OP's tough love for Mt Gox 'Victims' doesn't go down well on /r/bitcoin. Replies include "..What you're doing is basically telling a woman who got raped that she shouldn't have dressed that way." (np.reddit.com)
SubredditDrama
198 ups - 51 downs = 147 votes
133 comments submitted at 15:40:03 on Feb 25, 2014 by JutlandMassiv
The difference is that a woman who got raped really wasn't up to something. These guys were all trying to make it rich in some convoluted ponzi scheme and ended up losing their money when one guy turned out to be a scammer. They were all swooning over this "currency" that could skirt regulations when suddenly they all learned why we have regulations in the first place.
>They were all swooning over this "currency" that could skirt regulations when suddenly they all learned why we have regulations in the first place.
Except, once again, "regulations" would not address this issue. If Mt. Gox walks off with everyone's assets, that's just old-fashioned theft.
The answer to anything going wrong in the world is not "well that's why we need more regulations."
Is anything that Mt. Gox did illegal ?
I haven't been following closely to know all the details, but bitcoins are a digital asset protected by law, and as such absconding with them would obviously be illegal. Furthermore, the insider trading stuff that was exhibit A for "regulations: 1 libertarians: 0" was not the kind of thing that is illegal with non-cryptocurrency markets (ie. there is no "insider trading" crime in the carry trade iirc) anyways.
> bitcoins are a digital asset protected by law
Do you have a source on that ?
edit: I have other questions, but I think the source could answer them.
No, he's not going to find a source. They're not a digital asset protected by law.
See Trendon Shavers (aka pirateat40). He only stole Bitcoin and he's under arrest.
This document (looks serious, but IANAL) only mentions laws that seem to be about fraud. They mention this act.
Defrauding someone doesn't matter unless what was defrauded has value.
Hence gox has defrauded it's users
Would the fraud charges apply without a proof that the bitcoin loss was intentional ? The first article of law cited in Trendon's case is titled "Use of interstate commerce for purpose of fraud or deceit".
Surprisingly, I can't find one. I just see the legal protection of BTC as an extension of other intangible property protections. Like, I pretty clearly can't get away with taking a Paypal payment for something and then refusing to give whatever goods/services I promised for a payment - this would violate actual criminal law and not just Paypal's rules. If I was paid in BTC, there's presumably no difference. The law is pretty flexible in this regard.
Well in your paypal example the issue would be fraud (or theft or a bunch of other things turning on a number of issues), the non-transfer of currency (which actually opens up a whole range of legal issues, but we can ignore that as it doesn't occur) breaks the contract, and thus the good/service is obtained without payment, and that is the crime.
I do think you are right that bitcoins are digital assets though. Imagine if I had a company and I handled sweeping and storing all frequent flier miles for my clients (so they can better account and manage their use or whatever). If someone hacks my servers and absconds with the points then they have caused damages to my company then that is a pretty clear violation of CFAA.
> (4) knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value, unless the object of the fraud and the thing obtained consists only of the use of the computer and the value of such use is not more than $5,000 in any 1-year period;
(Pretty much any server is a protected computer). Frequent Flyer miles (or bitcoins) are pretty easily shown to be things of value (which is a very vague term).
CFAA may be laughably overbroad, but it does mean it can be used to hit almost anything, and certainly this.
Though if Mt. Gox were just innocent victims of a hack, they wouldn't be criminally liable, though they would be expected to pay damages unless specified otherwise by contract, and all damages would be limited to the corporate assets (unless the veil is pierced etc).
Some sort of CFAA-like language is needed to define what would constitute "theft" in a digital context, of course. But I agree that it's pretty obvious that any sort of calculations of damages pursuant to a CFAA claim (I'm not sure if the CFAA defines civil penalties, but surely something does) would include the exchange value of BTC, like it would for frequent flier miles.
I see this as an expounding of what's meant by claiming that BTC are protected by law. That whatever the alleged act of theft would be would be illegal via the CFAA (or maybe some other law), and damages estimates would be calculated based on the exchange value of BTC.
"Things of value" is a vague term but that's what makes it useful.
Paypal is just a money-transfer service moving around actual, real-life currency.
If what they did was illegal, then every scammer in EVE Online should be in prison.
>Paypal is just a money-transfer service moving around actual, real-life currency.
Well, real-life claims on currency...
>then every scammer in EVE Online should be in prison.
Does EVE Online not include the usual provisions that say that users of the digital currency do not own it for legal purposes? Because that's an important factor.
[Edit]
Here it is:
>B. Rights to Certain Content
>You have no interest in the value of your time spent playing the Game, for example, by the building up of the experience level of your character and the items your character accumulates during your time playing the Game. Your Account, and all attributes of your Account, including all corporations, actions, groups, titles and characters, and all objects, currency and items acquired, developed or delivered by or to characters as a result of play through your Accounts, are the sole and exclusive property of CCP, including any and all copyrights and intellectual property rights in or to any and all of the same, all of which are hereby expressly reserved.
>Surprisingly, I can't find one.
Because you were wrong.
> I pretty clearly can't get away with taking a Paypal payment for something and then refusing to give whatever goods/services I promised for a payment
Paypal deals in dollars. What you're saying is you can't steal money from people. BTC, at this point, is still play money. In the eyes of the government, it's about as valuable karma here on Reddit and treated no differently than tokens you pay for on Candy Crush. Currently, the government doesn't care about BTC until you trade it in for drugs, kiddie porn, or hitmen on Silk Road or exchange it for dollars.
>Because you were wrong.
Okay. Got any evidence to support this assertion?
>Paypal deals in dollars.
Claims on dollars.
>In the eyes of the government, it's about as valuable karma here on Reddit and treated no differently than tokens you pay for on Candy Crush.
It'd be nice if that were true, but consensus seems to have it that BTCs acquired via transactions need to be declared as income in USD. And I'm pretty sure that declaring $0 because it's "play money" isn't going to cut it. You don't want to make it that easy to go into the BTC economy to engage in tax evasion, do you?
>Okay. Got any evidence to support this assertion?
You made the claim, and then completely failed to find any evidence. It sure seems like you were wrong. You made the claim, and until you defend it, the assumption is that it's not true.
Also, I seriously doubt that Bitcoins need to be declared as income. If you cash out, then yeah, it's income. You only declare gains from stocks when you sell them, so why would Bitcoin work differently?
Okay.
/u/IncongruentModulo1 is not an idiot. However, I decline to defend this claim. Therefore..
>If Mt. Gox walks off with everyone's assets, that's just old-fashioned theft.
Supposedly, it's not Mt.Gox that walked off with it. Someone hacked them and stole it or scammed MT Gox out of it somehow. If the owner of the company doesn't have the money, those people won't get it back.
However, if you have your money in a traditional bank, no matter how small, and someone robs that bank, you can still get your money.
Most states require banks to be FDIC insured. This amateur website that had people's internet tokens, however, was not required to be insured. Want to wager on whether these guys carried enough insurance to give the stolen money back to the people who lost it?
>Most states require banks to be FDIC insured. This amateur website that had people's internet tokens, however, was not required to be insured. Want to wager on whether these guys carried enough insurance to give the stolen money back to the people who lost it?
But Mt. Gox was an exchange, not a BTC bank. I don't think exchanges require FDIC insurance. And the FDIC insurance was meant to prevent bank runs, which isn't much of an issue given that Mt. Gox doesn't use fractional reserves.
Sure, Gox could have still insured the deposits, at some expense to its users. But it didn't and afaik that was never seen as a huge issue (maybe its competitors insure the deposits?) But it's way too easy to see something go wrong and say "the government should've made these people insure themselves". Ex-post tut-tutting does not justify ex-ante regulation.
>And the FDIC insurance was meant to prevent bank runs
Right, you know how Mt. Gox is preventing it? By not letting people have their money.
> But it's way too easy to see something go wrong and say "the government should've made these people insure themselves"
Yes it is very easy. Requiring these people to be insured would have saved tons of people from losing their savings.
> Ex-post tut-tutting does not justify ex-ante regulation.
In other words: "Lets not do anything to prevent this in the future."
>Right, you know how Mt. Gox is preventing it? By not letting people have their money.
The problem with traditional bank runs is that it turns a liquidity problem into an insolvency problem. This isn't going to happen with Mt. Gox. If people are running on it, it's due to solvency - if these BTC were stolen, they lost a ton of assets. This is a very important distinction from traditional bank runs.
>Requiring these people to be insured would have saved tons of people from losing their savings.
Right. And requiring people to insure everything in their lives would also prevent things. But we generally don't see forcing people to self-insure as a fundamental role of government... though I admit we're moving in that direction, to some extent.
>Also read: "Lets not do anything to prevent this in the future."
The politician's syllogism? Really?
Doing something will have ancillary costs and you need to do better than noting a single bad outcome in order to justify imposing these costs on everyone. "If bad things are happening we need more regulation" is not a wise policy mantra. We do not live in a world so tightly-controlled that bad things do not happen.
I read elsewhere in this thread:
> I haven't been following closely to know all the details, but bitcoins are a digital asset protected by law
You don't even understand the basics, but you're sitting here trying to argue with me on the details. You might as well give up. Nothing you say comes with any authority. You're literally just saying things that sound good but aren't based in reality.
"I don't know what's going on, but whatever it is, I can assure you no regulation could fix it."
And you understand the basics? You're an authority? You clearly don't understand the purpose or scope of FDIC protection, which I've explained to you. otoh, you're just throwing out a quote that you presumably disagree with (or worse, you're just using an honest admission of uncertainty as a rhetorical cudgel) in order to make a butthurt dodge on the arguments that you clearly can't support. Truly, a winner is you. In the future, it'd be more mature of you to just drop the arguments you're losing.
Sometimes we all have to grow up and admit when we are wrong.
Dude I just read through this thread and you've clearly lost any argument put forth.
>And you understand the basics?
I can assure you I know more than the guy who admittedly hasn't been following closely.
>In the future, it'd be more mature of you to just drop the arguments you're losing.
Seriously? Look all over this thread. You have tons of downvotes and MULTIPLE people trying to explain to you how wrong you are. None of your comments are in the positive. It's not just me that knows you don't know what you're talking about. Everyone can tell. You're in over your head and these people are all giving you good information. You might want to pay attention to what they're all telling you so you don't embarrass yourself again.
>I can assure you I know more than the guy who admittedly hasn't been following closely.
I haven't followed this specific episode. That's not particularly relevant, again, to the arguments concerning what Mt. Gox is and how FDIC regulations would/should interact with it.
>You have tons of downvotes and MULTIPLE people trying to explain to you how wrong you are. None of your comments are in the positive. It's not just me that knows you don't know what you're talking about.
Please. The way karma breakdowns work on these issues in SRD is pretty predictable: BTC advocates lose, opponents win. It means nothing, particularly to a professional economist. There are tons of issues where espousing professional economic consensus will be downvoted, and that's not my problem.