California Sends a Cease and Desist Order To the Bitcoin Foundation 396
An anonymous reader writes in with bad news for the Bitcoin Foundation. "California's Department of Financial Institutions has issued a cease and desist letter to the Bitcoin Foundation for "allegedly engaging in the business of money transmission without a license or proper authorization," according to Forbes. The news comes after Bitcoin held its "Future of Payments" conference in San Jose last month. If found in violation, penalties range from $1,000 to $2,500 per violation per day plus criminal prosecution (which could lead to more fines and possibly imprisonment). Under federal law, it's also a felony "to engage in the business of money transmission without the appropriate state license or failure to register with the US Treasury Department," according to Forbes. Penalties under that law could be up to five years in prison and a $250,000 fine."
Old meets new (Score:4, Interesting)
So, the purveyor of mathematical computations that can be traded and/or sold via a network of cryptography meets a foundation that sells the idea of value via paper receipts.
This could get rather interesting...
Re:Uh (Score:5, Interesting)
“I believe that banking institutions are more dangerous to our liberties than standing armies.” – Thomas Jefferson
History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance. -James Madison
So Bitcoin is money? (Score:4, Interesting)
Cool! That's a great endorsement if ever there was one.
Bitcoin is money, it's official! And sending bitcoins is sending money! And bitcoins in a reserve are covered by baking deposit insurance just like any other money!
" it's also a felony "to engage in the business of money transmission without the appropriate state license or failure to register with the US Treasury Department,"
Which they don't do, nice try, but if you shut them down, you don't make squat difference to bitcoin.
So that's it then (Score:4, Interesting)
A form of money they have absolutely no control over.
[Nelson Muntz] Ha-ha! [/Nelson Muntz]
Catch-22 (Score:5, Interesting)
An operator of a payment system to the extent that it provides processing, clearing, or settlement services, between or among persons excluded by this section, in connection with wire transfers, credit card transactions, debit card transactions, stored value transactions, automated clearing house transfers, or similar funds transfers, to the extent of its operation as such a provider.
If they're going to claim that the Bitcoin Foundation is engaged in the business of money transmission, wouldn't it be because they consider them to be the "operator of a payment system" as described in the law [ca.gov]? Which would appear to exempt them from the licensing requirement.
Re:Catch-22 (Score:4, Interesting)
That's nice.
Except for the part where the bitcoin foundation only distributes software.
Except by the own admission, they "standardizes, protects and promotes the use of bitcoin cryptographic money for the
benefit of users worldwide." Also, they appear to intend to use foundation money to lobby and fund a group of core developers.
Actions they take when they protect and promote, say if they involve actual sale or exchange of bitcoin (e.g., accepting donations from external developers/lobbyist in bitcoin converting them to USD on their behalf and kicking that money back to fund external developers/lobbyist) may not be looked upon so benignly...
Of course, right now, it's just a warning...
Re:XBox Live Points (Score:4, Interesting)
Re:Satoshi Nakamoto foresaw this (Score:2, Interesting)
It's an elaborate double bluff. Satoshi is the US govt/Fed/IMF or some similar consortium of 'money controller', who are quite aware that the current monetary system is out of control.
They have built bitcoin, they own a controlling amount (or are in the process of buying it... they have infinite money to do so). Over time they will engineer themselves into a position of owning a controlling amount of the network (having infinite money to devote to a data-centre or two of miners).
The endgame is that they are going to be processing most blocks and therefore collecting the bulk of transaction fees. The protocol allows the finder of a block to choose which transactions to include, meaning they can effectively block transactions that don't pay sufficient fees.
Then we are back in exactly the same situation as now, except there is no actual cash that people might transact off the books. The USD becomes the black market currency. The majority of the new BTC wealth in the hands of the few, and everyone else paying tax for the privilege of transferring money.
Carerful what you wish for :)
Re:Uh (Score:5, Interesting)
This is starting to look like DMCA all over again. Person creates software and claims they can't be held responsible for how it's used. Argument and legislation goes into effect pointing out that the software cannot be used for anything legal, and is this illegal to use/develop (can't remember that important detail). Software becomes illegal and original person is left only with the option of creating legal alternatives.
Re:Good riddence (Score:5, Interesting)
Re:Context is everything (Score:5, Interesting)
4) No great social stigma was attached to smoking pot in the late 1700s and early 1800s — pot use wasn't considered a problem until the early 1900s.
You forgot to mention that the main reason that pot became an object of opprobrium in the western U.S. was because it was the intoxicant of choice among Mexican immigrants. In the Eastern U.S., it was its association with jazz musicians (a group which was primarily black and Latin American at the time). The fact of the matter is that smoking pot came to be viewed as a problem because it was attributed as the cause of certain minorities forgetting their place.
Re:Context is everything (Score:5, Interesting)
> 1) Botanically, marijuana equals hemp. These are basically two
> names for the same plant.
Yup. Adding to this, few people had even heard the term "marijuana" (which, if it arose new today, would be considered an ethic slur) when it was made illegal.
It wasn't until much later, 70s/80s when French botanists bred a low THC strain of cannabis and began pushing for a legal distinction between the two; enshrining into the law the use of a plant which could only be obtained from them (talk about shrewd business)
> 3) Jefferson farmed grew hemp on his Virginia farm
> commercially.
Not only that, but look at his buddy George (thats Washington) and the instructions that he gave is slaves. Specifically they had been instructed to sew hemp seed and collect it for several crops, and then, once a large enough seed stock was available, to kill the males on the next crop.
I am aware of no claims of benefit to removing the males on in a crop intended strictly for rope or canvas use. GW grew the sticky icky for the head.
> 4) No great social stigma was attached to smoking pot in
> the late 1700s and early 1800s â" pot use wasn't
> considered a problem until the early 1900s.
There are some interesting connections between this and both Alcohol prohibition AND the mormon church. The first state to ban cannabis was actually Utah, an event which followed the return of many still polygamist mormons back to the area after having left to mexico years earlier. The story goes that some had picked up cannabis smoking in Mexico and this was an attempt to make them unwelcome. Texas then apparently picked up on this and decided to ban it on the supposition that they should prevent the problem from coming there.
Around this same time we saw Alcohol prohibition end, and the newly created "Federal Bureau of Narcotics" (precursor to the DEA) which had been created partially to fight illegal alcohol, had precious little left to do, and their main man Harry Anslinger went on his crusade to give his agency a purpose, and to deamonize the weed.
I highly recomend checking out the Senate testimony at the time, including the portion where a Doctor from the AMA is told to go home because he stood against making cannabis illegal, calling it an important medicine.
Re:Uh (Score:2, Interesting)
Let's go with the bitcoin wikipedia definition http://en.wikipedia.org/wiki/Bitcoin [wikipedia.org] "described in a 2008 paper by pseudonymous developer Satoshi Nakamoto, who called it a peer-to-peer, electronic cash system". The growing problem with bitcoin, in making it more acceptable and with a view to improving it's value, there is a direct public relations marketing effort to make it appear more like a genuine currency. The more like a currency it becomes the more subject to greater regulation it becomes. Vain attempts at denial of what it is whilst simultaneously attempting to make it that, resembles the childish claims of toddlers who think they are outsmarting everyone by using an illogical lie, that something is only what it is when it suits them and when it doesn't it longer is that but something else.
Re:Uh (Score:5, Interesting)
Actually, I'd argue both Jefferson and Madison are talking sense here. Jefferson points out that a valuable commercial product should be exploited. Madison says that risk amelioration is important to encouraging business innovation.
Yes, but Madison was making a more important point about overbearing government regulation (this is from the Federalist Papers arguing for a Constitution that limited government authority). Risk is always a consideration in starting a new business venture, but Madison's point was that when governments go around outlawing things arbitrarily, or, worse, is unable to provide any assurances to a prospective entrepreneur as to their ability to engage in certain commerce, then business innovation will simply cease.
An important lesson for today. In California, if you're shopping for a piece of land to start a business, it's a huge gamble, because in most places the local planning board is unable to tell you what you can and can't do on that land. You have to roll the dice by purchasing the land, explaining your land use proposal, paying the application fees, and hoping that you'll be allowed to use your property.
Re:Uh (Score:4, Interesting)
The House actually passed an amendment to the farm bill the other day that would legalize hemp production for academic research purposes by colleges and universities. So there is some hope. Unfortunately, the farm bill itself failed to pass [wkms.org], primarily due to opposition to food stamp cuts and too-generous subsidies.
Re:Uh (Score:5, Interesting)
If hemp is such a wonderplant... why isn't it, in the numerous countries where it isn't illegal, grown in gigaton quantities?
"Largely the same", but not really the same. (US) Football and (the rest of the world) football are largely the same too if you step back far enough - but such abstractions aren't all that useful in the real world. And you've left out the all important step of obtaining the raw fiber - look at a puff of cotton fresh from the field and a length of hemp stem fresh from the field and you'll understand why cotton was (and is) King of natural fibers.