Bitcoin isn’t issued by the government nor can it be deposited in a bank. So should it be subject to the same federal banking rules as traditional paper and coin currency? Morgan Rockcoons takes a selfie while in San Diego for a court appearance. It is bitcoin prosecutions may break new legal ground question that federal authorities have been grappling with ever since digital currency took off a decade ago, one that will now be heard in a San Diego courtroom with the indictment of Morgan Rockcoons.
The case has re-energized the debate over how the virtual currency marketplace is regulated and whether such criminal prosecutions can stand up in court. Most cases have, but judges in a few prosecutions have taken provocative positions that bitcoin is not currency, suggesting the issue is far from being case-closed. A bitcoin prosecution has not yet been tested in the U. Could the Rockcoons case break any new legal ground? Rockcoons told the Union-Tribune in a Twitter message when asked about the case. It’s my fiduciary responsibility to protect all Bitcoin users, Bitcoin developers and Bitcoin companies using the Bitcoin network world wide, so I will fight these made up bogus charges all the way to the Supreme Court if I must.
Its anonymity also makes it the currency of choice for the dark web, which hosts a massive underground marketplace for everything from child porn to drugs to identity theft to murder for hire. The law surrounding how bitcoin can be exchanged is found in guidance from the Financial Crimes Enforcement Network, the arm of the U. Treasury Department that works to combat money laundering with regulations. San Diego County now has 27 Bitcoin ATMs with more on the way.
In 2013, FinCEN announced that virtual currency was no different than standard currency when it comes to following the Bank Secrecy Act. It is a general intent crime, meaning it’s a felony for someone to run an unlicensed bitcoin business whether or not there is knowledge of the licensing requirement. And because the courts so far have appeared to line up behind the DOJ’s interpretation, it can be a very difficult charge to defend. The prosecution of Charlie Shrem was the first of its kind, and made bitcoin enthusiasts nervous. The young bitcoin entrepreneur had started an exchange business that allowed users to buy bitcoins and make purchases with bitcoin for a fee, giving temporary credit to customers to make the deals go faster. He pleaded guilty to aiding and abetting unlicensed money transmission and was sentenced to two years in prison.
Others have followed in his footsteps. But bitcoin advocates point to two court rulings in particular that indicate the legal issues surrounding bitcoin aren’t settled. She threw out the Florida charges against Michell Espinoza who had been accused of selling bitcoin to undercover detectives who told him they were going to buy stolen credit-card numbers with it. About six months later in New York, a federal magistrate judge recommended that charges be thrown out against Richard Petix, who conducted more than 100 bitcoin transactions with customers, including with an undercover agent.
The judge noted the absence of a nexus to other criminal activity, as seen in other cases. Prosecutors argued against the judge’s recommendation, and the issue ended up being moot when Petix pleaded guilty to operating an unlicensed money transmitting business and lying to investigators about an unrelated issue connected to a prior child pornography conviction. Neither opinion set legal precedent in terms of federal law. In Arizona, federal prosecutors dropped charges against brain scientist Peter Steinmetz after transcripts of his conversations with the undercover agent surfaced. 10,000 reporting rule, Steinmetz said he didn’t want to be involved in anything illegal and declined to do business with him, court records show.
Linking bitcoin exchange to other criminal conduct, such as money laundering, seems to be key in these cases, experts say. Rockcoons caught the attention of U. San Diego, according to the search warrant affidavit. The website matches exchangers with customers. An agent went undercover in 2016 and posed as a drug manufacturer who extracts THC from marijuana to make butane hash oil.
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He asked for help buying bitcoin and asked to do the transactions anonymously. 10,000 and above, Rockcoons did neither — despite acknowledging he was familiar with such regulations, according to an affidavit filed in court. 5,300 service fee, the affidavit states. I’m a professional money manager and mover of funds without personal identifying information attached to the funds or equity. Rockcoons declined to be interviewed for this story, referring questions to his attorney, but in interviews with other publications he disputed the facts as presented in the court records. He told Bitcoin Magazine that the undercover agent indicated the hash oil equipment he would be purchasing was for medical use, which is legal in California.
He also accused investigators of trying to entrap him. He said he was living in a tent in the Mendocino National Forest at the time of the transaction and working on a voice-operated bitcoin wallet. Agents found him at the Palms Casino Resort in Las Vegas when he was arrested on Feb. His case has garnered wide interest among the international bitcoin community, with some more sympathetic than others. I’m on his side but, it’s illegal to give anybody funds to get drugs. So therefore banks are guilty of this also. That being said, BTC is not considered currency because it’s not issued by a gov’t.
43 billion NXP acquisition as China balks at approving the deal Magnitude 4. Daphne Caruana Galizia was the most dangerous person in Malta. I first came into contact with Daphne on January 13, 2017. But of course I knew her work well by that point, because I had been a twice-daily reader of her blog for the past 6 years. I would laugh at some of her more scathing articles when island life had driven me to despair, and to a point where I felt like the only sane person in a lunatic asylum.
It felt good to know that someone else recognized just how strange this little island was, and how bizarre were some of the things that passed as normal. To cite the name of Daphne was to take sides in the ongoing village football match that is Maltese politics. I would be dismissed by half the population of that country simply for admitting that I followed her work. But they always whispered and looked over their shoulder while saying it.
This is unfortunate, because Daphne was the only proper investigative journalist on the island. Daphne did what any self-respecting journalist should do. She published what she found, and she stood by her carefully-researched words. Her blog and her columns in the Malta Independent became a lone voice of sanity in a sea of whataboutism, shrugging, avoidance, and pathological allergies to personal responsibility. And as Malta descended into astonishing depths of corruption, Daphne Caruana Galizia’s blog was at the forefront in exposing it all. I remember January 13, 2017 so well because I logged on to her site that afternoon to see my own name at the top of the page. Someone had sent her an article I wrote for Outpost online three years earlier about the challenges of living in a developing country.
It was a strange coincidence because I had just left the island that week after 6 long years of residency. I wrote her immediately to correct a couple details, she responded in minutes, and we began to correspond by email. I became a regular featured commenter on Daphne’s blog, and I wrote two guest articles for her in the lead up to the 2017 election. She even mentioned getting together for dinner next time she visited Berlin. But I never had the opportunity to meet her in person.
I admired Daphne Caruana Galizia enormously for her integrity, fearlessness, honesty, investigative instincts, and for her clean, precise prose style and her biting sense of humour. Daphne was fearless in a culture where keeping one’s head down is seen as a virtue. She had integrity on an island where it is in short supply. And so the kleptocrats who had taken over the government of this tiny European Union country despised her and feared what she wrote. Reviled by half the country and secretly loved by the other half, everyone followed her site — especially her enemies, whose deeds she was always the first to expose.
On Monday October 16th, Daphne Caruana Galizia was brutally murdered with a car bomb on a small village road near her home. Her son was the first to come across the burning wreckage, and the bloody pieces of his mother scattered across a field. The inept and politically compromised Maltese police are handling the investigation, and I’m quite certain it will go the way of the other 15 car bombings and targeted killings that happened in Malta over the last 10 years. None of them were ever solved. The situation in Malta will get worse by the day because there’s no one to shine a light into shady corners anymore.
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But for once, the outside world is watching. The European Union parliament held a special session to discuss Daphne’s killing, just days after the horrific event. Her sons and husband were invited, and the parliament held a minute of silence in her memory. They also lowered flags to half mast, and are renaming their press conference room in Strasbourg after her. But in Malta, as of this writing and printing, nothing. Parliament did nothing — even as the story of her brutal murder made international news, from Japan to Canada and every paper in between. The foreign media seems to view it as an attempt to stifle freedom of expression, and as an attack on the press.
And I guess it was, in part. But the rot in Malta goes much deeper. They’re shocked at the complacency of the people, of which only a handful took to the streets in protest. Judging by the anti-corruption rallies of 2016 and 2017, those irate few will quickly lose interest and go back to their lives. They’re shocked at the smug press conferences of the Prime Minister, the man with the most to gain from this murder.
And as for me, I will only be shocked if this murder is solved. People don’t respond this way in a normal country. But Malta is not a normal country. The ultimate responsibility for Daphne Caruana Galizia’s murder goes much further than the assassin who planted and triggered the bomb, or the person who ordered the killing. It goes beyond the money launderers and criminals who stand to benefit from her silencing. Notable integrity challenges include procurement irregularities, unresolved conflicts of interest among serving government ministers, and the revolving door between the island state’s close-knit political and business class. Malta is also the only country in the European Union to have an incumbent minister named in the Panama Papers revelations in 2016.
Transfers of money generated from illicit activity in foreign jurisdictions to Maltese bank accounts constitute a notable volume of laundered funds. Despite its small size and comprehensive anti-money laundering legislations that include a definition of beneficial ownership, Malta ranked in the top eight EU states with the highest number of offshore entities listed in the Panama Papers leak in 2016. Malta’s commitment to combatting money laundering is due to the country’s interest in shielding its role as a reputable financial services centre. The severity of corruption in Malta is exemplified by the fact that, according to a recent report commissioned by the European Parliament, the country lost at least 11.
The major obstacles affecting businesses in Malta are favouritism in the government bureaucracy and the country’s shadow economy, which comprises of nearly a quarter of the entire market. Malta is the only EU member without a local chapter of Transparency International. Malta has reached its current depth of corruption because the culture and people made it that way. Daphne Caruana Galizia shone a light into the darkest corners of a country that was once known as a pirate nation, and that has since become a black mark on the map of Europe.
The only hope will come from outside: from a weak and indecisive European Union, or in the form of sanctions from the world’s major economic players. But none of this will happen. Daphne will have died in vain, fighting for what she believed in, writing her truth and fearlessly signing her name to it. At least she could look herself in the mirror each day.
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I don’t know how the rest of Malta can. Get your FREE Guide to Creating Unique Travel Experiences today! Unfortunately I learned of Daphne only after her death. She was incredibly brave and tenacious. What a terrible loss for her family. Things will get much worse in Malta now that her voice has been silenced.
Malta has allowed this to happen through a culture of complacency and lack of independent intellectual analysis of the political and institutional process. We mourn Daphne’s death but we also mourn the demise of a country that has given into greed and the gloss of pseudo-political marketing tactics which encourage personal gain over maturity, common good and development. That short term thinking and suspension of moral judgement is leading to a very dark place. And at some point, it becomes irreversible. I have read much of what has been written about Daphne’s murder but this is far and away the best piece.
Every single sentence echoes my thoughts. Malta was held in such high esteem by the rest of he world. It was shocking to see how quickly things in Malta changed during the 6 years I lived there. I’m making plans to leave Malta. Can’t understand what makes people come, or stay, here.
It’s difficult to express an opinion in Malta, even as a tax-paying foreign resident, without being told to fuck off and leave. Unless of course your opinion is uncritical praise, in which case that’s acceptable. Thank you for an excellent article. I hope that you and other foreign journalists will investigate this corrupt government, and continue with Daphne,s work.
I believe she was close to exposing something big. I’m not a journalist, but I am working on a book about the 6 years I spent in Malta, which includes history, anthropology, and a snapshot of the present as the country spiralled into corruption with great enthusiasm. I hope it will provide outsiders with some insights into a very strange place. Other countries may hide it better but it’s there. I have seen it in Belgium, which is more a collection of very separate communities than a country. I don’t like Joseph Muscat, our PM. But as I think Daphne realised well enough at the end of her days , he has so far created enough wealth that has leached into enough people’s pockets to remain in power and popular.
I think Mr Murdoch transposes his big country expectations of what triggers people’s outrage onto a very small island nation of 430,000 people. When he does not find what he is looking for, he goes fishing for reasons why his expectations are not met that must perforce be very closely linked to being Maltese. Is it to justify some sort of innate national proclivity to be rotten to the core? Well, he’d be interested to know that quite a few modern day Maltese family business owners are directly descended from those corsairs. Maybe there is a kernel of truth in that. But my own hunch is that when so many of those 430,000 have their snouts in the trough, the same human nature that’s in his own DNA takes over and so he does not get to see as much moral outrage as he would like. Mr Murdoch says much that needs to be said but in my view misses some essential context.
It’s almost like calling the French cowards for capitulating to the Germans with the same speed and alacrity of the British Expeditionary Force in WW2 and ignoring the existence of that natural obstacle, the English Channel. I liked reading this article, because it provoked me. Opinion there is and has always been aplenty. Unlike Mr Murdoch, I do not think think that journalism is a cold corpse in Malta. Daphne has kicked it in the butt, and it’s standing, albeit somewhat groggy and unsteady.
I heard frequently during my Malta years. Well, Charlie did it too, so why are you picking on me? I also don’t agree that small countries and big countries should be held to different standards of ethics or behaviour. That strikes me as very demeaning. I do agree that Joseph Muscat has secured his popularity by buying people off, and by giving enough crumbs from the table that the majority is willing to look beyond the personal corruption he’s been accused of.
I don’t care what they did in Panama or how corrupt they are, as long as I have money in my pocket. If that’s the sort of society you’d like to live in, you’re welcome to it. As for going fishing for reasons to support my claim, the research process is actually the opposite. My claims are based on a thorough reading of the literature, and on living in that society for 6 years and using my eyes and ears. My conclusions emerged after I left the island and began working on my upcoming book.
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I suggest starting with the literature on amoral familism. I’ve encountered few concepts in the social sciences with such predictive value, especially with regard to Malta. I don’t mean to excuse the corruption and I also don’t think that there should be different sets of standards for small and large countries. I am only interpreting the reality of what I see and amoral familsm is incidental to that understanding. It is easier for a citizen of a bigger country to decide on who to vote for that is not based on what directly suits his pocket than it is for the citizen of a micro state where the chances of knowing someone in politics who can actually and directly help you is so much higher. It’s about the efficacy of converging networks, and it’s a fundamental tool managers of big numbers of people with multiple tasks that need to be coordinated need to understand to be effective.
You cannot get away with this in a country of 60 million people, because you can only ever directly influence the lives of so many people, and their converging networks. The proof of this is that he has cleanly taken over swathes of the electorate that even today hold their noses when voting for him. To reform, the Maltese will actually have to adhere to even higher standard of ethical behaviour than elsewhere, the type that cuts to the bone. It might well happen in the wake of Daphne’s assassination which has shocked far more people than you think, including from across the political divide. The jury is still out on which direction it’s headed. But any reforms must not throw the baby out with the bath water.
The islands’ economic success, including real achievements such as historically low youth unemployment, should not be jeopardised. Those converging networks can work against you as well as with you. Thanks very much for clarifying your views, Mark. We’re in agreement that Muscat is brilliant at knowing exactly how to reach that audience, and what their price is, regardless of how they feel about him. I’m very skeptical that this will be possible, given what I saw in 6 years on the island. It would mean an end to nepotism and patronage, to actually getting jobs because of one’s qualifications and abilities rather than one’s connections.
Do you think the majority of Maltese voters would be willing to live with such a change? I’m also skeptical of such changes, given how much Muscat, Schembri, Mizzi and the others who are yet to be investigated have to lose. I agree that honesty in government should not — and need not — mean sabotaging economic success. But how do you reconcile the current government’s talk of economic success with the high percentage of GDP coming from passport sales, e-gaming, and tax avoidance by corporations in other EU countries? These are all practices that MEP’s from other countries are now targeting.
Government jobs consume resources rather than create new wealth. I think we’re in agreement about a fair bit here. The one big area where I think we disagree is the weight I place on the concept of amoral familism in explaining Maltese culture and predicting behaviour. There is nothing wrong with income derived from igaming and from financial services, including income derived from legitimate tax avoidance schemes. EU member state, not just the usual culprits like the Netherlands. The attractiveness of Malta’s tax avoidance mechanisms would disappear in an instant if countries like Germany and France legislate accordingly and the reason that they don’t is that any legislation on tax must be multilateral. Don’t hold your breath waiting for any change imposed from the EU.
My concern has always been passport sales, which I would like to see significantly modified to more resemble that of other EU countries and tied to higher levels of investment and residency. If you have a moral problem concerning I gaming pointless to discuss . My only concern here is that the rules should be scrupulously observed and monitored, especially the money laundering provisions. I gaming is a fascinating business and it is actually difficult to launder money given that all payments are electronic, which makes me want to know more about the Ndrangheta case mentioned by Europol. I am proud of Malta’s economic model which however depends on scrupulous regulatory mechanisms, which is where this cowboy government has failed. I do think that online gambling is a rather sleazy business which preys on addiction and weakness, and I feel the same about casinos, but there’s nothing illegal about either.
We’re in agreement that monitoring checks and balances are important in such industries. I’m curious to see what comes of this Ndrangheta case. I’m also curious about Muscat’s recent talk of Bitcoin and what embracing it could mean for e-gaming and money laundering regulation. I just have a hard time trusting the players involved, especially given today’s rumours that Adrian Hillman is being considered to head the Malta Gaming Authority. I agree that tax avoidance is very different from tax evasion, and that there’s a great deal of hot air and hypocrisy thrown around in that entire area, particularly by high tax countries. But I do think it’s dangerous for Malta to be too reliant on such industries as pillars of the economy when so much depends on perception and trust.
I can’t see anyone knocking down Panama’s door to set up there these days. I think passport sales need serious scrutiny. I don’t think the residency provisions are being enforced at all. I don’t even think anyone’s looking at them.
How many of those people are spending any time in Malta at all, and how many are just renting the same tiny flat from an agent while heading straight for London? Everything about it seems like Malta using their EU status to profit by selling access to other people’s countries. Ryan what you say is true. I am sure you went to Malta for a good reason and initially it gave you what you were looking for. But escape is a cop out. So please don’t just abandon it in these bad times and let complacency and corruption have is way. I’m not sure I follow the first part of your comment.
Are you suggesting that, by moving on to a different place, I’ve somehow abandoned Malta? I spent 6 years of my life there, and I’m just finishing up a book about those experiences, but I have no desire to go back. I hope my book gives outsiders some sense of the past and present of the island, and how things got the way they are. That’s the best contribution I can make. You have to take your own island back.
Incidentally, I don’t see Daphne’s murder as a noble sacrifice, or giving her life to Malta. She was largely reviled during the years I lived there, and few people openly admitted to me that they read her work daily or liked what she was doing. She saw a brief spike in popularity in the lead up to the last election, but those people turned against her right afterwards when the blue side lost. Where were these staunch defenders when she was alive? Opposition, and as a result of the murder of Daphne Caruana Galizia. I hope that this article will be tabled as a document to be preserved in the records of Parliament. May I add one positive comment.