Former U.S. Drug Enforcement Administration Agent Carl Force has accepted his crimes including money laundering and extortion of Bitcoin and will plead guilty to the charges, Bloomberg Business reported today. Carl Force and Shaun Bridges are the two former U.S. agents convicted of wire fraud, money laundering and stealing Bitcoin during the federal investigations of the Silk Road.

Carl’s acceptance of pocketing thousands of dollars worth of Bitcoin during the investigations comes just days after Shaun W. Bridges pleaded guilty. Investigations conducted by the two tainted officers led to the life imprisonment of Silk Road founder Ross Ulbricht.

The case is USA v. Force, 15-cr-00319, U.S. District Court, Northern District of California (San Francisco).

Force’s Shame

The former US agent set up fake online personas and blackmailed Ulbricht for money in order to keep his identity secured from federal investigators. Force used an online persona “French Maid” to extort $100,000 in Bitcoin. Using this alias and other several Bitcoin and U.S. dollar transactions, Force laundered more than $400,000 in Bitcoin to his personal bank accounts, said a court filing.

Force’s lawyer Ivan Bates and prosecutors have requested a July 1 hearing to submit his guilty pleas.

Shaun’s Crimes

Shaun Bridges, who previously served the US Secret Service as a forensic expert, accepted that he stole $820,000 in Bitcoin, all belonging to the Silk Road founder. Bridges, who will submit his guilty plea to the court on August 31^st this year, will be tried on charges of money laundering and obstruction of justice. It is expected that Shaun Bridges will be awarded a minimum jail time of 10 years.

The Government Must Set an Example!

It is a depressing state of affairs that the one who should uphold the law above all, stooped to such low levels – blackmailing, extortion, money laundering, obstruction of justice – just so that they could fill their pockets. The government must set up a strong example out of them and award them the severest of the punishments.

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Tainted former US Drug Enforcement Administration officer Carl Force has pleaded guilty to extorting Bitcoin from online drug marketplace Silk Road founder Ross Ulbricht. According to his 16-page plea agreement, Carl has pleaded guilty to money laundering and obstruction of justice, Forbes reported earlier today.

Carl is scheduled to be sentenced on October 19 and faces a maximum of 20 years in prison.

Assistant Attorney General Caldwell said, “While investigating the Silk Road, former DEA Agent Carl Force crossed the line from enforcing the law to breaking it.” He added that, “Seduced by the perceived anonymity of virtual currency and the dark web, Force used invented online personas and encrypted messaging to fraudulently obtain Bitcoin worth hundreds of thousands of dollars from the government and investigative targets alike.”

Joshua Horowitz, one of Ross Ulbricht’s defense attorneys told, “The recently filed Complaint which names Carl Force as a defendant demonstrates that the Government’s investigation of Mr. Ulbricht lacked integrity, and was wholly and fatally compromised from the inside.”

A former Secret Service agent Shaun Bridges has agreed to plead guilty of stealing around $820,000 in Bitcoin from Silk Road mastermind Ross Ulbricht. Bridges will file his plea on August 31 and is expected to be served a minimum of 10 years in prison.

Will the Judiciary set an example?

Ross Ulbricht was served life imprisonment in May for managing an illegal online website Silk Road which quickly raked in $200 million in sales. The Bitcoin community is now expecting the US judiciary to award the two corrupt officers harshest punishments as a befitting warning to those who misuse their power and authority to cross the line for personal gains.

But will it? We will come to know about that on October 19 and will relay the information as it comes.

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A bitcoin trader has been complaining about how he had thousands of pounds of cash seized under legislation that is usually used to target drug dealers.

Back in May, Max Flores a 27-year-old Bitcoin trader from Glasgow saw his Bank account frozen. He was then informed the account was being closed and was scheduled to come and collect his funds.

Max went on to retrieve his funds and to understand what was happening but when he got there, he was stopped by the Scottish police who told him it was seizing his cash under proceedings of crime legislation.

Max Flores commented:

“The bank only told me I couldn’t use my account and said it had been frozen until we investigate something. They then said your account is getting closed and asked me to come in and get my money at a specific time and date. I was stopped by the police when I left the bank;  they said you are not under arrest, but we are taking your money.”

He was now under investigation for fraudulent activities. The court then granted permission for prosecutors to hold the money for three months to allow investigations, with allegations of behavior that pointed to money laundering.

Max said he first became interested in bitcoin in 2011 and has been trading the digital currency ever since. Flores believes that his bank filed a suspicious activity report against him but so far was never been given an explanation whatsoever.

Flores said his money totally £5,500 was held for a total of around four months while the bank and police investigated. His money was handed back at the beginning of July after his solicitor appealed the decision, pointing out Flores traded in bitcoins. However, he has lost around £1,200 out of his original £5,500 in legal fees trying to get the money back.

Unfortunately, in banking and law enforcement circles, there is still a suspicion that digital currencies are de facto illegitimate because they are mainly used to perpetrate illegal proceeds of crime transactions and Max Flores was simply a victim of prejudice.

Thankfully Max Flores has been able to solve this issue. He now hopes that authorities learned from the mistakes made in this case so that it won’t be happening to anyone trading bitcoin again.

Source & Image

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In a post penned by the CTO & Co-Founder, Dr. Adam Joyce, UK-based Bitcoin analytics firm Elliptic has announced that it has been awarded Security Project of the Year award by the leading financial magazine, The Banker.

The Banker’s Technology Projects of the Year awards are among the highly coveted in the industry. This year, the magazine received 270 submissions in various categories such as risk management, security, social media, strategic transformation, trading, payments, developers APIs, data and several others. Other winners included JPMorgan Asset Management, BNY Mellon, Citigroup, BBVA, OTP Bank and ParFX Prime.

The Banker awards judges explained:

Sound storage and management of blockchain technology has become imperative in today’s market … Elliptic Vault addresses these key security issues. Projects such as Elliptic Vault could help make Bitcoin more attractive to relatively conventional or conservative financial institutions that still shy away from this new technology and its security issues.

James Smith, CEO and co-founder at Elliptic said,

“Bitcoin and other blockchain-based assets operate as bearer instruments – if you lose the key, you lose control of the asset. It is, therefore, essential that companies using this technology protect their keys in the most secure way possible. Elliptic Vault provides that enterprise-grade security, giving the user confidence that their blockchain assets are safe.”

Elliptic Vault is among the most trusted custodian services for institutions. It is the first company to have been insured by a Fortune 100 insurer and the first in the UK to have received VC funding.

To tackle the ever-growing menace of the money laundering, the company recently launched an interactive visualization tool – The Bitcoin Big Bang – that marks more than 250 prominent entities and identifies the historical transactions between them.

The security and analytics firm also partnered with Bitcoin derivatives exchange Crypto Facilities to bring enterprise standards to Bitcoin trading.

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As the popularity of virtual currency reaches a new crescendo so is the demand to regulate it. The latest one jumping on the ‘regulate digital currency’ bandwagon is the Central Bank of Nigeria (CBN) which wants the transactions to remain strictly under control.

The concerns over the virtual currencies were shared by the Director in charge of the Financial Policy and Regulation Department of the CBN, Mr. Obot Akpan, on behalf of the Deputy Governor, Financial System Stability, of the (CBN) Dr Okwu Nnanna in Abuja. He was speaking at the 2nd Anti-Money Laundering/Combating Financial Terrorism Stakeholders Consultative Workshop organized by the Association of Certified Anti-Money Laundering Specialist (ACAMS).

Akpan minced no words when he said that the “virtual currency is dangerous because it is not a legal tender of any country hence it has a borderless nature without jurisdiction which makes it a channel for money laundering.”

Speaking in the same vein Akpan noted that the “Financial Action Task Force (FATF) has observed that the virtual currency payment products and services (VCPPS) present opportunity for money laundering and has crime risk that must be identified and mitigated. Virtual currencies present a wide range of issues and challenges that require financial authorities to consider it properly, as the challenges posed are unique and call for an urgent response.”

Also, he said that Nigeria will be under the lens of FATF next year and if at any stage, the country is found lacking in its attempts to prosecute financial criminals then it may find itself in a soup.

This warning by CBN bigwigs is of significant value as many countries are pushing the envelope in trying to regulate virtual currencies. We had earlier reported about Japan, Germany and several other countries studying ways to ensure the regulation of transactions done in the case of digital currencies.

In June this year, the Group of Seven leaders had also agreed to take measures against terror funding and regulate Bitcoin and other virtual currencies.

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Virtual currency firm HashingSpace Corporation has announced that it has filed its Registration of Money Service Business (RMSB) form with the U.S. Financial Crimes Enforcement Network (FinCEN).

The Bitcoin ASIC mining and hosting company’s decision was announced by Terry Taylor who is the Chief Financial Officer of HashingSpace. Announcing the decision of the company she said, “we are pleased to announce the completion of this vital step towards full compliance with the federal regulations applying to our business.”

She also tried to address concerns of law enforcement official who have been suspicious of the Bitcoin’s abuse by anti-social elements. Adding more to her comment she vowed that “money laundering, terrorist financing and other illicit activity have no place in our financial system, and HashingSpace is committed to developing a comprehensive culture of compliance to ensure it stays off of our network. At the same time, our proprietary policies and procedures minimize the friction usually experienced by customers signing up for a regulated service.”

FinCEN is a bureau of the United States Department of the Treasury and has been formed with the aim to protect the financial routes from being abused for money laundering and also to safeguard national security via collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.

HashingSpace has been making all the right moves these days, just a few days back we had reported that it has launched a Bitcoin mining pool called Hashpool.com that also has iOS and Android Apps for miners to give them a better experience.

The company has on several occasions expressed its commitment to put together key infrastructure so that the Bitcoin usage could be spread universally. It strives to extend the use of this infrastructure for Bitcoin Mining Farms, ASIC Miner Colocation, ATM’s and Wallets as it sees more growth in this market.

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HashingSpace Corporation has reinforced its commitment for cleaner online transactions via its platform, by clinching an agreement with the anti-money laundering and regulatory compliance platform IdentityMind Global™.

Earlier we had reported that this Washington-based Bitcoin company had filed its Registration of Money Service Business (RMSB) form with the U.S. Financial Crimes Enforcement Network (FinCEN).

Announcing the agreement, Timothy Roberts, CEO of HashingSpace said that “IdentityMind Global™ provides HashingSpace with the complete suite of risk monitoring and anti-money laundering technology we need to comply with regulation anywhere in the world. Money laundering is an issue we take seriously, and compliance issues are a complicated obstacle that companies in our space have to stay current with. IdentityMind’s complete risk and AML solution will give us the capabilities we need to identify and prevent these issues.”

Continuing in the same vein Roberts said that “We have to make sure our company, customers and shareholders are protected. IdentityMind Global’s™ proprietary technology matches all the parameters captured from a transaction to find suspicious signs of identity theft and fraud.”

Echoing the sentiments expressed by the CEO of HashingSpace, Jose Caldera, IdentityMind VP of Marketing & Product said that “these companies are genuinely trying to do things right, to protect their customers, and prevent their businesses from facilitating criminal activity. We’re proud to provide the KYC, fraud prevention, and monitoring technologies these businesses use to identify and prevent  any suspicious activity, as part of their AML program to comply with U.S. and international regulations.”

It should be noted that while IdentityMind Global™ is an established name and provides anti-money laundering and compliance services for Bitcoin in 4 continents, HashingSpace Corporation is a Bitcoin company which aims to expand its data centers to help cater to the ever-growing Bitcoin industry with low cost but safe and compliance-friendly solutions.

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Pascal Reid, a Bitcoin dealer was accused of money laundering after selling bitcoins to an undercover agent. Now, in exchange for a reduced charge, he has agreed conduct training seminars on digital currencies for law enforcement officials about digital currencies.

Reid and his associate Michel Abner Espinoza, 31, were arrested back in February 2014 under the accusation of money laundering involving bitcoins.

It all happened when Pascal Reid tried to sell a Secret Service agent $25,000 worth of bitcoins. The undercover agent tried to purchase $30,000 from Espinoza as well. They scheduled the deal but they never got to close it because Espinoza was concerned the cash might be counterfeit.

Pascal Reid, 30, pleaded guilty in Miami state court to the less serious charge of operating an unlicensed money-transmitting business as part of the plea agreement. Prosecutors dropped a second money-laundering charge earlier.

Reid said in a statement to Bloomberg News

“I regret not recognizing that my actions, without keeping records and complying with reporting and licensing laws, could benefit criminals. I hope that my experience and knowledge of the bitcoin world and practices can now help law enforcement uncover and prevent criminal activity.”

According to the filings, the officers found Espinoza and Reid on LocalBitcoins. The undercover officers told both men they were using the digital currency to buy stolen credit-card numbers.

Espinosa got lucky. His associate on the other hand, wasn’t so lucky and was indicted for the crime of money laundering.

Pascal Reid was sentenced by Circuit Judge Diane Ward to 90 days in jail, with credit for the five weeks he has already spent behind bars, which had been part of the plea deal. In order to see his charge substantially reduced he agreed to conduct 20 training seminars on digital currencies for law enforcement and financial professionals as a part of his five years of probation.

Source & Image

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Bitcoin has seen several twists and turns in its short story and has been under the lens of law enforcers on charges of aiding money laundering, terrorism, and many other illegal activities as well.

Bloomberg Business article, which highlighted the drop in Bitcoin-related investments in the last quarter ($373 million in the first half of 2015, whereas just $85 million in the latest one), is, therefore, one of the many challenges for this virtual currency.

In a recent Deloitte report too, the highlight was how to regulate the Bitcoin and also whether it is still too early to do so.

We can, therefore, see, that virtually, everyone is discussing this digital currency and the businesses around it, hoping to see a glimpse of its future.

Jeff Garzik, the CEO of Dunvegan Space Systems, recently refrained from speaking clearly on this topic.

He is also featured in the Bloomberg article where it has been highlighted that his fundraising efforts, pertaining to a recent venture, have failed to yield positive results.

It does not help the nascent Bitcoin industry, that Jeff is one of the most noted names of this field, therefore, his lackluster effort could signal tough times ahead for the Bitcoin startups.

So bad was the outcome of his fundraising efforts that on October 13, Garzik shot an e-mail to the consumers and partners, where he wrote that he’d decided to put his company, Dunvegan Space Systems, in a “deep freeze.”

However, let us consider the other side of the picture; it is also quite likely that the fundraising efforts failed due to lack of interest in the proposed project.

Or it is also possible that the investors who have been investing heavily in this field would like to see some positive outcome before they move ahead and put more money here.

What is also equally noteworthy is that the technology behind the virtual currency Bitcoin, the blockchain, has also drawn a lot of attention of the experts and has several financial conglomerates investing heavily in it.

To sum up in the words of Jeff Garzik himself, “It is the very early days yet,” so it makes sense to not be in any haste to draw conclusions.

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Even though retail bank fanatics and policy makers always blame the anonymity of bitcoin and claim that it is why bitcoin can be used in money laundering, the fact is that Fiat cash is the ultimate form of anonymous currency. Researchers have proven recently that the US $100 bill is the most commonly used currency for laundering the revenue of illicit activities.

Professor Edgar Feige believes that the US Dollar is the preferred currency for facilitation of various clandestine transactions, and for saving illicit and untaxed profits. Various reports point to the fact that almost 50% of the world’s hard currency is utilized to conceal transactions. Illicit transactions include drug and arms trafficking, in addition to unreported streams of income to skirt tax records.

Similarly, Fiat cash and bitcoin share a crucial property that renders them both perfect for various forms of illegal activities; neither demands a subpoenable, institutional intermediary. Tracking a bitcoin transaction between two parties is as hard as it is to track the location of a briefcase stuffed with US $100 bills. Just like fiat cash, there is nothing nefarious about the blockchain, but it is the electronic nature of bitcoin that creates a brand new wrinkle, as it can be sent online, instead of requiring people to meet in the real world.

In the imagination of many, Bitcoin is linked to online drug trafficking, unsavory figures and the risk to be exposed to hackers. This is not entirely untrue, as bitcoin has been used as the sole payment method for mail-order street drugs and firearms online black markets. It has been also a key component of today’s Ponzi schemes. However, drugs and firearms can also be purchased for US Dollars, so should we also blame the USD too for these illicit activities?

Bitcoin and Policy Makers:

Although policy makers and legislators claim that they are trying to protect the society from the hazards of bitcoin use, in my opinion, the truth is that they are protecting the retail banking industry that can become obsolete, if bitcoin was to be globally adopted on a wider scale.

The IRS still considers bitcoin a property, not a currency, which limits the feasibility of doing bitcoin businesses in many states. Moreover, the latest regulation of the European Parliament regarding transfer of funds (20 May 2015) has put a lot of restrictions on money transfers that point to the fact that Europe will not be comfortable soon with an anonymous virtual currency like bitcoin.

Legislators must create a secure system that treats Bitcoin only as a currency which allows merchants and customers to rely on cryptocurrency as a lawful exchange medium. The IRS requires bitcoin holders to declare taxes on their capital gains which is a cumbersome, if not an impossible task to accomplish. Also, it is totally irrational to consider Bitcoin an investment asset, instead of a currency; all of this has to change.

Nonetheless, I believe that lawmakers will never legalize bitcoin until it is deanonymized, with a claim that this is the sole way to rid bitcoin of its negative connotations!!

Share your opinion on this with us here on NewsBTC.

References:

1. Chris Arnold, Should We Kill the $100 Bill?, NPR’S PLANET MONEY (Aug. 14, 2014), http://www.npr.org/blogs/money/2014/08/14/340356790/should-we-kill-the-100-bill.
2. Edgar L. Feige, New estimates of U.S. currency abroad, the domestic money supply and the unreported Economy (Munich Personal RePEc Archive, Paper No. 34778, at 4, http://mpra.ub.uni-muenchen.de/34778/1/MPRA_paper_34778.pdf (Sept. 2011).
3. Kenneth Rogoff, Costs and benefits to phasing out paper currency 4 Presentation at NBER Macroeconomics Conference (April 11, 2014), available at http://scholar.harvard.edu/files/rogoff/files/c13431.pdf

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The concept of digital currency was well-known way before Bitcoin and consorts staked their claim. One of the most notorious digital currencies in history is Liberty Reserve, which ultimately failed because it was still centralized. Furthermore, the founder of Liberty Reserve pleaded guilty to money laundering recently, a concept that is not possible with Bitcoin by any means.

Liberty Reserve Founder Dug His Own Grave

One of the main reasons why Liberty Reserve became so popular and well-known throughout the years is because this digital currency was used for criminal activities all over the world. Laundering money online was never easier than by using Liberty Reserve, as this particular digital currency was completely anonymous from day one.

It should come as no secret to find out the founder of this once popular digital currency was guilty of criminal activities himself. Based on a report by the United States Department of Justice, Arthur Budovsky pleaded guilty to laundering money worth more than US$250 million through the Liberty Reserve protocol.

U.S. Attorney Preet Bharara of the Southern District of New York stated:

“Arthur Budovsky founded and operated Liberty Reserve, an underworld cyber-banking system that laundered hundreds of millions of dollars in illicit proceeds for criminals around the world. The only liberty that Budovsky and Liberty Reserve promoted was the freedom to commit and profit from crime.  Thanks to this truly global investigation that included cooperation from 17 countries, Liberty Reserve has been shut down, and its founder Arthur Budovsky stands convicted in an American court of law, facing the loss of his own liberty.”

People who have ever read about Liberty Reserve in its prime may remember high the digital currency was touted as the largest money transfer system of the world. With its anonymous appeal and untraceable transactions, the digital currency gained a lot of attention from people looking to perform less than legitimate tasks over the Internet.

It would only be a matter of time until US government officials decided to take a closer look at the Liberty Reserve scheme. To prevent that from happening, Budovsky moved to Costa Rica, which has no extradition policy with the US. Furthermore, Budovsky renounced his US citizenship in 2011, cutting all ties with his nation of birth.

Liberty Reserve was a preferred method of payment in the credit card fraud industry. Hackers who obtained databases full of credit card records would accept Liberty Reserve payments in exchange for consumer information. As the system was completely anonymous, there was no way to link these individuals to those activities.

At its peak, the formerly popular digital currency had over 5 million accounts around the world, and millions of transactions had been processed at that time. Plenty of funds was laundered by the founder and a small group of other co-defendants. The US government eventually managed to shut down the platform in 2013.

Bitcoin is Completely Transparent, And Companies Are AML Compliant

Unlike Liberty Reserve in the past, Bitcoin is a completely new breed of digital currency. Even though mainstream media will keep telling people how Bitcoin is completely anonymous, the blockchain is a public ledger where anyone can track any transaction in real-time. But that is not the only aspect that makes Bitcoin so appealing to people from all over the world.

Money laundering through Bitcoin is simply not possible, as all companies in this space are working hard to be fully compliant with AML and KYC regulations. Doing so removes the last layer of illusionary anonymity people might associate with Bitcoin. Bitcoin is one of the last favorable tools among internet criminals these days, simply because it is far too transparent.

Source: Justice.Gov

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Bitcoin is, in the public perception, a traditional form of finance that eludes governments and law enforcement all over the world. Media outlets tend to call the digital currency “impossible to trace”, even though all transactions are publicly listed on the blockchain in real-time. To further solidify that statement, Chainalysis decided to come up with a business model that further prevents money laundering attempts in the Bitcoin world. Europol has taken notice of this startup, and enlisted the company’s services.

Also read: Sony Embraces Bitcoin Technology To Revamp Education System

Preventing Digital Currency Money Laundering

Even though it is rather easy to trace Bitcoin transactions on the blockchain in real-time, there is no direct way of figuring out the identities behind these wallet addresses. Bitcoin does not transmit personal details when sending or receiving money around the world, which can be an issue regarding money laundering attempts.

Companies active in the digital currency space have taken notice of this potential problem, and startups such as Chainalysis specialize in countering money laundering and fraud in the world of digital currency. It is important to keep in mind fraud in the Bitcoin space has nothing to do with chargebacks, but rather with hackers trying to double spend funds, or using money from a stolen account to pay for goods and services.

Digital currencies should never become the tool of preference for criminals, although those behind popular ransomware solutions prefer Bitcoin over any other payment method. Up until this point, there is no clear way for law enforcement to resolve the identity of Bitcoin users. Keeping in mind how money laundering is a preferred method of transferring funds around the world for [online] criminals, issues like these need to be addressed.

Chainalysis operates in a very simple yet powerful way, as they track digital identities linked to digital currencies. Their in-house developed software solution flags any suspicious activity associated with any digital currency address, and provides law enforcement with a range of investigative tools. This makes Chainalysis an invaluable partner for agencies such as Europol.

It comes as no surprise to find out Europol’s European Cybercrime Center has agreed to a partnership with Chainalysis. This announcement comes at a time in which digital currencies are gaining a lot of momentum, and this partnership will help bring more legitimacy to Bitcoin and other alternative forms of finance.

Cyber crime is a serious threat to citizens and companies all over the world. Due to the evolution of technology, hackers get more creative regarding attack vectors against individual users and companies. In a lot of cases, Bitcoin is being used as a payment method for ransom or extortion fees. Chainalysis and Europol want to put this matter to bed, and collaboration between Bitcoin startups and law enforcement will be very beneficial to the digital currency ecosystem.

Chainalysis Raises US$1.6m In Funding

Europol is not the only one taking notice of the business model offered by Chainalysis. Coming up with proper tools to fight potential money laundering in the Bitcoin world is much needed, and will help silence some of the digital currency’s biggest critics. But developing such a powerful and potent solution requires a lot of money.

Luckily for Chainalysis, they recently closed a US$1.6m funding round, led by Point Nine Capital. Other investors were Digital Currency Group, Converge Venture Partners, Techstars, and FundersClub. What is of particular interest is how all of these companies are active in the Bitcoin world, other than Berlin-based Point Nine Capital. .

Source: Reuters

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Many people often tout Bitcoin as a perfect tool to launder money and sluice funds to offshore bank accounts. But if there’s one thing the Panama Papers leak has taught the world, it is that people won’t go through all of that trouble when the traditional financial ecosystem offers a far more convenient solution to perform money laundering on a global scale.

Also read: Ethereum Price Technical Analysis 04/07/2016 – 100 MA As Resistance

The Legacy System Makes Money Laundering Relatively Easy

Anyone who would be looking to participate in money laundering through offshore bank accounts has no reason to go through the trouble of dealing with Bitcoin exchanges or ATMs. In fact, the popular digital currency is far too transparent to move funds around anonymously, as there several initiatives focusing on blockchain analysis to prevent suspicious Bitcoin activities.

Moreover, the Panama Papers story has shown the world why the banking system is far better equipped to move funds around the world in an anonymous and convenient manner. However, money laundering is not the only issue, as these documents show how companies and wealthy individuals were aided in evading taxes and dodging sanctions as well.

As people would come to expect from such an announcement, money laundering is a crime anyone can commit. Especially now that several current and former heads of state and people linked to world leaders have been unmasked for their money laundering practices, things are bound to get interesting. Using banks and other traditional financial institutions for this particular type of “business” is convenient, but the truth always comes out in the end.

In fact, there are so many different tax havens around the world, which are only made possible thanks to the existing financial ecosystem. It comes as little to no surprise to find out governments around the world are opposing Bitcoin, as it would make their way of money laundering completely impossible. Transparency in the financial sector is a positive aspect for people who have nothing to hide, yet it would be a particular concern for those looking to participate in money laundering.

In the end, Bitcoin is a lot harder to move funds into and out of it – in fiat currency – compared to the banking system. Banks around the world are interconnected, whereas bitcoin operates outside of the realm of traditional finance. Moreover, buying and selling Bitcoin is subject to KYC and AML regulation, whereas tax havens such as the Cayman Islands are not too bothered about where the funds are coming from.

Source: BBC

Header image courtesy of Shutterstock

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Bitcoin regulation is a very touchy topic. The regulators don’t want some open source, decentralized currency to take reigns of their country’s economy. At the same time, they don’t want to lose out when speaking of the blockchain technology or the possibility of creating their own digital currency.

While these regulators try to find ways to get what they want without jeopardizing the potential benefits of the “rogue currency” and its underlying technology, most of them tend to do so armed with incomplete information.

The European Union nations have been calling for the digital currency to be regulated. Their attempts got the much-required momentum after rumors claimed that the terrorists responsible for attacks in Paris used bitcoin to finance their operation. These rumors were put to rest later by the Europol investigation which didn’t find any evidence of bitcoin’s involvement in the attacks, but still there is plenty of pressure from the member nations at the European Parliament to regulate digital currencies.

There are a few logical voices in the parliament that call for proper due process and a better understanding of things before introducing any legislation against things unknown. in this case, it is bitcoin.

Recently, Antanas Guoga, a member of the European Parliament and an entrepreneur has recently been vocal about bitcoin regulations at the IMCO committee in the European parliament. In his speech he talks about the importance of bitcoin and how different it is from the traditional banking system. He also asks his fellow members whether any of them have ever used bitcoin? Unless they have a firsthand understanding of what bitcoin is and how it works, they will be in no position to pass a judgment on it. He urges his fellow politicians to fist buy some bitcoin and try using it before introducing regulations.

While Antanas Guoga’s comments are directed towards those who do not know about bitcoin, the recent article on WIRED mentioning the need for bitcoin regulation doesn’t do justice to the digital currency and its underlying technology. The article titled “We Must Regulate Bitcoin. Problem is, We don’t Understand It.” talks about the various uses of bitcoin and gives the standard list of reasons to call for its regulations. The list of reasons, which everyone must already know – money laundering, tax evasion, its use on deep web marketplaces etc.

The only difference between WIRED’s article and the arguments by the regulators who have no clue about bitcoin is that the article calls for regulations at a later stage. In an article published on the website Liberty.me, the author Tomas Forgac points out the lack of evidence to call for bitcoin regulations and the serious consequences regulations may have on bitcoin and its underlying technology. It is highly impossible to regulate something without any repercussions or consequences. Introducing bitcoin regulations may be an easy task, but it may lead to a series of unintended consequences which may end up criminalizing normal social and economic behavior.

The debate on bitcoin regulations is an ongoing one and it is not going to end anytime soon. However, the longer it goes on, the more sensible the eventual regulations be.

Ref: Youtube | WIRED |Liberty.me | Image: Regulations - Tom Magliery

Disclaimer: The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of NewsBTC

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It needs no explanation the financial ecosystem as we know it is being attacked from all angles. That is only made possible because they have been doing some dirty things behind the scenes. Albeit the HSBC bank should have been prosecuted back in 2012 for money laundering, the DOJ decided not to. After all, it would cause “global financial disaster”. So are banks absolved from any wrongdoings now?

Although very few people seem to know about this, a new US Congressional report shows HSBC was involved in money laundering in 2012. The Department of Justice could have easily made a case and prosecute the bank and all of its top-brass employees. However, they decided not to do so, out of fear of the financial turmoil it would cause.

HSBC Is Clearly Above the Law

The charges would have been quite severe, as HSBC was involved is letting drug cartels use US bank accounts to launder money. Instead of facing criminal charges, the bank paid nearly US$2bn as a settlement. Moreover, none of the institution’s top officials faced any charges during the process.

That being said, no one should be above the law, especially not when the evidence is clearly visible. Given the position of power HSBC holds, they got away with their money laundering and were penalized in a financial way. The fact that none of their top brass faced charges does not sit well with most people. Apparently, once you work for a bank, you become “untouchable” by the law.

But there seems to be a lot more to this story than just the “importance” of HSBC in the financial world. Current FBI Director Comey joined the bank back in 2013, shortly after the money laundering allegations were made. To this day, it remains unclear if his appointment was part of the deal to not face criminal charges.

If that isn’t enough, there is also the connection between HSBC and the Clintons. The Clinton Foundation received US$81m in funds from clients of the HSBC bank in 2015. Whether or not this was another attempt to launder money through the bank’s accounts, is anybody’s guess at this time. Any activity related to this institution should be thoroughly screened, as they have built up a mischievous reputation, to say the least.

To put this into perspective, Silk Road operator Ross Ulbricht received a severe sentence for his actions on the dark net. Albeit the funds involve don that platform was a lot lower compared to what HSBC pulled off, the latter got away with it. This goes to show how biased the legal system in, and who truly holds the power in this world.

Source: Zerohedge / InvestmentWatch blog

Header image courtesy of Shutterstock

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The recent judgement by the Miami-Dade Circuit Court declares that the popular digital currency, Bitcoin can’t be considered as money. The decision made by Judge Teresa Mary Pooler exonerates Michell Espinoza from the charges of illegally selling virtual currency and money laundering.

Michell Espinoza, the defendant in the case was arrested by the police as a result of an undercover operation. He was caught while attempting to sell $1500 worth of Bitcoin to undercover officers who informed him that they wanted the digital currency to procure stolen credit card information.

Michell Espinoza and his associate Pascal Reid were arrested while making an exchange and charged with laundering and illegal selling of digital currency. Pascal Reid was sentenced to probation after he pleaded guilty. Michell Espinoza went to trial with the lawyers Prieto and Rene Palomino representing him, says the reports on a local news publication.

The criminal charges brought about by the police department was thrown out by the Judge earlier today after concluding that Bitcoin doesn’t qualify as money. The proceeding involved testimonies and witnesses from both prosecution and the defense. Charles Evans, a Barry University economics professor was one of the expert witnesses who explained to the court about Bitcoin and how it doesn’t qualify as money. He is said to have received $3000 in Bitcoin to provide the testimony.

Charles is said to have explained Bitcoin by saying,

“Basically, it’s poker chips that people are willing to buy from you,”

Charles also claims that he has been involved with virtual currencies since they first made an appearance early in the 1990s until Bitcoin and other digital currencies. He is also involved in a non-profit called Conscious Entrepreneurship Foundation which helps small businesses in developing nations.

In the ruling, Judge Teresa Mary Pooler mentions that Bitcoin is not backed by any government or bank and it is not a tangible wealth that can be hidden under a mattress like cash and gold bars. Bitcoin still has a long way to go before it can be considered as an equivalent of money. The money laundering law according to Florida statute is too vague to be applied to Bitcoin.

The prosecution of Michell Espinoza has been one of the most closely followed cases by those in digital currency and financial sector as it could potentially pave the way for new legislations. The present outcome of the case may set a legal precedent which maybe use referred to in the future cases involving illegal Bitcoin trading.

Ref: Miami Herald | Image: Shutterstock

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Chinese Bitcoin exchange OKCoin was recently fined for unknowingly aiding money laundering operations on its platform. The Beijing-based company, which records the maximum daily Bitcoin volume, has been ordered by the Heilongjiang Provincial Court to cough up 627,569 Yuan (around $94,000) in damages. As per the ruling, OKCoin had flawed AML and KYC policies in … Continue reading Bitcoin Exchange OKCoin Fined in Money Laundering Case

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Exciting things are happening in China, albeit money launderers will not agree with that statement. Beijing authorities are collecting all of the dirty money in the country. Several hundred people have been arrested who are involved in illegally transferring money out of China. In fact, a total of 192 locations were discovered were illegal banking … Continue reading China Going After Dirty Money Creates Bitcoin Momentum

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Germany is leaning hard on drug trafficking over deep web. In a recent development, the German law enforcement authorities have seized over $400,000 in Bitcoin from four deep web drug dealers they arrested. Since last month, Germany has stepped up its investigations into “illegal” dealings on cyberspace. According to reports, the four arrests were made … Continue reading Deep Web Busts, Theft and Recovery of Bitcoin

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Bitcoin ATMs have been relatively safe from any gang-related activity so far. That situation has come to change, as fraudsters are using these devices to launder money, according to KrebsOnSecurity. By hacking bank accounts, they deposit funds into money mules’ accounts. These mules then withdraw funds in cash and remit the stolen funds through one … Continue reading Criminals Direct Money Mules to Bitcoin ATMs to Launder Hacked Funds

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