What Is A CTR And Do Cryptos Need To File Them? | BitAML

Bitcoin mentioned around Reddit: RED ALERT! MUELLERS CARTEL USED ILLEGALLY OBTAINED FINCEN SARS REPORTS INORDER TO CONVICT MANAFORT!!! /r/The_Donald

Bitcoin mentioned around Reddit: RED ALERT! MUELLERS CARTEL USED ILLEGALLY OBTAINED FINCEN SARS REPORTS INORDER TO CONVICT MANAFORT!!! /The_Donald submitted by SimilarAdvantage to BitcoinAll [link] [comments]

Bitcoin mentioned around Reddit: RED ALERT! MUELLERS CARTEL USED ILLEGALLY OBTAINED FINCEN SARS REPORTS INORDER TO CONVICT MANAFORT!!! /r/The_Donald

Bitcoin mentioned around Reddit: RED ALERT! MUELLERS CARTEL USED ILLEGALLY OBTAINED FINCEN SARS REPORTS INORDER TO CONVICT MANAFORT!!! /The_Donald submitted by cryptoallbot to cryptoall [link] [comments]

FinCEN to Financial Institutions: Include Cyber Data (such as bitcoin wallet IP addresses) in Suspicious Activity Reports (SARs)

FinCEN to Financial Institutions: Include Cyber Data (such as bitcoin wallet IP addresses) in Suspicious Activity Reports (SARs) submitted by jonmatonis to Bitcoin [link] [comments]

FinCEN to Financial Institutions: Include Cyber Data (such as bitcoin wallet IP addresses) in Suspicious Activity Reports (SARs)

FinCEN to Financial Institutions: Include Cyber Data (such as bitcoin wallet IP addresses) in Suspicious Activity Reports (SARs) submitted by BitcoinAllBot to BitcoinAll [link] [comments]

Regulations Applied To Cryptocurrencies Around The World

Cryptocurrency Regulations
Since the launch of Bitcoin in 2009, the economic revolution of cryptocurrencies has generated a stir in its demand, causing an increase in its popularity, therefore, increasing the transactions within the blockchain and the movements of crypto in the market. Consequently, many countries have had to implement laws and regulations to control crypto transactions within their jurisdiction, note that the blockchain are decentralized and do not respond to any public financial and legal entity, causing a lack of control over the transactions within the network.
Telos Blockchain, having governance and a specific and defined arbitration system, is governed by laws and regulations that prevent many illicit actions from becoming effective, this collaborates with the cause of the countries that are implementing new regulations, becoming the ideal platform.
As the demand for crypto increases, governments apply greater regulations at a global level, taking into account that cryptocurrencies are not backed by central banks, which is why many countries believe that there should be regulations that control this type of currency since it affects its local currency directly and indirectly; despite being an asset that can bring economic benefits to its users, it also lends itself to criminal actions through the network and the crypto. Any decision or economic announcement made in each country determines negatively or positively the behavior of the price of digital currencies.
The regulators aim to prevent illicit actions in exchange houses, such as, for example, money laundering, terrorism financing, scams, payments to the dark web among others; According to the DEA, 10% of transactions with cryptocurrencies are used for illegal activities. During an interview with Lilita Infante of the United States Drug Enforcement Administration (DEA), published in Bloomberg, five years ago the percentage of criminal activity in blockchain transactions was 90%, at present, this number represents 10%, which has become transactions for price speculation and not for other purposes.
In countries of the first world, governments have established regulations and laws that control the use of crypto assets. The regulations applied in China are not the same applied in the United States or Japan. Herein will be specified some regulations of countries where crypto have marked a trend.

Regulations In Japan

Asia, is one of the continents where more transactions of cryptocurrencies are made, not all countries that constitute the continent have been receptive, but this is not the case in Japan; where there are regulations in the commercial exchange of cryptocurrencies. The amendment that approved the use of cryptocurrencies in the country took effect as of 2017; under the Payment Services Act, only exchanges with representatives that reside in Japan and have offices in the country registered as part of the Japanese financial services agency may legally operate in the exchange of digital currencies.
The National Tax Agency (Dec 2017), established that all income in cryptocurrency are classified as “miscellaneous income” and are added to the total amount of other income that a citizen has; the taxes are calculated from the total amount of the incomes and then they are taxed. Investors must pay taxes at rates that range from 15% to 55%.
Japan under the Act on Prevention of Transfer of Criminal Proceeds, exchanges are required to verify the identities of customers who open accounts, keep records of transactions and notify the authorities when a suspicious transaction is recognized. Following the loss of 400 million dollars in NEM tokens in one of the most used exchanges in Japan, Coincheck, the government of Japan, according to the Library of Congress,
“The local Finance Bureau ordered Coincheck to submit a report on the same day, examined it, and issued an order of business improvement on January 29, 2018. The following day the FSA requested all cryptocurrency exchange businesses to review their system-risk management plans and report the results to the FSA. On March 2, 2018, the FSA conducted an on-site inspection of Coincheck. On March 8, 2018, the local Finance Bureaus issued business-improvement orders to seven exchange businesses, again including Coincheck. A group of cryptocurrency exchange businesses publicized their decision to form a new self-regulating body on March 2, 2018, that all registered exchange businesses will join. The body aims to obtain authorization from the FSA under the Payment Services Act.”

Regulations In China

Mainland China

In this country, both cryptocurrencies and exchange houses have been banned by the People’s Bank of China (PBOC), were completely eliminated in 2017, where 173 platforms were closed by 2018. Financial institutions cannot make any transactions with Bitcoin or another digital currency. In addition, they also banned ICOs and national currency exchanges. Additionally, as of January 2018, most of the crypto miners closed operations.

Hong Kong

Unlike mainland China, there is a British ex-colony that in 1997 stopped being part of Britain and became part of the Chinese, but it was agreed that this region would be autonomous for half a century before Beijing takes full control over it. In other words, it is “one country, two systems”. This area called Hong Kong is governed by the same president of mainland China but does not comply with the same communist regulations. Unlike China, the cryptocurrencies are legal, currently, there is no legislation that regulates digital money, but they have an anti-crime organization which sanctions those who do not comply with requirements that stops cases of money laundering or fraud; Bitcoin is considered a virtual asset.
Crypto Legal Status 2019

Regulations In The USA

Currently, cryptocurrencies are not considered as legal tender, although their exchange is; the regulations will depend on the state and the federal authorities since each one has different concepts of cryptocurrencies.
The Financial Crimes Enforcement Network (FinCEN) considers that tokens are another value that replaces the local currency (Dollar), unlike the Internal Revenue Service (IRS) which establishes that cryptocurrencies are taxed as a property and not like a coin.
In 2015, 802 people declared and paid taxes on the cryptocurrencies profits, which means that users are evading these taxes; The IRS is apparently using a unique software that helps them locate those users who are evading taxes. This theory is promoted by Laura Walter, a certified public accountant and cryptocurrency tax specialist, who published on July 8, 2018, a document that apparently has been presented to IRS agents of the Criminal Investigation division. The document indicates that the IRS intends to serve the subpoenas to request from large technology companies (Apple, Google, Paypal among others) information on users’ download history and to confirm whether they have any application in their devices related to any cryptocurrency.
The United States is considered one of the countries with most transactions in LocalBitcoin, therefore, they have placed more regulations and laws when making this type of transactions. In 2018, the US Supreme Court debated the future of Bitcoin for the first time, and this and other cryptocurrencies are regulated under United States law.
The treasury of the United States classified in 2013, that Bitcoin is a “convertible decentralized virtual currency”. The Commodity Futures Trading Commission, CFTC, classified bitcoin as a “good or asset” in September 2015.
The US government has required all monetary service companies, such as, for example, exchanges, which carry out considerable transactions in the region, to meet several requirements:
• Register in the FinCEN.
• Design an anti-money laundering (AML) program.
• Maintain record and make reports in case of suspicious activity (SAR). US FinCEN receives 1,500 SARs per month.
• Make and deliver reports of digital currency transactions (CTR).

Regulations In Canada

Currently, cryptocurrencies are not considered as legal tender, although their exchange is, depending on the province. Since 2013, the Canada Revenue Agency has taxed the cryptocurrency transactions depending on the type of activity. Canada was one of the first countries to draw up cryptocurrency legislation, which designated exchanges as “money service businesses,” where they have to follow with anti-money laundering and know-your-client requirements among others.

Regulations In The European Union

Cryptocurrencies are legal, depending on the country the regulations will change. Exchange houses are currently not regulated at the regional level. In some cases, the exchanges have to register with the regulators of each country, where they grant these companies authorizations to operate legally within the jurisdiction of each country. In addition, each jurisdiction has different tax systems, which charge citizen’s taxes from the profits of the purchase and sale of cryptocurrency that ranges from 0% -50%.

Regulations In Australia

In Australia cryptocurrencies (treated as property) and exchanges are considered legal; In 2017 the Australian Senate declared the legality of cryptocurrencies and are subject of Capital Gains Tax. The same year, they began debating statutes for anti-money laundering to the country’s cryptocurrency exchanges; by the end of the year, cryptocurrency exchanges have to register with the country’s financial intelligence agency Austrac where they have to verify the user identity and other requirements. Currently, there are no regulations for the use of digital money as a payment method.

Countries where cryptocurrency is banned or legal 2019

In conclusion…

Consequently to the economic collapses that many developing countries have been through, there is a need for a stable economic structure that is not easily influenced by its environment. The blockchain has provided solutions to this need and many users from all over the world have had to resort to this economic model, as, for example, Third World countries, which suffer inflation, exchange controls, economic regulations by their governments, among other problems. Telos Blockchain has come to give an economical alternative to the user for the best management of their assets and their patrimony with a reliable and safe model, unlike other blockchains that have fallen into fraud, scams, money laundering among others, many countries have taken action on the matter and have placed regulations and laws that control possible security flaws in this model, such as unlawful acts.
submitted by Telosfeed to Futurology [link] [comments]

I am a tax attorney, here are my answers to the most common questions about the taxation of bitcoins

Edit: On March 25, 2014 the IRS released Notice 2014-21 addressing the taxation of bitcoins. This post was updated on March 26, 2014 to reflect the IRS's positions contained in the Notice.
Last Edit: June 2017
Introduction
I've noticed a significant amount of uncertainty around here about the taxation of bitcoins. In effort to provide some guidance , I've compiled some of the most common questions I've seen and tried to provide straight-forward, easy to understand answers. I am a tax attorney, but there is so much uncertainty surrounding bitcoins that I expect some people to disagree with one or more of my conclusions. If you have a contradictory opinion, please share it. We would all benefit from an educated discussion of this issue.
Keep in mind this post is intended for a layman audience. If you are a tax professional or want a detailed examination of this topic, you find this post lacking. Please don't nit pick this post with technicalities or narrow exceptions, I purposely excluded such nuances for the sake of readability.
I should note that this post does not address aggressive tax planning strategies. Such strategies are a lot of fun to discuss, but they do not belong in this type of post. If you are interested in such strategies, perhaps we can make a follow-up post on another day.
Legal Disclaimer
This post was created for general guidance on matters of interest only, and does not constitute legal advice. You should not act upon the information contained in this publication without obtaining specific advice from a tax professional. No representation or warranty (expressed or implied) is given as to the accuracy or completeness of the information contained in this post, and I do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this post or for any decision based on it.
CIRCULAR 230 DISCLOSURE To ensure compliance with requirements imposed by the IRS, I inform you that any U.S. federal tax advice in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
THE AUTHOR Tyson P. Cross is a tax attorney licensed in California and Nevada. He represents individuals and businesses with tax issues related to Bitcoin and other cryptocurrencies, including tax return preparation, tax planning, and FinCEN compliance. He can be reached at Tel: +1 775-376-5690 or by visiting www.BitcoinTaxSolutions.com.
Topic 1: Realization
#1: Are gains on Bitcoins taxable? Yes. This is one of the only unequivocal answers you'll find in this post. All income is taxable, regardless of source or form, unless the Internal Revenue Code specifically states otherwise. Bitcoins present a lot of interesting tax questions, but whether gains are taxable is not one of them.
#2: When do my gains become taxable?*
Gains are taxable in the year they are realized. Realization occurs when you exchange bitcoins for any type of other property; such as cash, merchandise, or services. This includes everything from haircuts to yachts. Essentially, any transaction involving Bitcoin is a realization event and triggers taxable gain. Note: IRS Notice 2014-21 expressly confirms this treatment.
Because I've seen a lot of misinformation on this point, I want to make myself perfectly clear. If you own bitcoins that have appreciated in value, you cannot use them to purchase goods or services without realizing gain. Such a purchase is an accession to wealth. It puts you in the same position as if you had first sold the bitcoins for cash and then used the proceeds to purchase the goods or services directly. Yet, one would be a taxable transaction while the other would not? The IRS would never tolerate such a blatant loophole, and neither would the courts. In fact, this exact argument has already been rejected for other types of assets. The outcome for bitcoins will be the same.
Unfortunately, this has some serious implications for the future of bitcoin. I have to question the effectiveness of bitcoin as a medium of exchange when the user has to calculate his or her tax liability on every single transaction. As the saying goes, the power to tax is the power to destroy, and this is no exception.
Note: There is a code section that might provide some relief here, but only if bitcoins are categorized as a foreign currency. Under this code section, the use of bitcoin to buy goods and services would be tax free as long as the transaction was personal (i.e. not for business or investment) and did not generate more than $200 of gain. Unfortunately, the IRS ruled in Notice 2014-21 that bitcoin is not a currency for tax purposes. So, this code section is inapplicable unless the IRS changes its position sometime in the future.
#3: What if I sell my bitcoins but do not withdraw the proceeds from the exchange?
It doesn't matter, your gains were realized the moment you sold them. It is irrelevant whether the proceeds from the sale are kept in your bank account or your exchange account, you still have a realized gain for tax purposes.
#4: What if I exchange my bitcoins for altcoins? Is this a like-kind exchange?
This is a fair question and implicates what is known as a "like-kind exchange." Under Section 1031 of the tax code, exchanges of like-kind property do not trigger recognition of capital gains, and therefore are tax-free. Whether or not bitcoins/altoins are like-kind is uncertain to say the least. As intangible property, bitcoins/altcoins would qualify as like-kind only if they have the same rights, characteristics, and obligations. This is a very difficult test to apply to virtual currency.
Additionally, if characterized as a foreign currency, bitcoins would be automatically barred from like-kind treatment anyways. Thus, there are two significant legal hurdles that must be overcome before bitcoin and altcoins can qualify as for like-kind status. Although nothing is for certain when it comes to bitcoins, I'm fairly confident that the IRS would not agree with like-kind treatment and you run the risk of having the unrecognized gains added to your tax return (with penalties and interest added). Thus, I would not suggest that you try to qualify such a transaction as a like kind exchange until further guidance on this issue is given by the IRS or you obtain a tax opinion letter from an attorney concluding that your treatment of bitcoins/altcoins as like-kind appropriate.
Lastly, keep in mind that like-kind exchanges must still be reported on your tax return (using Form 8824).
edit: IRS Notice 2014-21 concluded that bitcoins are not a foreign currency, therefore it is possible that bitcoin can qualify for like-kind treatment if the "rights and characteristics" test is met.
#5: So how can I avoid realizing gains on my bitcoins?
The only way to avoid realization is to hold your bitcoins without selling or exchanging them. If you were hoping for a different answer, I'm sorry. Whether you decide to actually report you realized gains is of course a different matter, but as far as the law is concerned, you have realized gains upon any sale or exchange of your bitcoins.
#6: How does the IRS know about my gains? *
The IRS only knows what it is told. This means that it has no knowledge of your bitcoin transactions unless someone tells them. Here are four way that can happen (others may exist).
First, your bitcoin exchange or payment processor may report your transactions to the IRS. This would be done with a Form 1099, which you’ve probably encountered at one time or another in a different context. However, it does not appear that bitcoin transactions are currently subject to the 1099 reporting requirements (although that will probably change). Thus, unless they voluntarily file a 1099 against you, it is unlikely that the IRS will receive a report of your bitcoin transactions. Note that they would need your social security number to file a 1099 in your name. Edit: IRS Notice 2014-21 clarifies that "payment settlors" who convert bitcoin payments to cash for merchants will have to file 1099s. IF you are not a merchant, than this does not impact you.
Second, your bank or bitcoin exchange might file a Suspicious Activity Report ("SAR"). US banks and bitcoin exchanges are required to file SARs for wire transfers that are “suspicious” and larger than $5,000 ($2,000 in the case of bitcoin exchanges). The meaning of “suspicious” is very vague and highly discretionary. Out of an abundance of caution, many banks automatically treat all international transfer as “suspicious.” So, if you’ve sent or received a wire transfer of more than $5,000 to/from an international bitcoin exchange like Mt. Gox or BTC-e, you can be pretty sure that your bank has already filed a SAR against you (although they are prohibited from telling you if they did, so you'll never know for sure). The larger and/or more frequent you SAR filings, the more likely they will become a legitimate red flag and trigger an investigation. Although FinCEN is generally concerned with money laundering activities, the IRS does have access to FinCEN filings and it is common for IRS special agents to participate in FinCEN investigations.
Third, someone can rat you out to the IRS, which happens far more often than you might think. The simple fact is that people get jealous, and if they've heard that you've made lots of tax free money with bitcoin, they might get tempted to make sure justice is served. There's also that nice reward the IRS will pay them for snitching.
Fourth, you voluntarily and accurately report your gains on your tax return. That might sound ridiculous to some people given the inherent anonymity of bitcoin, but there are some very rich people in prison right now who used to think the same thing about their Swiss bank accounts. The fact is that penalties for failing to report income are significant. This includes the possibility of criminal prosecution. You can also add to this the additional penalties for failing to report foreign financial accounts (discussed below), which can be even more severe.
At the end of the day, you have a decision to make. You can comply with the law and pay taxes just like everyone else, which is admittedly unpleasant. Alternatively, you can violate the law and hope that you don't get caught. Maybe you will, maybe you won't. If you are caught, though, the amount of money you'll be forced to pay in penalties and interest will drastically exceed the amount you saved. That's not to mention the possibility of a felony criminal conviction and a prolonged stay at Club Fed. Personally, I have seen the havoc wreaked on people's lives by tax crimes and I would never want to be in their shoes. Neither should you.
TL; DR: Gains on bitcoins are taxable income. They become taxable when you sell bitcoins for cash or exchange them for goods or services. The IRS does not receive any direct information regarding your bitcoin transactions, but it has other ways of finding out. The monetary and criminal penalties for failing to report gains are not worth the taxes you'd save.
Continued Below Edit: This post has been edited since it was first posted. An asterisk was placed next to the questions that underwent more than just grammatical changes. Additionally, questions related to losses were inadvertently omitted from the first post, but have since been added back.
submitted by dblcross121 to Bitcoin [link] [comments]

07-02 11:43 - '[quote] Clearly, you're poor...and a fucking newb. / You think it's easy just having MILLIONS OF DOLLARS show up in your bank account? Like yeah Mr. Compliance Officer at Bank of America, I JUST SOLD MY INTERNET DRUG MO...' by /u/Carlos_Matos_ removed from /r/Bitcoin within 287-297min

'''
clearly a lie. If anyone knows what the price will do in the future they wouldn't be posting on reddit, theyd be spending their billions in monte carlo or milan. you are claiming you knew the price would go from 20k to 4k and you did NOT sell then in order to re-acquire 5x as much, either you are a liar or stupid, but most likely, you are both.
Clearly, you're poor...and a fucking newb.
You think it's easy just having MILLIONS OF DOLLARS show up in your bank account? Like yeah Mr. Compliance Officer at Bank of America, I JUST SOLD MY INTERNET DRUG MONEY PLEASE FREEZE MY FUNDS AND SEND A SAR TO FINCEN PLEASEEEEEEE????
How about this, dipshit: Some of HOLD because the fucking headache of dealing with banks is insane. Some of us DON'T WANT TO TRUST A THIRD PARTY to hold our funds. What are we supposed to do? Sell for cash MILLIONS OF FUCKING DOLLARS in coins and stuff it in our mattresses???
You're a piss ant. YOU can go sell your 2.8 BTC on exchange and REAP THOSE SWEET GAINZ BRUH. But for those of us that, ya know, ACTUALLY HAVE A REAL AMOUNT OF COINS, it's not so simple.
Take your snarky douchebag shit somewhere else.
'''
Context Link
Go1dfish undelete link
unreddit undelete link
Author: Carlos_Matos_
submitted by removalbot to removalbot [link] [comments]

[Manipulation] Notes on the transparency of Tether and Bitcoin market manipulation

I would like to share some alarming signs of Bitcoin price manipulation.
Bitcoin price is about 10 times of what it was a year ago. The exchange that decisively sets Bitcoin price is Bitfinex, a secretive institution with unknown beneficiary structure and place of organization.
https://pbs.twimg.com/media/Cs0oGXQWAAAqMRZ.jpg
Bitfinex had its wire services suspended by Wells Fargo in April. To resume trading, Bitfinex enlisted the help of Tether, another company with unknown beneficiary structure and place of organisation, but based on announcements is likely under common share holder control with Bitfinex. Tether sells crypto-tokens known as USD Tethers, or USDTs, that are purportedly backed by an equal number of US dollars. In other words, each USDT is a digital good priced at USD 1.00.
Despite the promise of "100% reserve" and the vague reference to "24×7 access to your funds" on Tether’s website, there is no contractual right, either tacit or express, for one USDT to be redeemed for one US dollar. It is probably through this legal construct that Tether hopes to characterise its USDTs as digital goods and not "convertible" virtual currency covered by FinCEN regulations.
The invention of USDTs led to the proliferation of numerous crypto-currency exchanges. Examples include Bitfinex, Binance, HitBTC, KKex, Poloniex, and YoBit. Instead of providing crypto-to-fiat trading pairs, these "coin-to-coin" exchanges offer crypto-to-tether trading exclusively. Therefore, USDTs not only help these exchanges remove the need for formal banking arrangement, but also enables these exchanges to organise in lesser known jurisdictions (e.g., the Republic of Seychelles) and operate outside of the regulation and supervision of major economies. Most of these exchanges claim to screen-off visitors from the United States and other countries with laws on coin-to-coin trading, but the screen-off is often perfunctory. In almost all cases, the screen can be defeated with a simple mouse click.
It is doubtful that these exchanges perform meaningful due diligence beyond identity verification to combat money laundering, financing of terrorism, and corruption of politically exposes persons. Bitfinex, for example, requires no identity verification at all for most trading activities and imposes no trading amount limits on unverified accounts. The enablement of these exchanges where rampant money laundering is possible is outside of the scope of this note. Instead, I would like to bring to your attention the distinct possibility that Bitfinex, as the likely controller of Tether, is a bad actor.
Strong circumstantial evidence suggests that Bitfinex is creating USDTs out of thin air to prop up Bitcoin prices. Namely, Bitfinex is likely acting as a central bank that issues a fiat money called USDTs. The sole mandate of this central bank is to enrich itself through market manipulation.
https://i.imgur.com/b1Pdsq9.jpg
The first image (above) illustrates how mysterious amounts of USDTs were minted and injected into Bitfinex at precise moments when a crash seemed imminent.
https://i.imgur.com/jAyPlF8.jpg
The second image (above) illustrates a strong correlation (but admittedly not causation) between the total amount of USDTs in circulation and Bitcoin price.
Bitfinex released an internal memo in September to allay concerns that USDTs might have been created at will. The memo purportedly shows that Tether maintained sufficient US dollars to match all USDTs in circulation as of a day in September. The memo, however, is of no probative value. Among other strange things, the author of the memo didn’t verify with banks (names redacted) that account balances from Tethers were in fact correct, couldn’t promise that the balances weren’t overnight borrowings for purposes of producing the memo, and couldn’t promise that Tether indeed had access to those funds.
I therefore urge you to consider the possibility that the current price of Bitcoin is the result of Bitfinex’s manipulation and may collapse when regulators take action.
For example, Tether is almost certainly an administrator of virtual currency — it centrally puts into and withdraws from circulation USDTs, a virtual currency squarely intended as a substitute for real currency as admitted by Tether in the internal memo.
Tether has nominally registered as a money transmitter with FinCEN, but it is unclear if they fulfill any of the BSA filing requirements (e.g., filing SARs).2 As a company, Tether’s USDTs enables large crypto-currency exchanges (including US-based exchanges like Poloniex) to exist and powers trades thereon in the amount of millions every day. So it wouldn’t be surprising if FinCEN eventually decides to enforce its rules against Tether as it did against Liberty Reserve.
Further, CFTC approved recently various swap execution facilities, designated contract markets and derivative clearing organizations with Bitcoin flavor. And the Chicago Mercantile Exchange is expected to launch cash-settled futures on Bitcoin soon. Manipulation of Bitcoin prices referenced by these entities is prosecutable by the CFTC, an agency with broad statutory authority to prosecute manipulation of commodity prices under the Commodity Exchange Act (including Section 753 as amended by the Dodd-Frank Act.).
Although none of these CFTC-registered entities are currently including Bitfinex in the calculation of their Bitcoin reference rates (CME used to), it is well understood and could be easily established (partially because of the transparency of Bitcoin blockchain) that Bitfinex-initiated price movements ripple through all exchanges via manual and automated trading.3 CFTC could then have grounds to investigate Bitfinex’s possible manipulation of Bitcoin price via Tether.
If you are considering investing into Bitcoin at this time, please look closer at the exchanges involved in price discovery and give it a second thought.
submitted by Yanlii to Buttcoin [link] [comments]

[Manipulation] Notes on the transparency of Tether and Bitcoin market manipulation

I would like to share some alarming signs of Bitcoin price manipulation.
Bitcoin price is about 10 times of what it was a year ago. The exchange that decisively sets Bitcoin price is Bitfinex, a secretive institution with unknown beneficiary structure and place of organization.
https://pbs.twimg.com/media/Cs0oGXQWAAAqMRZ.jpg
Bitfinex had its wire services suspended by Wells Fargo in April. To resume trading, Bitfinex enlisted the help of Tether, another company with unknown beneficiary structure and place of organisation, but based on announcements is likely under common share holder control with Bitfinex. Tether sells crypto-tokens known as USD Tethers, or USDTs, that are purportedly backed by an equal number of US dollars. In other words, each USDT is a digital good priced at USD 1.00.
Despite the promise of "100% reserve" and the vague reference to "24×7 access to your funds" on Tether’s website, there is no contractual right, either tacit or express, for one USDT to be redeemed for one US dollar. It is probably through this legal construct that Tether hopes to characterise its USDTs as digital goods and not "convertible" virtual currency covered by FinCEN regulations.
The invention of USDTs led to the proliferation of numerous crypto-currency exchanges. Examples include Bitfinex, Binance, HitBTC, KKex, Poloniex, and YoBit. Instead of providing crypto-to-fiat trading pairs, these "coin-to-coin" exchanges offer crypto-to-tether trading exclusively. Therefore, USDTs not only help these exchanges remove the need for formal banking arrangement, but also enables these exchanges to organise in lesser known jurisdictions (e.g., the Republic of Seychelles) and operate outside of the regulation and supervision of major economies. Most of these exchanges claim to screen-off visitors from the United States and other countries with laws on coin-to-coin trading, but the screen-off is often perfunctory. In almost all cases, the screen can be defeated with a simple mouse click.
It is doubtful that these exchanges perform meaningful due diligence beyond identity verification to combat money laundering, financing of terrorism, and corruption of politically exposes persons. Bitfinex, for example, requires no identity verification at all for most trading activities and imposes no trading amount limits on unverified accounts. The enablement of these exchanges where rampant money laundering is possible is outside of the scope of this note. Instead, I would like to bring to your attention the distinct possibility that Bitfinex, as the likely controller of Tether, is a bad actor.
Strong circumstantial evidence suggests that Bitfinex is creating USDTs out of thin air to prop up Bitcoin prices. Namely, Bitfinex is likely acting as a central bank that issues a fiat money called USDTs. The sole mandate of this central bank is to enrich itself through market manipulation.
https://i.imgur.com/b1Pdsq9.jpg
The first image (above) illustrates how mysterious amounts of USDTs were minted and injected into Bitfinex at precise moments when a crash seemed imminent.
https://i.imgur.com/jAyPlF8.jpg
The second image (above) illustrates a strong correlation (but admittedly not causation) between the total amount of USDTs in circulation and Bitcoin price.
Bitfinex released an internal memo in September to allay concerns that USDTs might have been created at will. The memo purportedly shows that Tether maintained sufficient US dollars to match all USDTs in circulation as of a day in September. The memo, however, is of no probative value. Among other strange things, the author of the memo didn’t verify with banks (names redacted) that account balances from Tethers were in fact correct, couldn’t promise that the balances weren’t overnight borrowings for purposes of producing the memo, and couldn’t promise that Tether indeed had access to those funds.
I therefore urge you to consider the possibility that the current price of Bitcoin is the result of Bitfinex’s manipulation and may collapse when regulators take action.
For example, Tether is almost certainly an administrator of virtual currency — it centrally puts into and withdraws from circulation USDTs, a virtual currency squarely intended as a substitute for real currency as admitted by Tether in the internal memo.
Tether has nominally registered as a money transmitter with FinCEN, but it is unclear if they fulfill any of the BSA filing requirements (e.g., filing SARs).2 As a company, Tether’s USDTs enables large crypto-currency exchanges (including US-based exchanges like Poloniex) to exist and powers trades thereon in the amount of millions every day. So it wouldn’t be surprising if FinCEN eventually decides to enforce its rules against Tether as it did against Liberty Reserve.
Further, CFTC approved recently various swap execution facilities, designated contract markets and derivative clearing organizations with Bitcoin flavor. And the Chicago Mercantile Exchange is expected to launch cash-settled futures on Bitcoin soon. Manipulation of Bitcoin prices referenced by these entities is prosecutable by the CFTC, an agency with broad statutory authority to prosecute manipulation of commodity prices under the Commodity Exchange Act (including Section 753 as amended by the Dodd-Frank Act.).
Although none of these CFTC-registered entities are currently including Bitfinex in the calculation of their Bitcoin reference rates (CME used to), it is well understood and could be easily established (partially because of the transparency of Bitcoin blockchain) that Bitfinex-initiated price movements ripple through all exchanges via manual and automated trading.3 CFTC could then have grounds to investigate Bitfinex’s possible manipulation of Bitcoin price via Tether.
If you are considering investing into Bitcoin at this time, please look closer at the exchanges involved in price discovery and give it a second thought.
submitted by Yanlii to btc [link] [comments]

[Manipulation] Notes on the transparency of Tether and Bitcoin market manipulation

I would like to share some alarming signs of Bitcoin price manipulation.
Bitcoin price is about 10 times of what it was a year ago. The exchange that decisively sets Bitcoin price is Bitfinex, a secretive institution with unknown beneficiary structure and place of organization.
https://pbs.twimg.com/media/Cs0oGXQWAAAqMRZ.jpg
Bitfinex had its wire services suspended by Wells Fargo in April. To resume trading, Bitfinex enlisted the help of Tether, another company with unknown beneficiary structure and place of organisation, but based on announcements is likely under common share holder control with Bitfinex. Tether sells crypto-tokens known as USD Tethers, or USDTs, that are purportedly backed by an equal number of US dollars. In other words, each USDT is a digital good priced at USD 1.00.
Despite the promise of "100% reserve" and the vague reference to "24×7 access to your funds" on Tether’s website, there is no contractual right, either tacit or express, for one USDT to be redeemed for one US dollar. It is probably through this legal construct that Tether hopes to characterise its USDTs as digital goods and not "convertible" virtual currency covered by FinCEN regulations.
The invention of USDTs led to the proliferation of numerous crypto-currency exchanges. Examples include Bitfinex, Binance, HitBTC, KKex, Poloniex, and YoBit. Instead of providing crypto-to-fiat trading pairs, these "coin-to-coin" exchanges offer crypto-to-tether trading exclusively. Therefore, USDTs not only help these exchanges remove the need for formal banking arrangement, but also enables these exchanges to organise in lesser known jurisdictions (e.g., the Republic of Seychelles) and operate outside of the regulation and supervision of major economies. Most of these exchanges claim to screen-off visitors from the United States and other countries with laws on coin-to-coin trading, but the screen-off is often perfunctory. In almost all cases, the screen can be defeated with a simple mouse click.
It is doubtful that these exchanges perform meaningful due diligence beyond identity verification to combat money laundering, financing of terrorism, and corruption of politically exposes persons. Bitfinex, for example, requires no identity verification at all for most trading activities and imposes no trading amount limits on unverified accounts. The enablement of these exchanges where rampant money laundering is possible is outside of the scope of this note. Instead, I would like to bring to your attention the distinct possibility that Bitfinex, as the likely controller of Tether, is a bad actor.
Strong circumstantial evidence suggests that Bitfinex is creating USDTs out of thin air to prop up Bitcoin prices. Namely, Bitfinex is likely acting as a central bank that issues a fiat money called USDTs. The sole mandate of this central bank is to enrich itself through market manipulation.
https://i.imgur.com/b1Pdsq9.jpg
The first image (above) illustrates how mysterious amounts of USDTs were minted and injected into Bitfinex at precise moments when a crash seemed imminent.
https://i.imgur.com/jAyPlF8.jpg
The second image (above) illustrates a strong correlation (but admittedly not causation) between the total amount of USDTs in circulation and Bitcoin price.
Bitfinex released an internal memo in September to allay concerns that USDTs might have been created at will. The memo purportedly shows that Tether maintained sufficient US dollars to match all USDTs in circulation as of a day in September. The memo, however, is of no probative value. Among other strange things, the author of the memo didn’t verify with banks (names redacted) that account balances from Tethers were in fact correct, couldn’t promise that the balances weren’t overnight borrowings for purposes of producing the memo, and couldn’t promise that Tether indeed had access to those funds.
I therefore urge you to consider the possibility that the current price of Bitcoin is the result of Bitfinex’s manipulation and may collapse when regulators take action.
For example, Tether is almost certainly an administrator of virtual currency — it centrally puts into and withdraws from circulation USDTs, a virtual currency squarely intended as a substitute for real currency as admitted by Tether in the internal memo.
Tether has nominally registered as a money transmitter with FinCEN, but it is unclear if they fulfill any of the BSA filing requirements (e.g., filing SARs).2 As a company, Tether’s USDTs enables large crypto-currency exchanges (including US-based exchanges like Poloniex) to exist and powers trades thereon in the amount of millions every day. So it wouldn’t be surprising if FinCEN eventually decides to enforce its rules against Tether as it did against Liberty Reserve.
Further, CFTC approved recently various swap execution facilities, designated contract markets and derivative clearing organizations with Bitcoin flavor. And the Chicago Mercantile Exchange is expected to launch cash-settled futures on Bitcoin soon. Manipulation of Bitcoin prices referenced by these entities is prosecutable by the CFTC, an agency with broad statutory authority to prosecute manipulation of commodity prices under the Commodity Exchange Act (including Section 753 as amended by the Dodd-Frank Act.).
Although none of these CFTC-registered entities are currently including Bitfinex in the calculation of their Bitcoin reference rates (CME used to), it is well understood and could be easily established (partially because of the transparency of Bitcoin blockchain) that Bitfinex-initiated price movements ripple through all exchanges via manual and automated trading.3 CFTC could then have grounds to investigate Bitfinex’s possible manipulation of Bitcoin price via Tether.
If you are considering investing into Bitcoin at this time, please look closer at the exchanges involved in price discovery and give it a second thought.
submitted by Yanlii to Tether [link] [comments]

[Manipulation] Notes on the transparency of Tether and Bitcoin market manipulation

I would like to share some alarming signs of Bitcoin price manipulation.
Bitcoin price is about 10 times of what it was a year ago. The exchange that decisively sets Bitcoin price is Bitfinex, a secretive institution with unknown beneficiary structure and place of organization.
https://pbs.twimg.com/media/Cs0oGXQWAAAqMRZ.jpg
Bitfinex had its wire services suspended by Wells Fargo in April. To resume trading, Bitfinex enlisted the help of Tether, another company with unknown beneficiary structure and place of organisation, but based on announcements is likely under common share holder control with Bitfinex. Tether sells crypto-tokens known as USD Tethers, or USDTs, that are purportedly backed by an equal number of US dollars. In other words, each USDT is a digital good priced at USD 1.00.
Despite the promise of "100% reserve" and the vague reference to "24×7 access to your funds" on Tether’s website, there is no contractual right, either tacit or express, for one USDT to be redeemed for one US dollar. It is probably through this legal construct that Tether hopes to characterise its USDTs as digital goods and not "convertible" virtual currency covered by FinCEN regulations.
The invention of USDTs led to the proliferation of numerous crypto-currency exchanges. Examples include Bitfinex, Binance, HitBTC, KKex, Poloniex, and YoBit. Instead of providing crypto-to-fiat trading pairs, these "coin-to-coin" exchanges offer crypto-to-tether trading exclusively. Therefore, USDTs not only help these exchanges remove the need for formal banking arrangement, but also enables these exchanges to organise in lesser known jurisdictions (e.g., the Republic of Seychelles) and operate outside of the regulation and supervision of major economies. Most of these exchanges claim to screen-off visitors from the United States and other countries with laws on coin-to-coin trading, but the screen-off is often perfunctory. In almost all cases, the screen can be defeated with a simple mouse click.
It is doubtful that these exchanges perform meaningful due diligence beyond identity verification to combat money laundering, financing of terrorism, and corruption of politically exposes persons. Bitfinex, for example, requires no identity verification at all for most trading activities and imposes no trading amount limits on unverified accounts. The enablement of these exchanges where rampant money laundering is possible is outside of the scope of this note. Instead, I would like to bring to your attention the distinct possibility that Bitfinex, as the likely controller of Tether, is a bad actor.
Strong circumstantial evidence suggests that Bitfinex is creating USDTs out of thin air to prop up Bitcoin prices. Namely, Bitfinex is likely acting as a central bank that issues a fiat money called USDTs. The sole mandate of this central bank is to enrich itself through market manipulation.
https://i.imgur.com/b1Pdsq9.jpg
The first image (above) illustrates how mysterious amounts of USDTs were minted and injected into Bitfinex at precise moments when a crash seemed imminent.
https://i.imgur.com/jAyPlF8.jpg
The second image (above) illustrates a strong correlation (but admittedly not causation) between the total amount of USDTs in circulation and Bitcoin price.
Bitfinex released an internal memo in September to allay concerns that USDTs might have been created at will. The memo purportedly shows that Tether maintained sufficient US dollars to match all USDTs in circulation as of a day in September. The memo, however, is of no probative value. Among other strange things, the author of the memo didn’t verify with banks (names redacted) that account balances from Tethers were in fact correct, couldn’t promise that the balances weren’t overnight borrowings for purposes of producing the memo, and couldn’t promise that Tether indeed had access to those funds.
I therefore urge you to consider the possibility that the current price of Bitcoin is the result of Bitfinex’s manipulation and may collapse when regulators take action.
For example, Tether is almost certainly an administrator of virtual currency — it centrally puts into and withdraws from circulation USDTs, a virtual currency squarely intended as a substitute for real currency as admitted by Tether in the internal memo.
Tether has nominally registered as a money transmitter with FinCEN, but it is unclear if they fulfill any of the BSA filing requirements (e.g., filing SARs).2 As a company, Tether’s USDTs enables large crypto-currency exchanges (including US-based exchanges like Poloniex) to exist and powers trades thereon in the amount of millions every day. So it wouldn’t be surprising if FinCEN eventually decides to enforce its rules against Tether as it did against Liberty Reserve.
Further, CFTC approved recently various swap execution facilities, designated contract markets and derivative clearing organizations with Bitcoin flavor. And the Chicago Mercantile Exchange is expected to launch cash-settled futures on Bitcoin soon. Manipulation of Bitcoin prices referenced by these entities is prosecutable by the CFTC, an agency with broad statutory authority to prosecute manipulation of commodity prices under the Commodity Exchange Act (including Section 753 as amended by the Dodd-Frank Act.).
Although none of these CFTC-registered entities are currently including Bitfinex in the calculation of their Bitcoin reference rates (CME used to), it is well understood and could be easily established (partially because of the transparency of Bitcoin blockchain) that Bitfinex-initiated price movements ripple through all exchanges via manual and automated trading.3 CFTC could then have grounds to investigate Bitfinex’s possible manipulation of Bitcoin price via Tether.
If you are considering investing into Bitcoin at this time, please look closer at the exchanges involved in price discovery and give it a second thought.
submitted by Yanlii to CryptoMarkets [link] [comments]

[Manipulation] Notes on the transparency of Tether and Bitcoin market manipulation

I would like to share some alarming signs of Bitcoin price manipulation.
Bitcoin price is about 10 times of what it was a year ago. The exchange that decisively sets Bitcoin price is Bitfinex, a secretive institution with unknown beneficiary structure and place of organization.
https://pbs.twimg.com/media/Cs0oGXQWAAAqMRZ.jpg
Bitfinex had its wire services suspended by Wells Fargo in April. To resume trading, Bitfinex enlisted the help of Tether, another company with unknown beneficiary structure and place of organisation, but based on announcements is likely under common share holder control with Bitfinex. Tether sells crypto-tokens known as USD Tethers, or USDTs, that are purportedly backed by an equal number of US dollars. In other words, each USDT is a digital good priced at USD 1.00.
Despite the promise of "100% reserve" and the vague reference to "24×7 access to your funds" on Tether’s website, there is no contractual right, either tacit or express, for one USDT to be redeemed for one US dollar. It is probably through this legal construct that Tether hopes to characterise its USDTs as digital goods and not "convertible" virtual currency covered by FinCEN regulations.
The invention of USDTs led to the proliferation of numerous crypto-currency exchanges. Examples include Bitfinex, Binance, HitBTC, KKex, Poloniex, and YoBit. Instead of providing crypto-to-fiat trading pairs, these "coin-to-coin" exchanges offer crypto-to-tether trading exclusively. Therefore, USDTs not only help these exchanges remove the need for formal banking arrangement, but also enables these exchanges to organise in lesser known jurisdictions (e.g., the Republic of Seychelles) and operate outside of the regulation and supervision of major economies. Most of these exchanges claim to screen-off visitors from the United States and other countries with laws on coin-to-coin trading, but the screen-off is often perfunctory. In almost all cases, the screen can be defeated with a simple mouse click.
It is doubtful that these exchanges perform meaningful due diligence beyond identity verification to combat money laundering, financing of terrorism, and corruption of politically exposes persons. Bitfinex, for example, requires no identity verification at all for most trading activities and imposes no trading amount limits on unverified accounts. The enablement of these exchanges where rampant money laundering is possible is outside of the scope of this note. Instead, I would like to bring to your attention the distinct possibility that Bitfinex, as the likely controller of Tether, is a bad actor.
Strong circumstantial evidence suggests that Bitfinex is creating USDTs out of thin air to prop up Bitcoin prices. Namely, Bitfinex is likely acting as a central bank that issues a fiat money called USDTs. The sole mandate of this central bank is to enrich itself through market manipulation.
https://i.imgur.com/b1Pdsq9.jpg
The first image (above) illustrates how mysterious amounts of USDTs were minted and injected into Bitfinex at precise moments when a crash seemed imminent.
https://i.imgur.com/jAyPlF8.jpg
The second image (above) illustrates a strong correlation (but admittedly not causation) between the total amount of USDTs in circulation and Bitcoin price.
Bitfinex released an internal memo in September to allay concerns that USDTs might have been created at will. The memo purportedly shows that Tether maintained sufficient US dollars to match all USDTs in circulation as of a day in September. The memo, however, is of no probative value. Among other strange things, the author of the memo didn’t verify with banks (names redacted) that account balances from Tethers were in fact correct, couldn’t promise that the balances weren’t overnight borrowings for purposes of producing the memo, and couldn’t promise that Tether indeed had access to those funds.
I therefore urge you to consider the possibility that the current price of Bitcoin is the result of Bitfinex’s manipulation and may collapse when regulators take action.
For example, Tether is almost certainly an administrator of virtual currency — it centrally puts into and withdraws from circulation USDTs, a virtual currency squarely intended as a substitute for real currency as admitted by Tether in the internal memo.
Tether has nominally registered as a money transmitter with FinCEN, but it is unclear if they fulfill any of the BSA filing requirements (e.g., filing SARs).2 As a company, Tether’s USDTs enables large crypto-currency exchanges (including US-based exchanges like Poloniex) to exist and powers trades thereon in the amount of millions every day. So it wouldn’t be surprising if FinCEN eventually decides to enforce its rules against Tether as it did against Liberty Reserve.
Further, CFTC approved recently various swap execution facilities, designated contract markets and derivative clearing organizations with Bitcoin flavor. And the Chicago Mercantile Exchange is expected to launch cash-settled futures on Bitcoin soon. Manipulation of Bitcoin prices referenced by these entities is prosecutable by the CFTC, an agency with broad statutory authority to prosecute manipulation of commodity prices under the Commodity Exchange Act (including Section 753 as amended by the Dodd-Frank Act.).
Although none of these CFTC-registered entities are currently including Bitfinex in the calculation of their Bitcoin reference rates (CME used to), it is well understood and could be easily established (partially because of the transparency of Bitcoin blockchain) that Bitfinex-initiated price movements ripple through all exchanges via manual and automated trading.3 CFTC could then have grounds to investigate Bitfinex’s possible manipulation of Bitcoin price via Tether.
If you are considering investing into Bitcoin at this time, please look closer at the exchanges involved in price discovery and give it a second thought.
submitted by Yanlii to BitcoinMarkets [link] [comments]

The Problem with North Carolina bitcoin legislation, and how we can prevent that from happening in California

In North Carolina, due to the enactment of bill H289 on June 30, 2016, the sale or issuance of any payment instruments or stored value primarily for personal, family, or household purposes, or even receiving of money or monetary value primarily for personal, family, or household purposes (including bitcoin or any cryptocurrency) is considered a crime unless you have a permit from the state or fall under one of very limited exemptions. As such, H289 in North Carolina was very similar to California's proposed AB 1326, but the difference was that California's bill failed twice due to overwhelming opposition from both residents of the state and EFF, and H289 (North Carolina) seemed to slip through the cracks and get passed by the Governor despite that the content of the bill makes it so horrible (not to mention unenforceable). Perhaps the only redeeming quality of H289 was that it stated that "For the purposes of this Article, a person is considered to be engaged in the business of money transmission in this State if that person solicits or advertises money transmission services from a Web site that North Carolina citizens may access in order to enter into those transactions by electronic means," so you'd have to advertise a service on a website in order for the act to be applicable to you. However, that also meant that North Carolina residents would be unable to put up a website and advertise that they are accepting bitcoin as payment for goods or services, without running the risk of having someone from the State demand they get a license for money transmission (the cost of which is at least $1,500 for the application, and there are likely other costs for the applicants). Altogether, H289 is a horrible bill, yet it managed to get enacted.
So let's examine how we can prevent such a bill from being passed in California. We managed to kill AB 1326 the first time it was brought up, and the actions of people across California, the EFF, the Bitcoin Foundation, and many others, helped kill AB 1326 the second time it reared its ugly head.
But despite all this, Assemblymember Dababneh in California plans on bringing a similar bill back in January 2017.
So, what are we going to do about this? Really, what are you going to do about this? We can't let the likes of Dababneh create financial censorship for everyone. It's already happened in New York and arguably in North Carolina as well. We have to draw the line here in California or else it will happen everywhere.
Here's my suggestion:
1) Don't wait until January 2017, when Dababneh's legislation comes out. If you are in California, start contacting not only Dababneh, but your state legislator now to tell them what you do and don't want.
How to contact your California Legislator on this issue
As a bit of a backgrounder, it seems there is always talk about the "necessity" to provide certification of one's identity (in a traditional sense, using government-created identification methods) in order to maintain "security" when using exchanges. This notion leads to a false sense of security and actually exposes users to a larger possibility of attack due to the scope of data that might be granted to a service provider in these circumstances.
It is important to remember that the notion that a user should provide some form of identity to a service provides absolutely no additional security to that service. The underlying structure of the service remains just as secure or as vulnerable as it was before. And if it was vulnerable in any way, the additional data you provide if you consent to a request to provide identity of some form, means that this identity information will one day soon be divulged to someone else. It may even happen instantaneously before any hack even occurs, due to provisions relating to how third parties are treated in US law. As many people have conveniently forgotten, the passage of the "cromnibus" bill in December 2014 included a sneakily passed provision of financial surveillance which allows the government to basically do full surveillance on any transaction routed through a bank, credit card company, or any associated 3rd party service to which your data is passed in the process of financial transactions, SARs, or any related processes really. This is one more reason why you should not use web-based exchanges, and should not use web wallets also, but rather should use fully decentralized exchanges and wallets which are installed on your computer and give you full control over both the application and your keys (no service, no corporation, no login required, etc.).
1) As a user, who has no control over what the exchanges will and will not do, and assuming for a moment that the exchanges make no improvements in their security practices, you can nonetheless approach the market in a way that will protect you (and your friends, colleagues, family, etc.) simply by using more secure tools. I've detailed some ways to do this in a recent post here.
You'll note that the above recommendation doesn't require (if you do it right) that you provide anyone with any identification (with the exception of certain circumstances where there is a dispute which would require moderation, I believe) but it will allow you to exchange one currency for another.
2) Now let us assume that you wish to try to make a dent in what exchanges will do. You can write them of course and encourage them to improve their security practices in different ways, but in reality the number of exchanges and the variation in the security practices each one utilizes would make this task meaningless. Fortunately, with the defeat of AB 1326 (CA), twice, the worst possible legislation (which could have been used as a model for the nation, actually) was stopped in its tracks, but similar legislation may be revived in new proposals in California in January, because in California, legislators do not learn. They understand only fascism, and how to oppress and tax people until people flee the state (which has been occurring in California more or less since 1990 in a process of outmigration).
So then, what can you do in the legislative front on this issue? It's actually rather simple. If you are writing California legislators (because CA legislator Dababneh has promised to bring back something like AB 1326 in January 2017), and you should be writing them now on this subject, remind them of the first two attempts they made to pass this bill ended in giant flaming failures, for good reason, because a bill that proposes to add permitting requirements to exchanges, startups / startup accelerators, bitcoin businesses, and individuals, merely for them to use their currency of choice, simply has no chance at passage, ever.
Instead, when they next try to pass a cryptocurrency bill (and they will), they should simply pass a minimum security standard that exchanges would have to meet in order to operate. (The requirement would be applicable to web-based exchanges, which function as MSBs and are already required to be licensed in the US by the US Treasury / FINCEN. There's no need for state level licenses... but if the state passes additional legislation, it should focus only on specifying security requirements for web-based exchanges. The regulation or standards would be required for MSB / FinCEN licensed exchanges and advisory (voluntary only) for decentralized exchanges and exchanges that are not web-based exchanges, because there are limits to enforceability of a security standard. This would not require any permitting or fees, but simply setting of standards for consumer safety.)
Wait, you say. This would be impossible to set a standard. Each state would want to have its own standard and say that its own is best! We'd simply be back in the same situation as we are now, right?
Well, maybe not. Why? Because some of the best minds in bitcoin, including Andreas Antonopoulos and others, have already made some security standards. So those standards could be worked up a bit by the Cryptoconsortium folks who made them, tailored for the purposes of securing web-based exchanges, adopted by states and that could be what the basis would be for protecting consumers. If it proved inadequate (and no doubt any standard will be tested by someone trying to break it) then someone can always improve it.
Also, you can propose your own changes to the Cryptoconsortium standards. Here are a couple (1, 2) that I've proposed. (My proposed changes mostly suggest distinguishing between government-issued ID and background requirements for exchange operators, versus standard users of exchanges who should not be required to provide government-issued ID, but rather should be able to utilize pseudonymous or decentralized (blockchainMe / blockchain ID) identification options.
Again -- How to contact your California Legislator on this issue
Don't wait until January 2017 when Dababneh comes out with his own version of how he thinks you should live your life. Tell legislators now what you want (and don't want) now. Remind them that legislation like AB 1326 won't work and we've defeated it twice -- and that applying new licensing requirements for use of cryptocurrency to individuals and businesses has no benefit for the public. Tell them that security standards for exchanges are what any new legislation in the area should focus on, and they should rely upon experts who have developed open standards such as the Cryptoconsortium model.
Thanks for reading this long ramble.
submitted by pcvcolin to Bitcoin [link] [comments]

[Manipulation] Notes on the transparency of Tether and Bitcoin market manipulation

I would like to share some alarming signs of Bitcoin price manipulation.
Bitcoin price is about 10 times of what it was a year ago. The exchange that decisively sets Bitcoin price is Bitfinex, a secretive institution with unknown beneficiary structure and place of organization.
https://pbs.twimg.com/media/Cs0oGXQWAAAqMRZ.jpg
Bitfinex had its wire services suspended by Wells Fargo in April. To resume trading, Bitfinex enlisted the help of Tether, another company with unknown beneficiary structure and place of organisation, but based on announcements is likely under common share holder control with Bitfinex. Tether sells crypto-tokens known as USD Tethers, or USDTs, that are purportedly backed by an equal number of US dollars. In other words, each USDT is a digital good priced at USD 1.00.
Despite the promise of "100% reserve" and the vague reference to "24×7 access to your funds" on Tether’s website, there is no contractual right, either tacit or express, for one USDT to be redeemed for one US dollar. It is probably through this legal construct that Tether hopes to characterise its USDTs as digital goods and not "convertible" virtual currency covered by FinCEN regulations.
The invention of USDTs led to the proliferation of numerous crypto-currency exchanges. Examples include Bitfinex, Binance, HitBTC, KKex, Poloniex, and YoBit. Instead of providing crypto-to-fiat trading pairs, these "coin-to-coin" exchanges offer crypto-to-tether trading exclusively. Therefore, USDTs not only help these exchanges remove the need for formal banking arrangement, but also enables these exchanges to organise in lesser known jurisdictions (e.g., the Republic of Seychelles) and operate outside of the regulation and supervision of major economies. Most of these exchanges claim to screen-off visitors from the United States and other countries with laws on coin-to-coin trading, but the screen-off is often perfunctory. In almost all cases, the screen can be defeated with a simple mouse click.
It is doubtful that these exchanges perform meaningful due diligence beyond identity verification to combat money laundering, financing of terrorism, and corruption of politically exposes persons. Bitfinex, for example, requires no identity verification at all for most trading activities and imposes no trading amount limits on unverified accounts. The enablement of these exchanges where rampant money laundering is possible is outside of the scope of this note. Instead, I would like to bring to your attention the distinct possibility that Bitfinex, as the likely controller of Tether, is a bad actor.
Strong circumstantial evidence suggests that Bitfinex is creating USDTs out of thin air to prop up Bitcoin prices. Namely, Bitfinex is likely acting as a central bank that issues a fiat money called USDTs. The sole mandate of this central bank is to enrich itself through market manipulation.
https://i.imgur.com/b1Pdsq9.jpg
The first image (above) illustrates how mysterious amounts of USDTs were minted and injected into Bitfinex at precise moments when a crash seemed imminent.
https://i.imgur.com/jAyPlF8.jpg
The second image (above) illustrates a strong correlation (but admittedly not causation) between the total amount of USDTs in circulation and Bitcoin price.
Bitfinex released an internal memo in September to allay concerns that USDTs might have been created at will. The memo purportedly shows that Tether maintained sufficient US dollars to match all USDTs in circulation as of a day in September. The memo, however, is of no probative value. Among other strange things, the author of the memo didn’t verify with banks (names redacted) that account balances from Tethers were in fact correct, couldn’t promise that the balances weren’t overnight borrowings for purposes of producing the memo, and couldn’t promise that Tether indeed had access to those funds.
I therefore urge you to consider the possibility that the current price of Bitcoin is the result of Bitfinex’s manipulation and may collapse when regulators take action.
For example, Tether is almost certainly an administrator of virtual currency — it centrally puts into and withdraws from circulation USDTs, a virtual currency squarely intended as a substitute for real currency as admitted by Tether in the internal memo.
Tether has nominally registered as a money transmitter with FinCEN, but it is unclear if they fulfill any of the BSA filing requirements (e.g., filing SARs).2 As a company, Tether’s USDTs enables large crypto-currency exchanges (including US-based exchanges like Poloniex) to exist and powers trades thereon in the amount of millions every day. So it wouldn’t be surprising if FinCEN eventually decides to enforce its rules against Tether as it did against Liberty Reserve.
Further, CFTC approved recently various swap execution facilities, designated contract markets and derivative clearing organizations with Bitcoin flavor. And the Chicago Mercantile Exchange is expected to launch cash-settled futures on Bitcoin soon. Manipulation of Bitcoin prices referenced by these entities is prosecutable by the CFTC, an agency with broad statutory authority to prosecute manipulation of commodity prices under the Commodity Exchange Act (including Section 753 as amended by the Dodd-Frank Act.).
Although none of these CFTC-registered entities are currently including Bitfinex in the calculation of their Bitcoin reference rates (CME used to), it is well understood and could be easily established (partially because of the transparency of Bitcoin blockchain) that Bitfinex-initiated price movements ripple through all exchanges via manual and automated trading.3 CFTC could then have grounds to investigate Bitfinex’s possible manipulation of Bitcoin price via Tether.
If you are considering investing into Bitcoin at this time, please look closer at the exchanges involved in price discovery and give it a second thought.
submitted by Yanlii to bitfinex [link] [comments]

FinCEN says BTC-e handled stolen Mt.Gox BTC. Does this mean that after they've taken their fines the will pass something back to the Mt.Gox trustee?

https://www.fincen.gov/sites/default/files/enforcement_action/2017-07-27/Assessment%20for%20BTCeVinnik%20FINAL2.pdf
FINCEN states:
BTC-e processed transactions involving funds stolen from the Mt.Gox exchange between 2011 and 2014. BTC-e processed over 300,000 bitcoin of these proceeds, which were sent and held at three separate but linked BTC-e accounts. BTC-e failed to conduct any due diligence on the transactions or on the accounts in which the stolen bitcoin were held. Moreover, BTC-e failed to file any SARs on these transactions even after the thefts were publicly reported in the media.
submitted by andypagonthemove to mtgoxinsolvency [link] [comments]

[Manipulation] Notes on the transparency of Tether and Bitcoin market manipulation

I would like to share some alarming signs of Bitcoin price manipulation.
Bitcoin price is about 10 times of what it was a year ago. The exchange that decisively sets Bitcoin price is Bitfinex, a secretive institution with unknown beneficiary structure and place of organization.
https://pbs.twimg.com/media/Cs0oGXQWAAAqMRZ.jpg
Bitfinex had its wire services suspended by Wells Fargo in April. To resume trading, Bitfinex enlisted the help of Tether, another company with unknown beneficiary structure and place of organisation, but based on announcements is likely under common share holder control with Bitfinex. Tether sells crypto-tokens known as USD Tethers, or USDTs, that are purportedly backed by an equal number of US dollars. In other words, each USDT is a digital good priced at USD 1.00.
Despite the promise of "100% reserve" and the vague reference to "24×7 access to your funds" on Tether’s website, there is no contractual right, either tacit or express, for one USDT to be redeemed for one US dollar. It is probably through this legal construct that Tether hopes to characterise its USDTs as digital goods and not "convertible" virtual currency covered by FinCEN regulations.
The invention of USDTs led to the proliferation of numerous crypto-currency exchanges. Examples include Bitfinex, Binance, HitBTC, KKex, Poloniex, and YoBit. Instead of providing crypto-to-fiat trading pairs, these "coin-to-coin" exchanges offer crypto-to-tether trading exclusively. Therefore, USDTs not only help these exchanges remove the need for formal banking arrangement, but also enables these exchanges to organise in lesser known jurisdictions (e.g., the Republic of Seychelles) and operate outside of the regulation and supervision of major economies. Most of these exchanges claim to screen-off visitors from the United States and other countries with laws on coin-to-coin trading, but the screen-off is often perfunctory. In almost all cases, the screen can be defeated with a simple mouse click.
It is doubtful that these exchanges perform meaningful due diligence beyond identity verification to combat money laundering, financing of terrorism, and corruption of politically exposes persons. Bitfinex, for example, requires no identity verification at all for most trading activities and imposes no trading amount limits on unverified accounts. The enablement of these exchanges where rampant money laundering is possible is outside of the scope of this note. Instead, I would like to bring to your attention the distinct possibility that Bitfinex, as the likely controller of Tether, is a bad actor.
Strong circumstantial evidence suggests that Bitfinex is creating USDTs out of thin air to prop up Bitcoin prices. Namely, Bitfinex is likely acting as a central bank that issues a fiat money called USDTs. The sole mandate of this central bank is to enrich itself through market manipulation.
https://i.imgur.com/b1Pdsq9.jpg
The first image (above) illustrates how mysterious amounts of USDTs were minted and injected into Bitfinex at precise moments when a crash seemed imminent.
https://i.imgur.com/jAyPlF8.jpg
The second image (above) illustrates a strong correlation (but admittedly not causation) between the total amount of USDTs in circulation and Bitcoin price.
Bitfinex released an internal memo in September to allay concerns that USDTs might have been created at will. The memo purportedly shows that Tether maintained sufficient US dollars to match all USDTs in circulation as of a day in September. The memo, however, is of no probative value. Among other strange things, the author of the memo didn’t verify with banks (names redacted) that account balances from Tethers were in fact correct, couldn’t promise that the balances weren’t overnight borrowings for purposes of producing the memo, and couldn’t promise that Tether indeed had access to those funds.
I therefore urge you to consider the possibility that the current price of Bitcoin is the result of Bitfinex’s manipulation and may collapse when regulators take action.
For example, Tether is almost certainly an administrator of virtual currency — it centrally puts into and withdraws from circulation USDTs, a virtual currency squarely intended as a substitute for real currency as admitted by Tether in the internal memo.
Tether has nominally registered as a money transmitter with FinCEN, but it is unclear if they fulfill any of the BSA filing requirements (e.g., filing SARs).2 As a company, Tether’s USDTs enables large crypto-currency exchanges (including US-based exchanges like Poloniex) to exist and powers trades thereon in the amount of millions every day. So it wouldn’t be surprising if FinCEN eventually decides to enforce its rules against Tether as it did against Liberty Reserve.
Further, CFTC approved recently various swap execution facilities, designated contract markets and derivative clearing organizations with Bitcoin flavor. And the Chicago Mercantile Exchange is expected to launch cash-settled futures on Bitcoin soon. Manipulation of Bitcoin prices referenced by these entities is prosecutable by the CFTC, an agency with broad statutory authority to prosecute manipulation of commodity prices under the Commodity Exchange Act (including Section 753 as amended by the Dodd-Frank Act.).
Although none of these CFTC-registered entities are currently including Bitfinex in the calculation of their Bitcoin reference rates (CME used to), it is well understood and could be easily established (partially because of the transparency of Bitcoin blockchain) that Bitfinex-initiated price movements ripple through all exchanges via manual and automated trading.3 CFTC could then have grounds to investigate Bitfinex’s possible manipulation of Bitcoin price via Tether.
If you are considering investing into Bitcoin at this time, please look closer at the exchanges involved in price discovery and give it a second thought.
submitted by Yanlii to Bitcoin [link] [comments]

[Manipulation] Notes on the transparency of Tether and Bitcoin market manipulation

I would like to share some alarming signs of Bitcoin price manipulation.
Bitcoin price is about 10 times of what it was a year ago. The exchange that decisively sets Bitcoin price is Bitfinex, a secretive institution with unknown beneficiary structure and place of organization.
https://pbs.twimg.com/media/Cs0oGXQWAAAqMRZ.jpg
Bitfinex had its wire services suspended by Wells Fargo in April. To resume trading, Bitfinex enlisted the help of Tether, another company with unknown beneficiary structure and place of organisation, but based on announcements is likely under common share holder control with Bitfinex. Tether sells crypto-tokens known as USD Tethers, or USDTs, that are purportedly backed by an equal number of US dollars. In other words, each USDT is a digital good priced at USD 1.00.
Despite the promise of "100% reserve" and the vague reference to "24×7 access to your funds" on Tether’s website, there is no contractual right, either tacit or express, for one USDT to be redeemed for one US dollar. It is probably through this legal construct that Tether hopes to characterise its USDTs as digital goods and not "convertible" virtual currency covered by FinCEN regulations.
The invention of USDTs led to the proliferation of numerous crypto-currency exchanges. Examples include Bitfinex, Binance, HitBTC, KKex, Poloniex, and YoBit. Instead of providing crypto-to-fiat trading pairs, these "coin-to-coin" exchanges offer crypto-to-tether trading exclusively. Therefore, USDTs not only help these exchanges remove the need for formal banking arrangement, but also enables these exchanges to organise in lesser known jurisdictions (e.g., the Republic of Seychelles) and operate outside of the regulation and supervision of major economies. Most of these exchanges claim to screen-off visitors from the United States and other countries with laws on coin-to-coin trading, but the screen-off is often perfunctory. In almost all cases, the screen can be defeated with a simple mouse click.
It is doubtful that these exchanges perform meaningful due diligence beyond identity verification to combat money laundering, financing of terrorism, and corruption of politically exposes persons. Bitfinex, for example, requires no identity verification at all for most trading activities and imposes no trading amount limits on unverified accounts. The enablement of these exchanges where rampant money laundering is possible is outside of the scope of this note. Instead, I would like to bring to your attention the distinct possibility that Bitfinex, as the likely controller of Tether, is a bad actor.
Strong circumstantial evidence suggests that Bitfinex is creating USDTs out of thin air to prop up Bitcoin prices. Namely, Bitfinex is likely acting as a central bank that issues a fiat money called USDTs. The sole mandate of this central bank is to enrich itself through market manipulation.
https://i.imgur.com/b1Pdsq9.jpg
The first image (above) illustrates how mysterious amounts of USDTs were minted and injected into Bitfinex at precise moments when a crash seemed imminent.
https://i.imgur.com/jAyPlF8.jpg
The second image (above) illustrates a strong correlation (but admittedly not causation) between the total amount of USDTs in circulation and Bitcoin price.
Bitfinex released an internal memo in September to allay concerns that USDTs might have been created at will. The memo purportedly shows that Tether maintained sufficient US dollars to match all USDTs in circulation as of a day in September. The memo, however, is of no probative value. Among other strange things, the author of the memo didn’t verify with banks (names redacted) that account balances from Tethers were in fact correct, couldn’t promise that the balances weren’t overnight borrowings for purposes of producing the memo, and couldn’t promise that Tether indeed had access to those funds.
I therefore urge you to consider the possibility that the current price of Bitcoin is the result of Bitfinex’s manipulation and may collapse when regulators take action.
For example, Tether is almost certainly an administrator of virtual currency — it centrally puts into and withdraws from circulation USDTs, a virtual currency squarely intended as a substitute for real currency as admitted by Tether in the internal memo.
Tether has nominally registered as a money transmitter with FinCEN, but it is unclear if they fulfill any of the BSA filing requirements (e.g., filing SARs).2 As a company, Tether’s USDTs enables large crypto-currency exchanges (including US-based exchanges like Poloniex) to exist and powers trades thereon in the amount of millions every day. So it wouldn’t be surprising if FinCEN eventually decides to enforce its rules against Tether as it did against Liberty Reserve.
Further, CFTC approved recently various swap execution facilities, designated contract markets and derivative clearing organizations with Bitcoin flavor. And the Chicago Mercantile Exchange is expected to launch cash-settled futures on Bitcoin soon. Manipulation of Bitcoin prices referenced by these entities is prosecutable by the CFTC, an agency with broad statutory authority to prosecute manipulation of commodity prices under the Commodity Exchange Act (including Section 753 as amended by the Dodd-Frank Act.).
Although none of these CFTC-registered entities are currently including Bitfinex in the calculation of their Bitcoin reference rates (CME used to), it is well understood and could be easily established (partially because of the transparency of Bitcoin blockchain) that Bitfinex-initiated price movements ripple through all exchanges via manual and automated trading.3 CFTC could then have grounds to investigate Bitfinex’s possible manipulation of Bitcoin price via Tether.
If you are considering investing into Bitcoin at this time, please look closer at the exchanges involved in price discovery and give it a second thought.
submitted by Yanlii to CryptoCurrency [link] [comments]

[uncensored-r/BitcoinMarkets] [Manipulation] Notes on the transparency of Tether and Bitcoin market manipulation

The following post by Yanlii is being replicated because some comments within the post(but not the post itself) have been silently removed.
The original post can be found(in censored form) at this link:
np.reddit.com/ BitcoinMarkets/comments/7bvxo5
The original post's content was as follows:
I would like to share some alarming signs of Bitcoin price manipulation.
Bitcoin price is about 10 times of what it was a year ago. The exchange that decisively sets Bitcoin price is Bitfinex, a secretive institution with unknown beneficiary structure and place of organization.
https://pbs.twimg.com/media/Cs0oGXQWAAAqMRZ.jpg
Bitfinex had its wire services suspended by Wells Fargo in April. To resume trading, Bitfinex enlisted the help of Tether, another company with unknown beneficiary structure and place of organisation, but based on announcements is likely under common share holder control with Bitfinex. Tether sells crypto-tokens known as USD Tethers, or USDTs, that are purportedly backed by an equal number of US dollars. In other words, each USDT is a digital good priced at USD 1.00.
Despite the promise of "100% reserve" and the vague reference to "24×7 access to your funds" on Tether’s website, there is no contractual right, either tacit or express, for one USDT to be redeemed for one US dollar. It is probably through this legal construct that Tether hopes to characterise its USDTs as digital goods and not "convertible" virtual currency covered by FinCEN regulations.
The invention of USDTs led to the proliferation of numerous crypto-currency exchanges. Examples include Bitfinex, Binance, HitBTC, KKex, Poloniex, and YoBit. Instead of providing crypto-to-fiat trading pairs, these "coin-to-coin" exchanges offer crypto-to-tether trading exclusively. Therefore, USDTs not only help these exchanges remove the need for formal banking arrangement, but also enables these exchanges to organise in lesser known jurisdictions (e.g., the Republic of Seychelles) and operate outside of the regulation and supervision of major economies. Most of these exchanges claim to screen-off visitors from the United States and other countries with laws on coin-to-coin trading, but the screen-off is often perfunctory. In almost all cases, the screen can be defeated with a simple mouse click.
It is doubtful that these exchanges perform meaningful due diligence beyond identity verification to combat money laundering, financing of terrorism, and corruption of politically exposes persons. Bitfinex, for example, requires no identity verification at all for most trading activities and imposes no trading amount limits on unverified accounts. The enablement of these exchanges where rampant money laundering is possible is outside of the scope of this note. Instead, I would like to bring to your attention the distinct possibility that Bitfinex, as the likely controller of Tether, is a bad actor.
Strong circumstantial evidence suggests that Bitfinex is creating USDTs out of thin air to prop up Bitcoin prices. Namely, Bitfinex is likely acting as a central bank that issues a fiat money called USDTs. The sole mandate of this central bank is to enrich itself through market manipulation.
https://i.imgur.com/b1Pdsq9.jpg
The first image (above) illustrates how mysterious amounts of USDTs were minted and injected into Bitfinex at precise moments when a crash seemed imminent.
https://i.imgur.com/jAyPlF8.jpg
The second image (above) illustrates a strong correlation (but admittedly not causation) between the total amount of USDTs in circulation and Bitcoin price.
Bitfinex released an internal memo in September to allay concerns that USDTs might have been created at will. The memo purportedly shows that Tether maintained sufficient US dollars to match all USDTs in circulation as of a day in September. The memo, however, is of no probative value. Among other strange things, the author of the memo didn’t verify with banks (names redacted) that account balances from Tethers were in fact correct, couldn’t promise that the balances weren’t overnight borrowings for purposes of producing the memo, and couldn’t promise that Tether indeed had access to those funds.
I therefore urge you to consider the possibility that the current price of Bitcoin is the result of Bitfinex’s manipulation and may collapse when regulators take action.
For example, Tether is almost certainly an administrator of virtual currency — it centrally puts into and withdraws from circulation USDTs, a virtual currency squarely intended as a substitute for real currency as admitted by Tether in the internal memo.
Tether has nominally registered as a money transmitter with FinCEN, but it is unclear if they fulfill any of the BSA filing requirements (e.g., filing SARs).2 As a company, Tether’s USDTs enables large crypto-currency exchanges (including US-based exchanges like Poloniex) to exist and powers trades thereon in the amount of millions every day. So it wouldn’t be surprising if FinCEN eventually decides to enforce its rules against Tether as it did against Liberty Reserve.
Further, CFTC approved recently various swap execution facilities, designated contract markets and derivative clearing organizations with Bitcoin flavor. And the Chicago Mercantile Exchange is expected to launch cash-settled futures on Bitcoin soon. Manipulation of Bitcoin prices referenced by these entities is prosecutable by the CFTC, an agency with broad statutory authority to prosecute manipulation of commodity prices under the Commodity Exchange Act (including Section 753 as amended by the Dodd-Frank Act.).
Although none of these CFTC-registered entities are currently including Bitfinex in the calculation of their Bitcoin reference rates (CME used to), it is well understood and could be easily established (partially because of the transparency of Bitcoin blockchain) that Bitfinex-initiated price movements ripple through all exchanges via manual and automated trading.3 CFTC could then have grounds to investigate Bitfinex’s possible manipulation of Bitcoin price via Tether.
If you are considering investing into Bitcoin at this time, please look closer at the exchanges involved in price discovery and give it a second thought.
submitted by censorship_notifier to noncensored_bitcoin [link] [comments]

a conversation with patrick dugan about aml/kyc in tether and the coming cryptofiat money laundering / law enforcement wars

patrick dugan: Interview with Jamie Redman at Bitcoin.com thomas hartman: nice interview. from the transcript: “Personal speculation convinces me that If we have 100 million decentralized dollars backed by OMNIs, then the price of OMNI could be around 100M/580k= $172.41,” thomas hartman: seems moon juicy to me though… thomas hartman: these are claims are dollars, not the dollars themselves. thomas hartman: there’s still counterparty risk (if debt tokens) or system risk (if decentralized hedged) thomas hartman: I can’t see how there could be 1 to 1 parity. thomas hartman: also this would be competing with systems built on open assets and others. thomas hartman: anyway… the thought running through my head these days is… tokenize everything. thomas hartman: transparent books, the less in a database the better. thomas hartman: counterparts keep you honest. thomas hartman: keep trust low. thomas hartman: that’s what will drive valuations. patrick dugan: what's really interesting is when you make tokens basically logic switches of some kind in a dApp structure with smart contracts thomas hartman: yeah I agree with that patrick dugan: we'll be publishing cool charts soon thomas hartman: related.. I’m unclear on kyc/aml for tether. thomas hartman: I understand you need to pass kyc/aml when cashing out of tether system. thomas hartman: so… what if user a buys some tether after passing kyc/aml. thomas hartman: he tumbles the tethers. sells for btc on polonium to user b. thomas hartman: user b now wants to cash out tethers for real use. he passes aml/kyc as far as identity check. thomas hartman: but anyone can see the tethers have been tumbled and the link is broken. thomas hartman: so this could be part of some money laundering operation. thomas hartman: would tether cash user b out? thomas hartman: seems to me like these tethers would be significantly less liquid than untumbled tethers, and therefore less valuable. thomas hartman: i.e. maybe you get used in the end but there’s a long/annoying wait period while you get probed. thomas hartman: or maybe you’re targeted for a criminal investigation. thomas hartman: academic while tether volumes are low but as the system ramps up in volume, this will happen at some point. thomas hartman: answers from team tether would be nice. thomas hartman: the key intuition is that anything that’s a token can be tumbled. thomas hartman: well, if the anonymity set is large enough. thomas hartman: so… if we’re going to tokenize everything............ thomas hartman: when does the aml/kyc ban hammer slam down? thomas hartman: if you think it’s going to slam down soon, you should probably buy ripple thomas hartman: not soon, or maybe never, bet on strong mixable tokens like omni / open assets patrick dugan: I spoke with the CEO of Bitfinex about letting people buy BTC without a verified account patrick dugan: just deposting it, trading it, withdrawing it patrick dugan: for banks and Tether they have a verified req. patrick dugan: I think from a regulator's point-of-view patrick dugan: there is a boon to all this patrick dugan: because Tumbling is predicated on the liquidity of the tumble pool patrick dugan: so you can build evidence against those guys patrick dugan: charge them all with money laundering, but later thomas hartman: that’s interesting. patrick dugan: and non-tumbled blockchain is pretty great for investigators patrick dugan: just run a regression and collate that with whatever else you have, you just need to pint an eye and a nose to pin the tail on the donkey thomas hartman: essentially this means there is arms race / cat and mouse analogous with $10k use limits currently in place for cash. patrick dugan: so they get the eye from the exchanges which would be otherwise block boxes thomas hartman: you’ll be able to tumble, but only small amounts. patrick dugan: yeah I'm not really worried about it thomas hartman: you can tumble large amounts by batching small amounts under sock puppet’s identities patrick dugan: I had my coming to ceasar moment recently thomas hartman: sometimes regulators will look the other way thomas hartman: and sometimes they will make an example out of you thomas hartman: exactly as now. thomas hartman: I guess that’s how it thomas hartman: it’s going to play out. patrick dugan: All I care about is that we're doing things by the book and so too the organizations we endow, though there is a reg. arb at work there in that we typically endow in jurisdictions that are way more chaotic than the US. thomas hartman: there’s some gray area allowed in the fiat system, because otherwise the peasants revolt if you don’t allow them some degree of privacy thomas hartman: the exact boundaries of the gray area are gray, because that gives you maximum flexibility in terms of who you lock up, how you play favorites, etc. patrick dugan: the interesting thing about publishing an algorithm for free and letting anyone combine collateral like BTC with trading some hedge to issue pegged currency, is that it's a true bearer asset, and essentially everone can do it patrick dugan: so the threshold of revolt you mention patrick dugan: well that's a dialectic for all System D economic growth that governments want to tax to some degree patrick dugan: will blockchain-ization of that shadow economy make it easier or harder for regulators patrick dugan: on decentralized chains maybe harder patrick dugan: on Ripple/Hyperledger-esque systems patrick dugan: easier! patrick dugan: much much easier patrick dugan: it would completely transform the situation in Greece of Argentina patrick dugan: assuming the gov cut rates to a lower level and taxed everyone affordabblly patrick dugan: which is perhaps more credit than I'm willing to give them patrick dugan: but the decentralized economic history is stil history that anyone can analyze patrick dugan: that's why Ecuador is smart patrick dugan: they got ahead of the curve thomas hartman: you won’t be able to get amld/kycd account with tether if you’re in a proscribed country like argentina or greece. but I guess you’ll always be able to get in and out with bitcoin. thomas hartman: the end effect is that tether on poloniex should be worth slightly less than a dollar thomas hartman: but hopefully not too much less patrick dugan: well anyone with verified accounts can arb it patrick dugan: so the discount should be that profit margin patrick dugan: as competitive as it may get thomas hartman: that makes sense patrick dugan: what I've learned doing arb in this space for a while, competitive as it may get may take a long time to get competitive thomas hartman: of course, as soon as there are headlines of drug money or whatever on tether, the discount will increase patrick dugan: but that's part of what I'm doing with this role I play, growing capital by providing liquidity thomas hartman: because now you’re looking at the counterparty risk of the tethers being non-exchangeable while interpol does its thing patrick dugan: I think people will do drug deals - or whatever - with p2p escrow that bonds the payment pending the competion of the deal, and they'll prefer USD with a yield that is also p2p generated and redeemed patrick dugan: but ultimately the only way you institute a criminal penalty for people who publish software is to revoke the 1st amendment patrick dugan: so law enforcement will simply have to adapt to hiring guys who can crunch the data and do investigations aided by that thomas hartman: somebody will tumble + attempt redeem on tether, just to mess with the system patrick dugan: it's called work and it's what they're paid for patrick dugan: likewise mil.gov like NSA will have to adopt better encrypted infrastructure to avoid getting zapped by the Chinese thomas hartman: its not the people who publish the software (they can be anonymous), it’s inconveniencing the actual tether holders when they try to cash in patrick dugan: thing is Bitfinex and Tether are not part of the US SAR system as much patrick dugan: they are in the Eurodollar system already thomas hartman: there’s aml there too, and interpol and and and patrick dugan: so their regulator is the HK monetary authority or the Taiwanese superintendand of banks, and their regulators have not explicated that those who deposit/withdrawal crypto-assets to trade must be verified thomas hartman: but do you expect this situation to continue indefinitely? thomas hartman: especially given the certainty of this avenue for capital flight? patrick dugan: now what you're actually talking about would be like a court precedent to try someone who traded Tether and deposited it as an accomplice to money laundering thomas hartman: it’s just a temporary artifact probably patrick dugan: but in order to set a precedent there would have to be proof of mens rea thomas hartman: yes to your last comment (court precedent) patrick dugan: which is balatantly untenable considering the purely p2p nature of usage in a blind, fungible fashion patrick dugan: if that were possible, people who have handled cash or bitcoins could all be tried for money laundering thomas hartman: well it’s new territory here, but I wouldn’t expect territorial governments to essentially open the floodgates on money laundering / capital flight in fiat currency thomas hartman: just because of some wording on previous precedents thomas hartman: they will at least attempt to lock it down patrick dugan: I mean you're talking about the 1st amendment and the 4th thomas hartman: along the lines I described earlier (fuzzy limits with fuzzy boundaries) patrick dugan: I am not pro-money laundering patrick dugan: I am not Cody Wilson though I enjoy his videos thomas hartman: neither am I, I’m just trying to predict the future thomas hartman: in terms of how this will play out patrick dugan: a Dex is not, like what Wilson said of dark wallet "basically money laundering software" patrick dugan: the chain of addresses is still quite intact thomas hartman: but the tokens themselves can be mixed patrick dugan: I think you're overestimating how effective these tools are for enabling individual actors who are evidentiarily guilty of other crimes to get away with money laundering thomas hartman: at low cost of both time, money and effort (somewhat unlike current laundering techniques) patrick dugan: Dark Wallet sets a precedent where the publishers have free speech rights but arguably the users are accomplices in ML thomas hartman: yes, but bitcoin is infinitely fungible patrick dugan: but having a chain of addresses, and any address in the chain has meta-data associated, you can build a case super easily thomas hartman: with tether, you get stuck holding the hot potato when you try to convert to real dollars patrick dugan: it really helps LE in a lot of ways patrick dugan: tax evasion is the hariest because tax events need context, which is more meta-data than the KYC usually permits thomas hartman: so LE doesn’t have to attack the system, they can just put pressure on the central account keeper patrick dugan: well Dark Wallet being p2p is a precedent that really thumbs the nose patrick dugan: because your central account keeper is every user patrick dugan: so what do you track down IPs and subpeana everyone who downloaded dark wallet thomas hartman: but not the case in tether and similar systems patrick dugan: yeah Bitfinex would not have put their foot on the train tracks if it were otherwise thomas hartman: LE can go to tether and say “these are blacklisted tokens. don’t let users cash out to real dollars until you’ve cleared it with us" patrick dugan: no because they don't have jurisdiction thomas hartman: and I guess they probably will thomas hartman: someone has jurisdiction patrick dugan: they can however charge people with crimes, investigate, and prosecute thomas hartman: there are treaties patrick dugan: HK/Taiwan thomas hartman: there may be a window of confusion, but eventually enforcement will be automatic and global patrick dugan: right let's download those and figure out how, if we were lawyers on such a case, we might defend our client thomas hartman: we’re talking about national sovereignty at stake patrick dugan: anyway Bitfinex will certain disclose all info on Verified users that way patrick dugan: will it eventually? patrick dugan: I've been looking at the TPP thomas hartman: that’s my prediction patrick dugan: it's a NWO-style dealio patrick dugan: there is an agency in Chile that pays people to eat at restaurants and record for any unliscenced music plays patrick dugan: seriously thomas hartman: the ability to track money flows is a tremendous power, that world governments will not give up on lightly patrick dugan: that could apply to subjagating food supply if Monsanto sues a guy for an errant wind-blown grain and the courts ruling in the guy's favor makes the country liable for payments under TPP thomas hartman: essentially they already have for pure crypto, but when it comes to tokens on fiat money, they will up their game patrick dugan: they actually don't' quite have it now patrick dugan: tracking SWIFT through offshore banking centers is possible, but it's a job thomas hartman: sure, it falls into that gray area I was talking about patrick dugan: I just think you're assuming that unilateral authority applies more to various parties, whereas the reality is they hire guys at 150k to sit down and do the hard work thomas hartman: but boundaries are going to shift radically if governments don’t take steps thomas hartman: so my prediction is they will take steps, to preserve not exactly status quo, but not total revolution either patrick dugan: the smartest thing for TBTB to do is adopt Blythe's thing or Eris' thing or Ripple and save money, invite people to use the digital ledger for tax transacitons as well maybe with a credit or a lower rate, and get a bunch of IDs and economic volume in their ledgers thomas hartman: with laundering shifted to block chains the work will be harder in some ways, easier in others patrick dugan: I actually take the possibility of criminals getting away with ransoms and hostage kidnappings seriously patrick dugan: I have thought deeply about this thomas hartman: me too patrick dugan: because I have kids and can entertain paranoia patrick dugan: so ultimately in a place like Argentina, you could sell cold wallets with 10 BTC each to a guy for $1750 each maybe patrick dugan: at present rates patrick dugan: but can you sell 100 of those wallets? maybe the guy will work with you to make it happen patrick dugan: can you sell 100 a month, I don't know if that economy in Argentina is quite big enough patrick dugan: it comes down to the scale of liquidity in the rogue pool thomas hartman: I don’t follow you now patrick dugan: you can properly launder BTC for cash by finding a cash dealer thomas hartman: seems like you’d collect ransom via bitcoin, buy tether to control the exchange risk if you’re worried about that patrick dugan: but people are still laundering money predominantly (like 99.999%) in older methods because those are liquid thomas hartman: and go tether -> bitcoin -> tumbler -> exchange with fake user id -> usd thomas hartman: to spend it in fiat if that’s what you want patrick dugan: haha ransomer doesn't want to be long BTC patrick dugan: too risky thomas hartman: he doesn’t have to be, he can buy tether on poloniex thomas hartman: without passing aml. right? patrick dugan: no Tether now requires KYC for all users thomas hartman: ok, that makes things slightly harder. patrick dugan: though they treat Tether equally to any other coin on there patrick dugan: right so the whiz kid at FinCEN who graphs nodal density in BTC aaddresses is already tracking tumbler pools thomas hartman: got it, tether is functionally traceable like other coins, but requires aml/kyc unlike other coins thomas hartman: on every exchange that allows it patrick dugan: they can model where things go dark and what is coming back to the light from those pools patrick dugan: probably you can untangle BTC blockchain tumbling with the right algo thomas hartman: you could still buy tether via localbitcoin / wot though thomas hartman: “dark tether" patrick dugan: you need the same KYC to do 2k daily withdrawals in Tether as in Moneero or LTC or ETH ect. thomas hartman: no, you can’t untangle tumbling if done right thomas hartman: it currently isn’t done right for the most part, but again that’s just temporary patrick dugan: and p2p local bitcoins will be a thing patrick dugan: I think the only serious thorn in the side of monetary authorities is cash trading for crypto patrick dugan: done p2p, efficiently thomas hartman: currently yes, but that’ll change eventually patrick dugan: like here in Chile they have the Caja Vecina patrick dugan: corner store, bring them some cash, they deposit to your account associated with your ID number at the state bank patrick dugan: if that business model can percolate patrick dugan: and in which countries patrick dugan: like in Chile that's an ID'd, state controlled deal patrick dugan: has similar reach thomas hartman: hmmm interesting patrick dugan: Bolivia is doing a really good job with that as well patrick dugan: met their Payments Director at the cb in Miami the other week thomas hartman: cb? patrick dugan: but in Argentina perhaps patrick dugan: central bank patrick dugan: or throughout Africa patrick dugan: or in rural India patrick dugan: we could see cash/crypto trade that is unlicensed patrick dugan: we could see cash/crypto trade that is licensed patrick dugan: saw a guy on local bitcoins paying a premium for your BTC via cash deposit patrick dugan: but, he's in NYC, so he claims to have BitLicense patrick dugan: which means notes, notes patrick dugan: so you see the problem continues to migrate down the line from the platforms to the individual users, and the inherent degree that the platform, more true of distributed ledgers, automatically informs on bad actors patrick dugan: not without paying people well to do some challenging work, but it's all tractable math and computer science patrick dugan: oh also ring signatures may be the exception to that thomas hartman: well, except the tumbling / ring signatures as you say thomas hartman: it will definitely be possible to break the link thomas hartman: and leave only timing attacks on the anonymity set patrick dugan: an rs blockchain like Moneero, with smart contracts and the growth potential that I am trying to galvanize on Bitcoin, so trillions in System D liquidity in this shadow chain, that could really be a threat to KYC status quo thomas hartman: only a matter of time thomas hartman: confidential transactions on a future bitcoin gives you essentially the same deal thomas hartman: best to treat all these anonymity techs as esentially already done deals when you’re trying to predict the future, imho patrick dugan: yeah but 100,000,000 system d merchants don't think the same way as the 89,000 Poloniex account holders thomas hartman: doesn’t really matter which token they happen in, or all of them, since tokens are interchangeable via exchanges patrick dugan: I wouldn't consider anything a done deal patrick dugan: because user acq. is hard for a social game patrick dugan: it's really hard for money apps patrick dugan: because people need to not just trust it but be comfortable with it patrick dugan: I was just barely comfortable rigging the Geth CLI to fire off some Ether patrick dugan: and I work in this biz patrick dugan: so scale that on down thomas hartman: it’s not a done deal of course, but when you’re doing psychohistory you need to make simplifying assumptions… identify the critical juncture points patrick dugan: if anything I should be more conservative about estimates of adoption thomas hartman: yes I think you should be thomas hartman: aim for traction on small scales in identifiable markets thomas hartman: rather than boiling the ocean thomas hartman: but I think overall you’re doing a great job thomas hartman: tether is a real thing. it’s being used. just figure out what works, and keep growing that. patrick dugan: thank you for your kind words 
submitted by standardcrypto to omni [link] [comments]

FinCEN Director Notes Improved Oversight of Cryptocurrency Industry Risk Watch 122: Key Takeaways from FinCEN's 2016 SAR Report BITCOIN OVER $20,000 Says Novogratz - FinCen & Liechtenstein Crypto Regulation - Medici Bank Crypto Hyperwave - Parabolic SAR's, S&P 500 and Bitcoin Bitcoin: SAR says “BUY” – first time for the last sex months.

FINCEN GUIDANCE 5. transmission) but does so on an infrequent basis and not for gain or profit. 12. 12. 31 CFR § 1010.100(ff)(8). In the case of 1010.100(ff)(8)(ii), the exemption applies only if the person Bitcoin exchanges allow individuals and other entities to transfer fiat currency into bitcoins, and vice versa. Bitcoin exchanges act as brokers that attempt to match two offsetting transactions (buy order and sell order) involving the acceptance of one type of currency and the transmission of another. Exchanges do not hold an According to FinCEN, while Depository Institutions do not currently interact directly with the Bitcoin economy (i.e., accepting deposits in Bitcoin, conducting transactions in Bitcoin, and so forth), they may see cash, ACH, or Wire and Funds Transfer deposits and withdrawals associated with the following entities, as outlined in the SAR Stats. The bullets refer to other activities that may require a form to be filed, but not the SAR. Transporting $10,000 in or out of the U.S. does not generate a SAR, but it has to be reported. This refers to electronic or physical currency, but it has to be dollars, and it doesn't apply to Bitcoin. Same for the next two bullet points. The US Financial Crimes Enforcement Network (FinCEN) has published a new Suspicious Activity Report (SAR) analysis and, notably, the bulletin covers bitcoin. FinCEN, which is a bureau of the

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FinCEN Director Notes Improved Oversight of Cryptocurrency Industry

FinCEN recently published its 2016 SAR Stats Technical Bulletin, which provides an in-depth recap of the all the year's SAR filings. If you're involved in your institution's BSA program, a review ... Hyperwave Channel by Lucid Investment Strategies Co-hosted by D. Tyler Jenks and Leah Wald Lucid Investment Strategies, LLC https://lucidinvestmentstrategies.com Bitcoin ... - Galaxy Digital CEO Michael Novogratz said that he expects bitcoin (BTC) to beat its all-time-high price of $20,000 within 18 months. Novogratz made his remarks during an interview with ... The new FinCEN SAR 1) reduced the amount of characters allowed in the narrative and 2) added an Excel® compatible spread sheet. Banks need to re-evaluate the "5 W's and an H" for the SAR ... In his remarks, Blanco noted that since its publication, the agency has seen a significant increase in Suspicious Activity Reports (SAR): a total of 11,000, of which roughly two thirds (7,100) are ...

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