[ExI] State crackdown on Bitcoin?

Giulio Prisco giulio at gmail.com
Mon Jun 24 09:41:12 UTC 2013

The BTC Foundation is a public relation front-end. Bitcoin is the
people using Bitcoin, there is not much that they can do to stop them.

On Mon, Jun 24, 2013 at 2:37 AM, Gordon <gts_2000 at yahoo.com> wrote:
> The Bitcoin Foundation is not a money transmitter, so this cease and desist
> order is ridiculous. Actual money transmitters need to be registered. We
> might see more news on this if any non-registered transmitters are operating
> in California. But I don't see it as a crackdown on Bitcoin.
> Gordon
> ________________________________
> From: James Clement <clementlawyer at gmail.com>
> To: ExI chat list <extropy-chat at lists.extropy.org>
> Sent: Sunday, June 23, 2013 5:36 PM
> Subject: [ExI] State crackdown on Bitcoin?
> Bitcoin Foundation Receives Cease And Desist Order From California
> [Disclosure: Author serves on Board of Directors for Bitcoin Foundation.]
> Directly following last month’s Bitcoin 2013 conference event in San Jose,
> CA that brought decent revenue into the state, California’s Department of
> Financial Institutions decided to issue a cease and desist warning to
> conference organizer Bitcoin Foundation for allegedly engaging in the
> business of money transmission without a license or proper authorization.
> If found to be in violation of California Financial Code, penalties can be
> severe ranging from $1,000 to $2,500 per violation per day plus criminal
> prosecution which could result in fines and/or imprisonment. Additionally,
> it is a felony violation of federal law to engage in the business of money
> transmission without the appropriate state license or failure to register
> with the U.S. Treasury Department. Convictions under the federal statute are
> punishable by up to 5 years in prison and a $250,000 fine.
> The Bitcoin Foundation is a nonprofit corporation registered in Washington,
> D.C. with mailing address in Seattle, WA. As a nonprofit, its mission is to
> standardize and promote the open source Bitcoin protocol and they receive
> generous support from individuals and corporations to advance those
> objectives.  The foundation also boasts significant international
> membership.
> One activity that the foundation does not engage in is the owning,
> controlling, or conducting of money transmission business. Furthermore, that
> activity would also be against the original charter of the foundation. As
> general counsel for the Bitcoin Foundation, Patrick Murck has lead
> responsibility for corresponding with the California Department of Financial
> Institutions.
> At this stage, it’s difficult to tell whether or not it was a general
> blanket action and if other bitcoin-related entities received cease and
> desist letters from California. If Bitcoin Foundation was not the only
> recipient, then expect other companies to come forward in the days and weeks
> ahead.
> The issued letter was signed by State of California Senior Counsel Paul T.
> Crayton and the letter was copied to Department of Financial Institutions
> Deputy Commissioner Robert Venchiarutti, who also serves on the Board of
> Directors of the Money Transmitter Regulators Association , ironically a
> national nonprofit organization dedicated to the efficient and effective
> regulation of the money transmission industry.
> Recently, the State of Illinois also issued a cease and desist letter to
> mobile payments processor Square for failing to have the proper licensing in
> accordance with the state’s Transmitters of Money Act. Prepaid card provider
> NetSpend and six other payments companies also received Illinois cease and
> desist orders. If this practice grows among states, it could have a
> potentially significant “chilling effect ” on financial services innovation,
> especially upon lawful businesses that are designing infrastructure to
> support and grow the Bitcoin technology.Freedom of choice in currencies is
> probably the most important free speech issue of our time.
> For similar but not wholly unrelated reasons, the Electronic Frontier
> Foundation and several law school clinics established the collaborative
> archiveChilling Effects Clearinghouse in 2001 to protect lawful online
> activity from harassing legal threats related to intellectual property.
> Harkening back to the saga of FaceCash and Aaron Greenspan, this new
> far-reaching action from California’s financial regulator apparently now
> scoops up nonprofit scientific and educational organizations. California,
> the cradle of technological innovation and home to the inspiring Silicon
> Valley venture capital community, is now focusing its sights on the
> futuristic Bitcoin.
> http://www.forbes.com/sites/jonmatonis/2013/06/23/bitcoin-foundation-receives-cease-and-desist-order-from-california/
> James
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