by Mike Masnick
Tue, May 28th 2013 1:02pm
by Mike Masnick
Wed, May 15th 2013 8:36am
from the no-explanation dept
Update: The DHS has released a copy of the warrant, which claims probable cause to believe that Mt. Gox is engaging in money transmitting without a license.We've discussed in the past how the government seems very skeptical of Bitcoin, and now it may be doing something about it. As a whole bunch of you have sent in, ICE (Immigrations and Customs Enforcement), a division of Homeland Security -- best known around here for its cowboy attitude towards censoring websites with no basis -- has cut off Dwolla transfers to Mt. Gox, the biggest Bitcoin exchange, preventing Dwolla from processing any Bitcoin transfers. According to Declan McCullagh at News.com:
The U.S. Department of Homeland Security confirmed it has initiated legal action that prompted the Dwolla payment service to stop processing bitcoin transactions.Chris Coyne, from Ok Cupid, posted a screenshot of an email from Dwolla claiming that ICE had "seized" the account of Mt. Gox:
Nicole Navas, a spokesperson for U.S. Immigration and Customs Enforcement, confirmed the legal action to CNET this afternoon.
MtGox has read on the Internet that the United States Department of Homeland Security had a court order and/or warrant issued from the United States District Court in Maryland which it served upon the Dwolla mobile payment service with respect to accounts used for trading with MtGox. We take this information seriously. However, as of this time we have not been provided with a copy of the court order and/or warrant, and do not know its scope and/or the reasons for its issuance. MtGox is investigating and will provide further reports when additional information becomes known.I would imagine there will be a lot more to this story, but for the moment details are scarce.
by Michael Ho
Tue, Apr 16th 2013 5:00pm
from the urls-we-dig-up dept
- Amazon Coins are yet another virtual currency -- specifically for buying virtual goods on Amazon's Kindle tablet. One Amazon Coin is equal to the value of a US penny, and everyone will soon be collecting them, so get them before they're all gone.... [url]
- Flooz.com officially shut down in 2001, putting an end to its digital currency that was used on the internet as an early kind of electronic gift certificate. Thousands of people had bought Flooz (at an exchange rate of 1 USD to 1 Flooz), but the company had also sold ~$300,000 worth of Flooz via fraudulent credit card transactions, which ultimately doomed the company. [url]
- Bitcoins are still getting attention, even after some serious missteps, but the market for Bitcoins isn't quite trustworthy yet. If Bitcoins do succeed in gaining mainstream use, will there be a flood of digital currencies based on a variety of different cryptographic rules? [url]
by Mike Masnick
Fri, Mar 29th 2013 2:16pm
from the control-control-control dept
Recently, they took a step in the direction of trying to gain some tiny bit of control over Bitcoin by having the Financial Crimes Enforcement Network (FinCEN) issue new guidelines concerning rules for (unnamed) "de-centralized virtual currency." Basically, the rules say that "money services businesses" including "money transmitters" will have to report "potentially suspicious transactions" to the government -- which potentially could involve a decent number of Bitcoin transactions. The question was who qualifies, and the new rules basically suggest if there's a connection to another currency (say... US dollars), then you've got an issue. Users of Bitcoin are clearly exempted, but with sellers... it's not so clear. As Tim Lee explains:
On the other hand, "a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter," and is therefore subject to federal regulations.Of course, with an unclear rule, you can bet that some people are going to test the boundaries -- and that could eventually lead to a very interesting case, challenging specific aspects of Bitcoin.
However, this may only apply to those who perform money transmitting services "as a business." FinCEN says that "a user of virtual currency is not an MSB under FinCEN's regulations and therefore is not subject to MSB registration, reporting, and record keeping regulations." But with a peer-to-peer currency, the line between a "user" and an "administrator or exchanger" is not at all clear. The regulations define an exchanger as someone who "engaged as a business in the exchange of virtual currency for real currency."
by Glyn Moody
Mon, Sep 24th 2012 11:58pm
from the not-so-secret dept
The debate is still raging whether Bitcoin is a brilliant idea that will revolutionize business and society, a high-tech money laundering scheme, or just a fad that will soon pass into history. But in a fascinating post, Jon Matonis points to a problem that doesn't really seem to have been considered before:
Key disclosure laws may become the most important government tool in asset seizures and the war on money laundering. When charged with a criminal offense, that refers to the ability of the government to demand that you surrender your private encryption keys that decrypt your data. If your data is currency such as access control to various amounts of bitcoin on the block chain, then you have surrendered your financial transaction history and potentially the value itself.
That's no mere theoretical issue in countries like Australia, South Africa and the UK that already have such key disclosure laws.
Matonis reviews the limited US case law here, and concludes:
To say the cryptocurrency bitcoin is disruptive would be an understatement. Bitcoin not only disrupts payments and monetary sovereignty, it also disrupts the legal enforcement of anti-money laundering laws, asset seizure, and capital controls. It is very likely that a key disclosure case will make it to the U.S. Supreme Court where it is far from certain that the Fifth Amendment privilege, as it relates to a refusal to decrypt bitcoin assets, will be universally upheld.
Perhaps that's something to bear in mind if you're currently using Bitcoin in the belief that they'll never be able to force you to reveal your assets and transaction history.
by Mike Masnick
Fri, Sep 14th 2012 3:01pm
from the but-the-customers-are-happy dept
Nicolas Christin, from Carnegie Mellon, recently released a fascinating research paper analyzing the Silk Road marketplace. Christin also recently appeared on Jerry Brito's Surprisingly Free podcast, which is where I first heard about the report.
There are a bunch of interesting things in the report itself, but a few key points that seemed especially interesting. The market is surprisingly stable. You might think with a very (but certainly not totally) anonymous marketplace, that seems to focus mostly on illegal products, using a really volatile currency, that the market itself would be pretty volatile as well. But the data does not suggest that at all. Also, you might expect a number of scammers to use the site, but (like plenty of regular online marketplaces), Silk Road has a rating system, and the research found that there was tremendous customer satisfaction:
On a site like Silk Road, where, as shown above, most of the goods sold are illicit, one would expect a certain amount of deception to occur. Indeed, a buyer choosing, for instance, to purchase heroin from an anonymous seller would have very little recourse if the goods promised are not delivered. Surprisingly, though, most transactions on Silk Road seem to generate excellent feedback from buyers. Table 3 provides a breakdown of the feedback ratings from 187,825 feedback instances we collected. 97.8% of feedback posted was positive (4 or 5 on a scale of 1 to 5). In contrast, only 1.4% of feedback was negative (1 or 2 on the same scale).Also, it will come as little to no surprise that the vast majority of products for sale are not what most people would consider legal. Drugs seem to represent an overwhelming percentage of items for sale, though there are also things like "books" for sale.
The report also notes various ways that such a site might be disrupted... and you have to imagine that law enforcement has been working on doing exactly that. It won't surprise me at all to find out that the operators of the site eventually do get tracked down, but I doubt that will stop these kinds of marketplaces from existing.
by Mike Masnick
Tue, May 15th 2012 11:56am
from the why-that's-so-2011 dept
The report is pretty even-handed, actually. It notes that there's a reasonable likelihood that "malicious actors will exploit Bitcoin to launder money." However, it at least admits, noting that this is no different than cash, that users of Bitcoin "value the currency for many of the same reasons people trust Federal Reserve notes: they believe they can exchange the currency for goods, services or a national currency at a later date." It does highlight some "unique features" that make Bitcoin especially suited for illegal activity -- but most of those just seem to be examples of Bitcoin being used for questionable activity, rather than specific features of Bitcoin.
It also suggests that the FBI isn't that worried about the fact that some uses of Bitcoin can be anonymous -- noting (correctly) that it's not as anonymous as some people think, and good old fashioned detective work can often uncover the people:
Although Bitcoin does not have a centralized authority, the FBI assesses with medium confidence that law enforcement can discover more information about, and in some cases identify, malicious actors, if the actors convert their bitcoins into a fiat currency. Thirdparty bitcoin services may require customers to submit valid identification or bank information to complete transactions. Furthermore, any third-party service that qualifies as a money transmitter, and therefore a MSB, must register with the FinCEN and implement an anti-money laundering program.All in all, I actually expected more hyperbole and fear mongering, but seeing as this was meant for internal use, rather than for political gain, it seems like the paper was pretty even-handed. Of course, none of that matters at all if no one is using Bitcoin any more...
by Mike Masnick
Mon, Nov 28th 2011 9:56pm
from the not-quite dept
Wired is running a detailed article on "The Rise and Fall of Bitcoin," which is a worthwhile read. Of course, it seems to be premised on the idea that Bitcoin is more or less dead -- a fad that came and went. Indeed, my initial post on Bitcoin questioned whether it would just be a fad. I still think it's likely... but I'm wondering if the big flare up over the past few months might be good for Bitcoin in the long run. Lots of speculators came and went, and Bitcoin gets to be ignored once more. Might that create a space to allow for a more sustainable ecosystem to be built, while the speculators and swindlers have moved on? Maybe. I'm still thinking that Bitcoin is most likely a fad that will die out. But sometimes a big flame out early on is a good way to obscure work that comes out of the ashes.
If I had to guess (and it's purely a guess), I'd say that the real legacy of Bitcoin may be in how it paved a path. The more interesting area to watch might not be what happens to Bitcoin specifically, but what the next attempt at such a currency brings around. There are lots of smart people looking at what happened to Bitcoin, and someone's going to come up with a better mousetrap.
by Mike Masnick
Tue, Oct 4th 2011 6:38am
from the in-the-clear dept
So Davis, the author of the New Yorker story, emails Clear.The other key point is that Clear points out a weakness in the Bitcoin code: encryption for wallets. When Planet Money's Jacob Goldstein asks another Bitcoin expert about what's new in Bitcoin, the guy points out that the latest version... has wallet encryption.
"I like to keep a low profile," Clear replies. "I'm curious to know how you found me."
Davis eventually cuts to the chase:
Finally, I asked, "Are you Satoshi?"
He laughed, but didn't respond. There was an awkward silence.
"If you like, I'd be happy to review the design for you," he offered instead. "I could let you know what I think."
"Sure," I said hesitantly. "Do you need me to send you a link to the code?"
"I think I can find it," he said.
In the end, Clear says he's not the guy — but his denial leaves the door open just a crack:
"I'm not Satoshi," Clear said. "But even if I was I wouldn't tell you."
by Mike Masnick
Fri, Jul 8th 2011 3:03pm
from the mock-away dept
First, he claimed that "for strategic reasons," he and his wife had abandoned the US trademark filing... but, at the same time, they've commenced trademark applications in other countries, which have a first to file rule, rather than a first to use:
Simultaneously therewith, trademark applications have begun in those civil law countries, wherein, "first to use" status is not recognized as a defense to trademark registration. These civil law countries, which account for most of the world's population, and land mass, only recognize a "first to file" basis for trademark registration. The penalties for infringing trademarks in those civil law "first to file" countries are as severe as the common law jurisdictions, such as the USA, UK, Canada, Australia, etc., which utilize a "first to use" basis.Pretty shameless. He's basically admitting that he has no actual rights to Bitcoin, but he's going to try to use the fact that many countries (especially the EU and India) have a first-to-file system, to take ownership of the word. Thankfully, another lawyer, John William Nelson, who actually is an expert in these areas (Pascazi is not), explained why Pascazi's new, extra slimy, scheme probably won't work either:
Therefore, jumping up and down exhorting that "Bitcoin" has been in use in the USA, or another common law country, since the dark ages is no defense, repeat no defense, to a claim of infringement of a properly registered mark in a "first to file" jurisdiction.
Mr. Pascazi does not really understand trademark law, it appears. While he is correct that many civil law countries have a first-to-file process, that does not mean they have no ability to challenge the issuance of the mark.So, there you have it.
A trademark must be a source identifier. In other words, Mr. Pascazi's 'client' must be recognized as the source of a product by consumers if the mark Bitcoin is used.
As for enforcing international marks in the U.S., this is not as easily done as Mr. Pascazi would hope. Especially if he is able to obtain a registration abroad on such shaky grounds. It could still be subject to the same cancellation process as a U.S. mark.
The question is whether Mr. Pascazi will truly try and enforce a foreign mark on foreign soil. Paying international lawyers is not cheap.
And will he continue to maintain the mark and defend it against attacks?
Mr. Pascazi's client is over-reaching. I recommend Mr. Pascazi or his lawyer consult real trademark attorneys about this. They might receive more thorough advice.