind of wondering if that's the example the parent poster actually planned to use, or if he cut and pasted the wrong link. I'd have thought Bulter would have been aware of the consequences of pretending someone had stolen such a thing, that it would result in a major investigation, with a lot of resources wasted.

          This is a good example of how someone can take a statement, as the cops do, and misinterpret it. This story was covered in Science, Nature, and most of the science magazines, by people who actually understood how bacteriology labs worked. Peter Agre, the Nobel laureate, investigated the case, decided Butler was railroaded and innocent, and spent his Nobel prize on Butler's defense. A lot of scientists and professional associations supported Butler because they worked in labs and they thought that Butler was

      • The Butler case is not exactly what you claim. First of all, the scientist in question called in the FBI in a panic because he couldn't account for 30 missing vials of plague vaccine and assumed they were stolen. The FBI found no evidence of a break in and then Butler officially signed a document stating that he was in error and he destroyed the vials himself and he claimed they were missing to cover it up. That got him arrested. Then he said that he doesn't know what happened, whether he destroyed the
        • by nbauman (624611)

          I was giving an example of someone who hadn't committed a crime, but talked to the FBI without a lawyer present, and as a result was convicted of a crime. He was tricked into confessing a crime, and possibly even tricked into committing a crime.

          I read about it in Science, and some of the other publications that were following the case. I know that Peter Agre and several scientific societies investigated it and concluded that Butler hadn't committed a crime. They convinced me.

          I also wasn't convinced that he

    • That's the purpose of interviewing that man - to figure out if he had anything to do with illegal activities or not. Apparently he didn't. So what's the problem?

      Not really my obligation to make their fishing expedition easier, though, is it? The problem is that all there's this assumption that when the police (local, state, federal) come asking, there's some responsibility to answer them to demonstrate that your activities are legal. That's not how it's supposed to work.

    • That's the purpose of interviewing that man - to figure out if he had anything to do with illegal activities or not. Apparently he didn't. So what's the problem?

      The problem is that there is a lot of very paranoid people absolutely (and groundlessly) convinced that if the police are talking to them, the police are coming after them. Personally. With malice aforethought. They've never heard of investigations, or due dilegence... or if they have heard of them, they discard them because the police are after

      • by WorBlux (1751716)
        The U.S. imprisons more people per capita than any other nation. Police and prosecutors careers are positively correlated with convictions. So yes there are cops out there who will smash thier boot into your face in an instant if they think it will help them get that next promotion.
    • by Anonymous Coward

      In this case there doesn't seem to be any problem.

      More generally the problem is that the US has managed to get to a very bad place where the cops are heavily militarized and have a primary mandate of "catching bad guys". (they' mandate should be "protecting citizens")

      It gets worse in that they've managed to get the judiciary and legislature to become complacent in ignoring constitutional limits on their power, and there are a lot of laws that essentially no one thinks should be laws but they somehow remain

  • Just don't talk to the police, ever!

    • That's not how it works. They will come to talk to you. They will make problems for you. And you will talk, or you will have HUGE problems.

  • by troll -1 (956834) on Tuesday August 26, 2014 @11:24AM (#47757045)
    You think you are free because you can say what you want but you are not free. You cannot trade with anyone, anywhere, anytime. For some reason freedom to trade was never considered a basic human right. From a functionalist perspective trade is to the modern state what speech was to the church. Both affect revenue.
  • by Anonymous Coward

    perhaps Federal officers wanted to actually learn how Bitcoins really work, and went to find out how things really got started, to get past the zealots and the quasi-religious supporters of alt currency.

    A little field research goes a long way.

    Naw, couldn't be that. this is the Federal government after all.

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