Thursday, November 6, 2014

The Iron Fist of Government Comes Down on Bitcoin Companies

Wired reports:

In early September, David Benson, a lawyer with the SEC, wrote [Bitcoin entrepreneur Garrett] Keirns a letter. Benson said he was investigating whether “violations of the federal securities laws have occurred,” and he asked for financial records and more information related to the fund...

Garrett Keirns isn’t the only bitcoin entrepreneur to come within the sights of the SEC, and some worry that his case may mark the beginning of a larger crackdown into the technically interesting and freewheeling world of crypto currency pre-sales—a crackdown that could affect promising Bitcoin 2.0 projects such as Ethereum, MaidSafe, and Counterparty.

Keirns, who doesn’t have a lawyer, says he took in lass than “five figures” in U.S. dollars from the Bitcoin fund, which is still being traded. He’s doing his best to comply with the SEC’s request, which he calls an “invasion of privacy,” but he feels that bitcoin-dominated trades are a gray area. “I believe that the SEC doesn’t really have a jurisdiction when it comes to bitcoin. This is not US dollars or euros.”

But SEC Chair Mary Jo White doesn’t see it that way. In a letter she wrote to the Senate Homeland Security Committee committee last year, she said that “interests issued by entities owning virtual currencies or providing returns based on assets such as virtual currencies likely would be securities and therefore subject to our regulation.” That language could ensnare not only Keirns but many others...

Other than Garrett Keirns, none of the companies that WIRED reached out to this week have received SEC letters. But some of them also also want to work with the SEC to make these technologies more widely available. CEO Patrick Byrne recently hired two of the founders of Counterparty to build a bitcoin-like stock exchange, where anyone could issue and trade stock without going through third-parties such as NASDAQ. He wants to work with the SEC to make this happen.
The crackdown is coming and the only survivors will be those that playball with government agencies and make Bitcoin a very trackable currency.

Bitcoin is not a libertarian answer to fiat currency. It's trackability makes it a very dangerous form of exchange.


  1. Iron fist trough a swarm does not damage. They can't kill decentralized systems, only threaten individual companies in the US. They can try as they did with the internet in its beginnings, when it threatened its communications protocol. It didn't work out for them. The Blockchain is here to stay.

    We don't need to beg anybody to give us our freedom/rights back. We are free, just have to realize it and act on it. The tools are in our hands:

    There are viable alternatives right now, decentralized/peer-to-peer systems are the way to empower the people and bypass banks and all centralized financial institutions, the path to re-set the control from the few to the many, are the future for everything. The potential implications of the development of distributed consensus technologies is revolutionary.

    We have now an open source peer to peer decentralized digital currency. It is very safe, since is cryptographically secured by a distributed global mathematical algorithm and public decentralized open source ledger, a revolutionary disruptive technology called 'Blockchain'.

    This could be the future of money for everything, from donations, micropayments, money transfers, online shopping and bill payments, etc.

    Empowering and welcoming to the game to billions of unbanked people. And the blockchain peer-to-peer open source decentralized secure technology will be used for many more applications, like escrow, contracts, voting, global ledger, etc.

    We shouldn't be like the ones that were dismissing the internet not long ago as a "den of pedophiles, drug dealers and terrorists". The blockchain is the biggest thing since the internet and will benefit also the billions of under and unbanked people.

    Bill Gates: “Bitcoin Technology is Key”

    PayPal now lets shops accept Bitcoin:

    Bitcoin goes mainstream:

    Bank Of England: Digital currencies and how do they work

    Transfer money anywhere, safely, no fees, no middlemen, no charge-backs for merchants and no fraud.

  2. Cryptoequities and bitcoin's trackable have nothing to do with each other for the purpose of this article of whether bitcoin denominated assets are securities or not. So that odd conclusion you wrote from way out of left field has nothing to do with anything, I'm sure you've already made up your mind about this but this article wasn't the reason to make that conclusion.

    A quick read through of the Securities Act of 1933 will quickly dispel any myths about whether a security needs to be in US dollars or not to be under the SEC's jurisdiction. The Securities Act of 1933 defines securities very well and the currency/denomination has never been a factor in whether something falls within the definition of a security or not. Secondly, when it comes to precedence with virtual currencies, the SEC already HAS precedence with the Bitcoin Savings and Trusts case.

    Raising funds through cryptocurrencies even with a registration or exemption from the SEC will still be TONS cheaper than with fiat and listing on a fiat exchange. Again, this has nothing to do with the transparency or lack thereof with virtual currencies.

    This will be a recurring subject so see you soon!