by Mike Masnick
Fri, Dec 2nd 2016 4:47pm
by Mike Masnick
Mon, Nov 21st 2016 6:25am
from the slow-down,-skippy dept
All records of account/wallet/vault activity including transaction logs or other records identifying the date, amount, and type of transaction (purchase/sale/exchange), the post transaction balance, the names or other identifiers of counterparties to the transaction; requests or instructions to send or receive bitcoin; and, where counterparties transact through their own Coinbase accounts/wallets/vaults, all available information identifying the users of such accounts and their contact information.Uh, yeah, that's not very limited. It's not limited at all. The IRS literally wants everything. Why? Because, according to the IRS, it's investigating one single tax cheat. In a declaration, IRS agent David Utzke, talks about a single tax cheat, and says this gives him a basis for requesting all info.
After using a traditional abusive offshore arrangement for approximately 5 years, Taxpayer 1 became fatigued with the effort required to manage his offshore accounts, attorneys, and applicable regulations, and discovered virtual currency while conducting internet research on the topic. Taxpayer 1 began testing the use of virtual currency and eventually abandoned the use of his offshore structure. Taxpayer 1 was able to use virtual currency to repatriate his assets without governmental detection.Utzke also mentions two other taxpayers, which were companies, not individuals, but which used Coinbase. He notes that others are laundering money and thus likely to be using cryptocurrencies. That may be true, but it seems like a pretty big stretch to argue that means Coinbase should cough up all details on all transactions.
For example, Taxpayer 1 originally worked with a foreign promoter who set up a controlled foreign shell company which diverted his income to a foreign brokerage account, then to a foreign bank account, and lastly back to Taxpayer 1 through the use of an automated teller machine (ATM). Once Taxpayer 1 abandoned the use of his offshore structure in favor of using virtual currency, the steps described above were the same until his income reached his foreign bank account. Once there, instead of repatriating his income from an ATM in the form of cash, Taxpayer 1 diverted his income to a bank which works with a virtual currency exchanger to convert his income to virtual currency. Once converted to virtual currency, Taxpayer 1’s income was placed into a virtual currency account until Taxpayer 1 used it to purchase goods and services. Taxpayer 1 failed to report this income to the IRS.
In the IRS's memorandum of support, it insists that it's just trying to find all the tax cheats, so it should get to look at all the records.
Since 2009, the use of virtual currency has increased exponentially. Some users value the relatively high degree of anonymity associated with virtual currency transactions because only a transaction in virtual currency, such as buying goods or services, is public and not the identities of the parties to the transaction. Because of that, virtual currency transactions are subject to fewer third-party reporting requirements than transactions in conventional forms of payment. However, due to this anonymity and lack of third-party reporting, the IRS is concerned that U.S. taxpayers are underreporting taxable income from transactions in virtual currencies. Further, because the IRS considers virtual currencies to be property, United States taxpayers can realize a taxable gain from buying, selling, or trading in virtual currencies. There is a likelihood that United States taxpayers are failing to properly determine and report any taxable gain from such transactions.Coinbase posted a short blog post Friday evening expressing concern over this while exploring the issues:
.... The issuance of the summons is warranted here because (i) the summons relates to an ascertainable group or class of persons; (ii) there is a reasonable basis for believing these U.S. taxpayers failed to comply with internal revenue laws; and (iii) information sufficient to establish these U.S. taxpayers’ identities is not readily available to the IRS from other sources.
Our customers may be aware that the U.S. government filed a civil petition yesterday in federal court seeking disclosure of all Coinbase U.S. customers' records over a three year period. The government has not alleged any wrongdoing on the part of Coinbase and its petition is predicated on sweeping statements that taxpayers may use virtual currency to evade taxes.What happens here is going to be a big, big deal in the cryptocurrency world. The IRS had to know that this was going to get attention, and perhaps that's the intent. But this seems like a massive overreach.
Although Coinbase's general practice is to cooperate with properly targeted law enforcement inquiries, we are extremely concerned with the indiscriminate breadth of the government's request. Our customers’ privacy rights are important to us and our legal team is in the process of examining the government's petition. In its current form, we will oppose the government’s petition in court. We will continue to keep our customers informed on developments in this matter.
by Daily Deal
Thu, Aug 25th 2016 10:46am
from the good-deals-on-cool-stuff dept
Note: The Techdirt Deals Store is powered and curated by StackCommerce. A portion of all sales from Techdirt Deals helps support Techdirt. The products featured do not reflect endorsements by our editorial team.
by Mike Masnick
Mon, Aug 1st 2016 4:00pm
from the more-companies-should-do-this dept
As detailed by the EFF, Blockstream's plan has three components -- all of which are good:
Hopefully as we see companies like Blockstream commit to these kinds of things, it will inspire more startups to do similar things.
It adopted a patent pledge promising that it will only use its own software patents defensively — that is, it won’t use them to sue or demand licensing fees others for using similar technologies, but it may use them to defend itself from the patent lawsuits of others. It shared its patents under the Defensive Patent License (DPL), licensing its patents to any other person or company who agrees to the terms of the DPL. It introduced a modified version of the Innovator’s Patent Agreement, an agreement with Blockstream inventors that it may file patents for their inventions but may not use them offensively (if Blockstream ever assigns a patent to another party, the agreement would apply to that party too).
by Zach Graves
Wed, Jun 29th 2016 11:54am
from the in-the-ether dept
Hype around blockchain has risen to an all-time high. A technology once perceived to be the realm of crypto-anarchists and drug dealers has gained increasing popular recognition for its revolutionary potential, drawing billions in venture-capital investment by the world's leading financial institutions and technology companies.
Regulators, rather than treating blockchain platforms (such as Bitcoin or Ethereum) and other "distributed ledgers" merely as tools of illicit dark markets, are beginning to look at frameworks to regulate and incorporate this important technology into traditional commerce.
That progress was challenged recently, when more than $54 million was stolen from The DAO (short for "decentralized autonomous organization") — an experimental and unregulated investment fund built on the blockchain platform Ethereum. As people realized The DAO was being drained, the ensuing panic also crashed the price of Ether (or ETH), Ethereum's cryptocurrency.
Beyond potentially making a lot of people poorer – who probably should have known better than to invest in an experimental "robotic corporation" — the theft has created a massive political rift within the blockchain community, and threatens to undermine trust in a technology described as the "trust machine". In addition, this event raises serious questions about the cybersecurity risks of distributed applications, the (lack of) enforcement of existing securities laws and the potential for increased scrutiny by regulators looking to protect unwary investors.
Prior to last week, The DAO was widely considered a phenomenal success. It enjoyed the largest crowdfunding in history, raising the equivalent of more than $150 million, or about a tenth of the value of the Ethereum blockchain platform on which it was built. While you could conceivably build a DAO for anything, since it was a piece of software, The DAO was created for the purpose of developing the Ethereum platform and other decentralized software projects. According to its "manifesto" on daohub.org:
The goal of The DAO is to diligently use the ETH it controls to support projects that will:
• Provide a return on investment or benefit to the DAO and its members.
• Benefit the decentralized ecosystem as a whole.
In short, it was developed as a venture-capital fund and, importantly, its investors expected returns.
@steve_somers Personally I think it will be spent more smartly than if it was just as pure ETH. Now falls under governance of the many.— Stephan Tual (@stephantual) May 14, 2016
What is a DAO, anyway? And how does it work? Christoph Jentzsch — founder of the German company Slock.it, which helped create The DAO — explained the concept in his white paper as "organizations in which (1) participants maintain direct real-time control of contributed funds and (2) governance rules are formalized, automated and enforced using software."
As American Banker's Tanaya Macheel writes, DAOs and the smart contracts on which they are built could have a lot to offer traditional financial institutions:
In theory, distributed autonomous organizations (of which the DAO is one of the first examples) are a hardcoded solution to the age-old principal-agent problem. Simply put, backers shouldn't have to worry about a third party mismanaging their funds when that third party is a computer program that no one party controls.
At a time when the financial services industry is trying to automate old processes to cut costs, errors and friction, DAOs represent perhaps the most extreme attempt to take people out of the picture.
DAOs can be deployed on the distributed global computer of the Ethereum platform or other suitable blockchains, including private ones. One mechanism to fund them is through a "crowdsale" of DAO tokens that act like shares of stock, which is what The DAO did. Token-holders can vote on new proposals (weighted by the number of tokens a user controls) to change the structure of the DAO and alter its code. Tokens also can be traded and have an exchange-value. As The DAO's "official website" daohub.org describes it:
The DAO is borne from immutable, unstoppable, and irrefutable computer code, operated entirely by its members.How exactly does an immutable decentralized computer get "hacked"? According to DAO developer Felix Albert, it wasn't. Unlike the failed bitcoin exchange Mt. Gox — where nearly $500 million of bitcoins were lost due to a combination of breach and fraud — the theft exploited a bug that previously had been undiscovered (or more accurately, hadn't been fixed) in its code.
A quirk of robotic corporations is that they take their bylaws literally. Like Asimov's robots, DAOs are built with rules to govern their behavior that cannot easily be revised or overwritten once they are set in motion. Inevitably, these sometimes conflict with our preconceived ideas of how they ought to operate.
The attack [on The DAO] is a recursive calling vulnerability, where an attacker called the "split" function, and then calls the split function recursively inside of the split, thereby collecting ether many times over in a single transaction.
It wasn't really a hack at all. It was human error. Making matters worse, The DAO's promoters (in this case, Slock.it Chief Operating Officer Stephan Tual) had said this kind of bug wouldn't be an issue just a few days before the theft (whoops).
We are assuming that the base contract is secure. This assumption is justified due to the community verification and a private security audit.
Additionally, Slock.it's blog claimed that the generic DAO framework code had been audited by a leading security firm:
We're pleased to announce that one of the world's leading security audit companies, Deja Vu Security, has performed a security review of the generic DAO framework smart contracts.
On close inspection, the only report they linked in their blog was three pages long. It's unclear whether a rigorous formal audit had ever been conducted. After the attack, people started asking for the audit report and wondering why Slock.it hadn't shared it. The security firm, Deja Vu, even responded on Reddit.
Hi Everyone, Adam Cecchetti CEO of Deja vu Security here. For legal and professional reasons Deja vu Security does not discuss details of any customer interaction, engagement, or audit without written consent from said customer. Please contact representatives from Slock.it for additional details.
Whoever was in charge of auditing the code screwed up big-time. As former Ethereum release coordinator Vinay Gupta explained on YouTube, The DAO was an experiment that was never built to handle this much risk:
We all knew as we watched this happening that this was an emperor's clothes scenario ... there was no way that that smart contract had undergone an appropriate amount of scrutiny for something that was a container for $160 million.
Sure, everyone involved should have stopped it from getting carried away. But what are the actual consequences when a decentralized extralegal robot corporation doesn't do what it's expected to? Is anyone really "in charge" of making sure it works? Is anyone on the hook if the whole thing goes down the tubes because of its creators' (or proposal authors') lack of due diligence?
For one thing, as Coin Center's Peter Van Valkenburgh explains, DAOs are likely to run afoul of existing securities law – potentially implicating their developers, promoters and investors:
The Securities Act intentionally defines "promoter" broadly: "any person that, alone or together with others, directly or indirectly, takes initiative in founding the business or enterprise of the issuer." Given the breadth of this language, developers should carefully weigh the risks of being visibly associated with the release and sale of [DAO] tokens.
Individuals deemed to be promoters of a [DAO] may be found to be in violation of Section 5(a) and 5(c) of the Securities Act. Under these sections it is unlawful to directly or indirectly offer to sell or buy unregistered securities, or to "carry" for sale or delivery after the sale an unregistered security or a prospectus detailing that security. Even if a [DAO] is deemed to be an unregistered security, it remains very unclear how promoting that [DAO] would or would not equate to these unlawful activities, and who—if anyone—would be found to have violated the law. Nonetheless, broad interpretation of these laws may potentially implicate any participant or visibly affiliated developer or advocate.
So DAO evangelists could soon be in hot water, regardless of any disclaimers they put up.
To the Securities and Exchange Commission's credit, they have thus far been relatively open to innovations like crowdfunding, as well as the potential for blockchain technology. As SEC Chairwoman Mary Jo White recently said in an address at Stanford University:
Blockchain technology has the potential to modernize, simplify, or even potentially replace, current trading and clearing and settlement operations ... We are closely monitoring the proliferation of this technology and already addressing it in certain contexts ... One key regulatory issue is whether blockchain applications require registration under existing Commission regulatory regimes, such as those for transfer agents or clearing agencies. We are actively exploring these issues and their implications.
Beyond financial regulation, the broader legal treatment of DAOs is a murky subject. With applications running on Ethereum, it's not always clear what the point of enforcement is. You can't exactly sue a DAO in court and then seize its assets. And, while The DAO's creators were in the public eye, that doesn't necessarily have to be the case; it could be deployed anonymously.
Maybe the next DAOs should be anonymous. Avoids the blame game and force us to use tools to build trust despite not trusting the creators.— alex van de sande (@avsa) June 21, 2016
Even if DAOs are created without a formal legal status, governments may impose legal status on them. As business lawyer Stephen Palley writes at CoinDesk:
If you don't formalize a legal structure for a human-created entity, courts will impose one for you. As most lawyers will tell you: a general partnership, unless properly formalized or a deliberately created structure, is a Very Bad Thing ... [T]he members of a general partnership can end up jointly and severally liable on a personal basis for partnership obligations.
For instance, I don't think this is how the law works:
Even if the SEC or other government entity decides to crack down on DAOs, it might be easier said than done. Because they operate on pseudonymous distributed computers, those parties may not be easy to track down (notably, we still don't know who Satoshi Nakamoto is). Even if you did, they might not have any control over it or know what it was doing. Its code also may have been radically altered from its original programming/intent.
But as far as The DAO is concerned, are we in for a slew of lawsuits or calls for SEC action by disgruntled investors? Not so fast. Investors in The DAO may yet be able to recover their losses.
Various prominent stakeholders in the Ethereum community, from Ethereum inventor Vitalik Buterin to Slock.it's Christopher Jentzsch, have suggested that the only sensible solution is to create a "fork" of the Ethereum network that could freeze the attacker's stolen funds and shut down The DAO, with the option to create a “hard fork” to fully reverse the theft and return investors' funds. Some have criticized this approach as a “bailout” or “asserting centralized control.” But it's worth noting that it would require a plurality of miners to adopt it voluntarily; whether they will remains to be seen.
Either way, Ethereum's credibility may be adversely affected. On the one hand, people need to trust that smart-contracts do what they are supposed to — particularly where millions of dollars are on the line. On the other hand, the credibility of the platform is also tied to its immutability. If developers and miners collude to reverse transactions they don't like, that sets a bad precedent.
Additionally, if the community decides The DAO's investors need to take a haircut, it could open up a Pandora's box of legal troubles for its developers and promoters (and maybe even miners and investors), potentially stifling advancement of this important technology.
But wait a minute. Why didn't the attacker see the this coming? Surely if he was sufficiently sophisticated to find a "recursive call" bug, he would have known that split funds would be locked away for 27 days — giving the community time to get wise to his activities and find a solution like the fork.
As previously mentioned, The DAO theft also crashed ETH prices. Savvy readers will note that a DAO vulnerability doesn't mean the Ethereum platform itself was compromised (any more than a nasty bug in Photoshop means that everyone with Windows 10 is at risk).
Was it possible this whole event was a ruse to pull off a "big short", as one user suggests on Reddit? As of now, there's no proof of that, but it's an interesting theory.
But was this even a theft at all? As Slock.it's representative said, "code is law!" If the code doesn't do what you think it does — that's your fault. At least, that's the theory behind an anonymous letter uploaded to Pastebin and purportedly authored by The DAO's attacker:
I have carefully examined the code of The DAO and decided to participate after finding the feature where splitting is rewarded with additional ether. I have made use of this feature and have rightfully claimed 3,641,694 ether, and would like to thank the DAO for this reward. It is my understanding that the DAO code contains this feature to promote decentralization and encourage the creation of "child DAOs".
I am disappointed by those who are characterizing the use of this intentional feature as "theft". I am making use of this explicitly coded feature as per the smart contract terms and my law firm has advised me that my action is fully compliant with United States criminal and tort law.
I reserve all rights to take any and all legal action against any accomplices of illegitimate theft, freezing, or seizure of my legitimate ether, and am actively working with my law firm. Those accomplices will be receiving Cease and Desist notices in the mail shortly.
If the fork moves forward to freeze or seize the attacker's digital assets, could that open up the broader Ethereum community and its miners to legal liability? We'll have to wait and see what happens.
Regardless how The DAO "theft" is resolved, regulators shouldn't be in a rush to impose stricter regulations on Ethereum, which is just a platform, or DAOs in general or even The DAO specifically, should it be reincarnated with better security practices.
While The DAO attack raises serious questions about the viability of creating this "DAO 2.0", that doesn't mean we should stop it from happening. Whether or not you believe all the hype about Ethereum being as important as the invention of the internet, it's an exciting technology that's worth giving the opportunity to grow.
Unlike Bitcoin, which has been around for eight years, Ethereum is only a year old. It officially launched in July 2015, but is already the second-largest cryptocurrency by market capitalization. It's vastly more complex than Bitcoin and still in its infancy; it will have inevitable growing pains on the way to maturity.
Just as the internet wasn't built in a day, neither will smart-contract technology come to fruition without a permissive regulatory environment to grow, much like the Clinton administration's Framework for Global Electronic Commerce did for the internet.
Certainly, vetting DAO code (particularly new proposals) is a big problem. More fundamentally, smart-contract security is an emerging area where people are rightly starting to pivot, following the lessons of The DAO attack. As Ethereum developer Peter Borah writes:
In his response to the bug, Slock's COO expressed shock, referring to it as "unthinkable", and pointing to the "thousands of pairs of eyes" that somehow missed this. It's certainly hard to blame anyone for being shaken by the sudden disappearance of tens of millions of dollars. However, this natural reaction hides the simple truth that anyone who has dabbled in programming knows: bugs in programs are far from unthinkable — they are inevitable.
Making code open-source is not enough. We need mechanisms to create smarter (i.e., fault-tolerant) smart contracts. This could mean more rigorous independent testing, strategies to implement better development practices or, at least, more time to develop through trial-and-error in a lower-risk context. Stakeholder interests also must be aligned to make sure appropriate vetting happens, particularly where voting on code alterations is involved and particularly if we want to develop more complex autonomous programs.
The DAO is an instance of people getting carried away with an exciting new technology, while not effectively managing the new cybersecurity risks that come with it. But just because a group of people screwed up The DAO, it doesn't mean all DAOs are DOA.
While there's an overabundance of utopian thinking in this space, blockchain-based experiments in decentralized governance and peer-to-peer commerce could have immense benefits that offer truly revolutionary potential. Regulators should continue to take a wait-and-see approach and not use this as an invitation to try to shut them down or impose harsh new regulations.
by Mike Masnick
Wed, Jun 22nd 2016 10:38am
from the ordinary-skill dept
Buried in all of this was a plot by Wright and a Canadian company named nTrust, to basically patent all the Bitcoin/blockchain stuff they could think of, and then after Wright was revealed to be Nakamoto, sell it off for ONE BILLLLLLLLLLION DOLLARS.
The plan was always clear to the men behind nCrypt. They would bring Wright to London and set up a research and development centre for him, with around thirty staff working under him. They would complete the work on his inventions and patent applications – he appeared to have hundreds of them – and the whole lot would be sold as the work of Satoshi Nakamoto, who would be unmasked as part of the project. Once packaged, Matthews and MacGregor planned to sell the intellectual property for upwards of a billion dollars. MacGregor later told me he was speaking to Google and Uber, as well as to a number of Swiss banks. ‘The plan was to package it all up and sell it,’ Matthews told me. ‘The plan was never to operate it.’Elsewhere in the report, Wright talks about having "hundreds of patents and papers in progress -- research from the beginning." And later, a colleague of Wright's mentions a plan to push for "upwards of four hundred patents." It seems noteworthy, of course, that at least in the US you're supposed to file for a patent within a year of any public use or description of the invention. If he's trying to patent stuff "from the beginning," he might be a bit late.
Either way, while the big reveal hasn't worked the way they intended (because it appears to be bullshit), Wright is still moving forward on the patent front. He's been applying for a ton of patents related to blockchain technologies:
Since February, Wright has filed more than 50 patent applications in Britain through Antigua-registered EITC Holdings Ltd, which a source close to the company confirmed was connected to Wright, government records show.Because nothing says revolutionizing money and technology like creating a giant patent troll to block such innovations.
Interviews with sources close to EITC Holdings Ltd, which has two of Wright's associates as directors, confirmed it was still working on filing patent applications and Britain's Intellectual Property Office has published another 11 patent applications filed by the company in the past week.
"It looks like he is trying to patent the fundamental building blocks of any blockchain, cryptocurrency, or distributed ledger system," said Antony Lewis, a consultant on bitcoin issues to whom Reuters showed the patent titles and some of the texts.In seeing some of the talk about the LRB article, some people keep pointing to the fact that Wright is trying to patent all this stuff as some sort of evidence that he really knows a lot about Bitcoin and the blockchain. People seem to have this magical spell come over them in that they think patents actually connote some sort of special status on people -- perhaps because they don't spend much time wading through tons and tons of ridiculous patents and wacky inventors insisting the patents matter much more than they really do.
Either way, if Wright gets his patents, whether or not he's truly Nakamoto, he could create an awful lot of problems for the advancement of Bitcoin and the blockchain. Because that's what patents are really for: blocking innovation, rather than encouraging it.
by Mike Masnick
Tue, Jun 21st 2016 11:49am
chamber of digital commerce
from the that's-not-how-it-works dept
Not surprisingly, the interview doesn't go over well. They close it out by highlighting that she doesn't appear to understand a number of issues related to Bitcoin/blockchains, and they worry about what happens when people think she represents the technology and the regulatory questions. They point out that there are tons of scams in the space, and they worry that when someone represents the space and can't understand what's a scam and what's legit, it can lead to very bad results overall.
Fine. That kind of thing happens. People give bad interviews with people who are deliberately trying to make them look foolish. It doesn't necessarily mean they really are foolish, just that they got caught in such an interview. What happens next is where things go weird. Boring apparently emailed one of the hosts of the show, Chris DeRose, to demand he take down the episode. Like so many people who are angry about content online, she trots out all the ridiculous reasons why:
Incredibly disappointed by what happened today. Please delete the episode (link referenced below) immediately -- you are not authorized to publish this content. A cease and desist letter is forthcoming, and charges of harassment and slander will follow if you do not comply.Yeah, so that's not how any of this works. She clearly agreed to go on the program, so there's no "authorization" needed to publish the interview. Publishing her own interview is also neither harassment nor slander. She does get credit for being correct that "slander" is the word for defamatory speech (whereas it's libel if it's written), but having listened to the entire interview, I don't hear anything that comes even remotely close to slander. They do mock her, and are perhaps a little harsh, but it's not slander. And, of course, threatening them only makes this worse. I never would have heard about any of this if she hadn't sent such a bogus threat email, and now it's getting more attention because of it. There's a term for that somewhere...
I actually think it's good that there are people working to educate politicians on Bitcoin and blockchain technologies. I'm not nearly as skeptical as the guys who run the podcast are of the technology, though I agree that there are lots of questions about where it will go and if it will ultimately be as useful as some expect. I also recognize that sometimes interviews can go weird and not come out the way people expect. But to react by demanding it be taken down and waving around bogus legal threats doesn't seem particularly productive, and only seems likely to call into greater question Boring's other claims.
by Michael Ho
Wed, Nov 18th 2015 5:00pm
alternative banking, annuity, banking, bitcoin, cash, chit fund, credit history, cryptocurrency, financing schemes, huay, investing, lending circle, p2p lending, retirement fund, rosca, rotating savings and credit associations, savings club, sou-sou, tan
from the urls-we-dig-up dept
- A sou-sou is a kind of informal savings club where a small group of people agree to contribute cash regularly and distribute lump sums on a schedule. This kind of arrangement is not uncommon for immigrants or people who can't build credit with centralized banking systems. [url]
- Lending circles or Rotating Savings and Credit Associations (ROSCAs) is the academic term for a savings club like a sou-sou. Related savings vehicles are also called a huay, tanda or chit fund -- and some organizations are helping to document the transactions of these informal groups so that more formal credit histories can be established. [url]
- The tontine is an old kind of retirement fund (or financing scheme, actually) that was much more popular over 100 years ago. People would contribute money to a tontine with many other investors, get regular distributions... and each member's distributed share would increase as members died off (hopefully due to old age), so the longer you lived, the more you could profit. A new kind of tontine could be revived to replace the pensions and annuities that people nowadays don't seem to be participating in. [url]
by Mike Masnick
Fri, Nov 6th 2015 12:50pm
from the good-luck-with-that dept
“Virtual currency, where it’s called a bitcoin vs. a U.S. dollar, that’s going to be stopped,” said Dimon. “No government will ever support a virtual currency that goes around borders and doesn’t have the same controls. It’s not going to happen.”That's kind of an incredible statement when you think about it -- a sort of direct admission that Wall Street knows how tightly it's in bed with Washington DC, that should something like Bitcoin ever challenge Wall Street's power, he has no fear that the politicians will "stop" the virtual currency.
Talk about regulatory capture...
Of course, that confidence that the US government will kill the innovation is perhaps the biggest weakness of Dimon's argument. We have no doubt that governments are already trying their damnedest to kill off innovation around cryptocurrencies, but the larger question is really whether or not that's even really possible.
Here's the problem for Dimon: should Bitcoin really reach the point at which Wall Street really views it as a true threat, then it's probably too late for it to be stopped. That's one of the (many) interesting parts about cryptocurrencies. The ability to stop them as they get more and more successful becomes significantly more difficult, to the point of reaching a near impossibility. But, it sure will lead to some amusing and ridiculous regulatory fights.
by Mike Masnick
Wed, Sep 2nd 2015 11:45am
Secret Service Agent Who Pleaded Guilty To Stealing Bitcoin From Silk Road Trying To Change His Name
from the flight-risk-or-concerned-about-opm-hack dept
So, yes, you had a DEA agent, Carl Force, who was already moonlighting for a Bitcoin company, and who used his position as a DEA agent to steal a bunch of money from a customer of that Bitcoin company, befriending Ross Ulbricht of Silk Road while supposedly "investigating" him. Then, you had a colleague of Force's, the Secret Service agent Bridges, go and steal a bunch of Bitcoin from Silk Road immediately following the arrest of Curtis Green, one of Ulbricht's top lieutenants. Green revealed his admin login, and Bridges just went in and took a ton of money. Ulbricht then contacted Force, to help him kill Green, because Ulbricht believed that Green had stolen the money that Bridges had actually stolen. It's so complicated it feels like it needs a graphic to explain it all, but even that might be too confusing.
Either way, earlier this summer, Force pleaded guilty, and earlier this week Bridges also pleaded guilty. In both cases, some interesting additional information came out. With Force, it was that, prior to his own arrest, he'd apparently sold the rights to his story of tracking down Ulbricht to Fox for $240,000. As the government pointed out, this was a conflict of interest (you think?).
With Bridges, it's that he had been attempting to change his name and social security number, leading the judge to wonder if he was a flight risk. According to Joe Mullin at Ars Technica:
Before the proceeding ended, prosecutor Katherine Haun mentioned that the government had just received information that gave them concerns that Bridges could be a flight risk.Bridges' lawyer came up with an excuse that is so ridiculous that it literally made me laugh out loud. Bridges wasn't trying to change his first name, last name and social security in order to disappear from the law, or to avoid the reputational harm of being known as a former Secret Service agent who stole hundreds of thousands of dollars from an operation he was investigating... but because he was so, so worried about the recent OPM hack of government employee files. Bridges, of course, was a government employee:
"The defendant had been actively trying to change his name and social security number in the state of Maryland," she told the judge. "That's very concerning."
According to Hahn, Bridges had tried to change his last name to be the same as his wife's last name and change his first name to "a very odd name." She also noted that Bridges had handed over four firearms after he was charged, and if he changed his name he could again be able to acquire weapons.
Bridges' lawyer said his client's name change attempts had been a response to concerns about identity theft following the widely reported hacking into US federal government personnel files.Somehow, among the millions of others concerned about the OPM hack, you don't hear too many stories about them trying to change their first and last names along with their social security number...
"Those of who work in the federal government have to deal with that," said Seeborg. "When you're concerned with flight risk, activity of this kind sends up a lot of red flags. I’m not surprised they’re bringing this to my attention."