Bitcoin Foundation Receives Cease And Desist Order From California

California’s Department of Financial Institutions has 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, reports Forbes.

Forbes continues:

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, their mission is to standardize and promote the open source Bitcoin protocol and they receive generous support from individuals and corporations to advance those objectives[...]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[...]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.[...]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.