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Bitcoin Exchange CEO Charlie Shrem Arrested On Money Laundering Charge 330

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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  • by jratcliffe ( 208809 ) on Monday January 27, 2014 @04:01PM (#46084137)

    If they were doing what they are alleged to have been doing using Yen, or Dollars, or Pounds, or whatever, it would still have been money laundering. Bitcoin doesn't change that.

  • Re:HSBC (Score:4, Interesting)

    by Anonymous Coward on Monday January 27, 2014 @04:06PM (#46084201)

    The problem is that the formulation of the rules enable them to be arbitrarily interpreted, which means that the rules don't really matter. It's up to the persons doing the interpretation. The recent revelations about NSA highlights this pretty well I think. The government clearly disregards the constitution but nothing happens.

  • by Animats ( 122034 ) on Monday January 27, 2014 @04:20PM (#46084415) Homepage

    This is about normal for Bitcoin exchanges. All of them are flaky. Most of them don't even have a legit business address. About half of all Bitcoin "exchanges" so far have failed. The problem is that they're not just exchanges, they're also deposit-taking institutions holding customer funds. With no regulation. A sizable number of Bitcoin "exchanges" just took the money and ran. With the arrest of the CEO, "" dropped offline.

    Right now, the formerly biggest Bitcoin exchange, Mt. Gox, in Tokyo, is tanking. They stopped US dollar withdrawals back in June 2013, then EUR withdrawals slowed down, then JPY withdrawals, and now Bitcoin withdrawals. There's much discussion over whether they're broke, crooked, or merely incompetent. Right now, Bitcoins on Mt. Gox are priced 25% higher than on the other exchanges, because if you sell Bitcoins on Mt. Gox, you can't get the money out, and that spread has been climbing rapidly for the last few days.

    Irrevocable anonymous remote transactions are the scammer's dream. Scammers can rip people off without ever meeting the marks and with a low chance of getting caught. That's Bitcoin's big problem. It takes ten honest people to support one crook, and Bitcoin's ratio of crooks is much higher than that.

  • by gatfirls ( 1315141 ) on Monday January 27, 2014 @04:22PM (#46084451)

    ..has been proposed or enacted by the federal government on bitcoin.

    The problem is that this marketplace doesn't want a competing currency, they want a way to electronically move money around "anonymously".

    The government is saying no to sidestepping financial regulations and other laws. You're right about one thing. I seemed to take much longer than expected.

  • by tripleevenfall ( 1990004 ) on Monday January 27, 2014 @04:29PM (#46084553)

    since bitcoin isn't a currency so much as it is a ledger where everything is tracked and traceable, it does not seem like the ideal venue for illegal transactions. The "paper trail" is going to be out there.

    One article I recently read described Bitcoins as "prosecution futures". I think they might have been right.

  • Re:HSBC (Score:0, Interesting)

    by Anonymous Coward on Monday January 27, 2014 @05:44PM (#46085485)
    REally getting annoyed with the USian thing. One it doesnt roll of the tongue like mexican canadian or american. Can we please get back to calling people from the USA american please. Yes I understand we are not the only ones who are technically "american" however every other nation has a name that works with -ian , we dont. so we get the catch all of american
  • by Anonymous Coward on Monday January 27, 2014 @05:55PM (#46085595)

    Who the fuck modded this fucking nonsense up? I can RIGHT NOW transfer any amount of money for free and do it instantly. How the fuck is Bitcoin going to do better than that?

    BTW when you do a transfer via bitcoin, you do pay a fee. That's how the miner will do your transaction and add it to the block chain.

  • by Anonymous Coward on Monday January 27, 2014 @06:36PM (#46086025)

    How likely is it that the entire world gets behind banning bitcoins - especially if it benefits the economy?
    How, pray tell, can the US govt. prosecute me for selling bitcoins for far, far more than $0.00001? The US != The world, even though 90% of americans are too ass-backwards to tell the difference.

  • by Eskarel ( 565631 ) on Monday January 27, 2014 @10:50PM (#46087791)

    I dunno, personally I think that a currency that is much easier to steal, much easier to lose, requires a functioning internet connection to use for anything at all, is by nature highly deflationary and which, just as an added bonus, contains its entire transaction history so that whoever has that coin can see exactly where it's come from is actually clear worse than anything we have now.

    Just because you mine it doesn't mean that it's actually got any inherent value, it's even more worthless than gold and unlike the dollar it's not backed by the full faith and credit of the US government(for whatever that's worth these days). In terms of transactions you can send real money for pretty close to free as well, just stick cash in an envelope. Sure it won't necessarily get there on the other end, but that's what you actually pay for. A lot of people like the fact that you can reverse transactions to get back money someone stole from you to actually be a feature to.

    There's certainly some validity to the arguments in favor of an electronic currency of some sort, but the idea that there's a single damned thing about bitcoin which is actually better than even some of the idiotic alternatives like gold backed dollars, is just insane.

  • Re:Tin foil hat time (Score:3, Interesting)

    by Eskarel ( 565631 ) on Monday January 27, 2014 @11:06PM (#46087861)

    Bitcoin will eventually be deflationary because of the limited supply cap. The fact that we have things like fractional reserve banking increases the amount of time it could theoretically remain non deflationary, but there comes a point where if you made any more imaginary money the whole system will collapse and you need to make some more real money which bitcoin doesn't do.

    The major problem with bitcoin however is that a fairly small number of people already have the vast majority of coins that can ever be mined. If you stuck the entire world onto bitcoins the few thousand people who currently own bitcoins would become richer than anyone who currently exists on earth while everyone else would be third world poor. Except of course that most of the people who had all those bitcoins would be incredibly asset poor and a lot of the people who didn't would be incredibly asset rich. You'd have extremely poor people who owned multi billion dollar companies and extremely rich people who didn't even own their own home. That's insane and won't work.

Never tell people how to do things. Tell them WHAT to do and they will surprise you with their ingenuity. -- Gen. George S. Patton, Jr.