Saturday, April 5, 2014

Cathy Reisenwitz Takes On Money Laundering Theory

Cathy Reisenwitz  continues to amaze, following her turning of Austrian methodology on its head (SEE: A "Humanitarian" Libertarian Considers the Hyper-Inflations of the Weimar Republic and Zimbabwe "Experiments"), she  now has moved on to the world of money laundering theory. In a post titled, What Might Ulbricht’s Defense Mean for Charlie Shrem?, she writes:
Ross Ulbricht, alleged Silk Road HBIC, is claiming that new federal bitcoin laws classifying bitcoin as assets and not money invalidate the money laundering charges he faces. In short, he argues that you can’t launder money if you’re not using it.
Earlier this year, Robert Faiella, 52, and Charlie Shrem, 24, were arrested on federal money laundering charges for their bitcoin activity on Silk Road. It would stand to reason that if Ulbricht did not break anti-money laundering laws, they didn’t either. The two allegedly sold more than $1 million in bitcoin to Silk Road users. Selling assets isn’t money laundering.
Before I discuss Reisenwitz "advancements"  in money laundering theory, I do want to make clear that money laundering law is outrageous and that it would have no place in a libertarian society. "Money laundering" is simply an attempt to operate beyond the clutches of an oppressive government.  Shrem and Faiella from a libertarian perspective have done nothing wrong. The running of Silk Road, as it is alleged Ubricht did, would also not be a problem in a libertarian society.

Now lets move on to Reisenwitz's theory. Ulbricht's lawyer makes a valid point that if Bitcoin isn't money, Ubricht couldn't be involved with money laundering, since what was going on at Silk Road was the exchange of bitcoins for drug etc. No money was being exchanged.

However, the Reisenwitz attempt to expand this to the Shrem case is absurd. Money was allegedly used in the Shrem case, where individuals were attempting to exchange dollars for bitcoins. As long as money is used on one side of a transaction, money laundering, as defined by the government can occur. That's why you occasionally see auto dealers charged with money laundering. SEE: President of Car Dealership Sentenced to 40 Months for Money Laundering for the Gulf Cartel.

In another case, Trio of Used Car Salesmen Plead Guilty in Money Laundering Conspiracy, Forfeit Almost $12 Million, Christopher A. Henry, IRS Special Agent exlained the government view on money laundering:
Structuring financial transactions to avoid currency reporting requirements is a criminal violation of federal law under the Bank Secrecy Act. Deliberately avoiding BSA requirements is a form of money laundering.
This is part of what Shrem has alleged to have done. From a press release of the US Attorney's Office of the Southern District, when Shrem was arrested:
SHREM is also charged with willfully failing to file any suspicious activity report regarding FAIELLA’s illegal transactions through the Company, in violation of the Bank Secrecy Act...SHREM knowingly facilitated FAIELLA’s business with the Company in order to maintain FAIELLA’s business as a lucrative source of Company revenue. SHREM knowingly allowed FAIELLA to use the Company’s services to buy Bitcoins for his Silk Road customers; personally processed FAIELLA’s orders; gave FAIELLA discounts on his high-volume transactions; failed to file a single suspicious activity report with the United States Treasury Department about FAIELLA’s illicit activity, as he was otherwise required to do in his role as the Company’s Compliance Officer; and deliberately helped FAIELLA circumvent the Company’s AML restrictions, even though it was SHREM’s job to enforce them and even though the Company had registered with the Treasury Department as a money services business.
Working together, SHREM and FAIELLA exchanged over $1 million in cash for Bitcoins for the benefit of Silk Road users, so that the users could, in turn, make illegal purchases on Silk Road.

I repeat, from a libertarian perspective, Shrem did nothing wrong, but the fact that the IRS does not consider Bitcoin money, may help Ulbricht, but it does nothing to help Shrem.

I hate to be brutal about this, but Reisenwitz doesn't know what the hell she is writing about.  

6 comments:

  1. "I hate to be brutal about this, but Reisenwitz doesn't know what the hell she is writing about."

    LMAO!

    Don't you dare construct plain buildings either!

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  2. >I hate to be brutal about this, but Reisenwitz doesn't know what the hell she is writing about.
    Ah, but in today's world it is about the sale, not the facts or truth. There are few women in the cryptocoin space, she can be a cool kid, get lots of speaking gigs, appear on TV, maybe even write a book, so what's a facts foulup or two(or three, or four . . . ).
    She is a perfect fit for DC, this is the norm.
    But thanks for enlightening the shrinking pool of us that do care.

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  3. @Wenzel,

    They're b-a-a-a-aaack - the thick libertarians.

    It's round 2 of the THICKS versus the HICKS (you know, us bitter clingers).

    http://fff.org/explore-freedom/article/tgif-in-praise-of-thick-libertarianism/

    I fear I'll keel over with boredom if I have to undergo another dose of leftist theology masquerading as libertarian theory.

    Thus did the Kremlin collapse - from the weight of its own propaganda.

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  4. So Clueless Cathy broke the monotony.
    Instead of being disingenuous and posing as a libertarian, this time she was simply clueless.
    Is she improving?

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  5. "I hate to be brutal about this, but Reisenwitz doesn't know what the hell she is writing about."

    I don't. She's a complete IDIOT. Next moron please....

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  6. I'm still having a hard time believing "structuring" was criminalized without a single politician strung up from a lamppost and nary a building in the District set aflame. The mere attempt to criminalize structuring (or money laundering) as a whole should have triggered a revolt. The crime is not to evade government control. The crime is to impose government control in the first place.

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