
Bitcoin Promoter Gets 2 Years for Silk Road Money Laundering - prostoalex
http://www.bloomberg.com/news/2014-12-19/ex-bitcoin-foundation-s-shrem-gets-2-year-term-in-silk-road-case.html
======
patrickg_zill
Where are the criminal convictions for HSBC and Wachovia's money laundering
for the Mexican drug cartels? They laundered over $300 Billion USD over the
years, and no one went to jail?

~~~
hurin
Because criminal convictions against a major bank could have serious
repercussions, probably both in terms of international relations and
economically.

In the same spirit - Silkroad the great online evil of the drug trade, had a
yearly turnover of less than .1% of the world drug market.

~~~
epscylonb
If you owe me 100 dollars you have a problem, if you owe me a million dollars
I have problem.

------
downandout
He's lucky he didn't also catch a case for ripping people off through
Bitinstant. While no one knows the total of orders that they failed to
deliver, it's likely to be in the hundreds of thousands of dollars. A class
action suit was filed against the company before it folded. I'm guessing a big
chunk of the stolen money went into this guy's pocket.

Curiously, it looks like he's also asking for donations on Twitter:
[https://twitter.com/CharlieShrem/status/546367889625079808](https://twitter.com/CharlieShrem/status/546367889625079808)

~~~
eof
> He's lucky

I'm not sure about that. I don't know the details; but I strongly suspect that
while Shrem very likely knew he was laundering 'illegal' money (at least, I
think he would have done it whether he knew or not), he was not ripping people
off on purpose.

Personally, I find it hard to feel too bad for Shrem; since he was sloppy and
loud.. and kind of just had it coming. That being said, I don't think he did
anything morally _wrong_ w/r/t what is he is being convicted of.

This is more a case of a bad law and a stupid person than a bad person. In a
more reasonable world where people are legally allowed to enter into mutual,
private contracts without a nanny state policing people's morals.. what Shrem
did could not even be considered a crime.

His fault? sure. Stupid of him? Sure.. but laundering money for drug dealers
is _not_ morally reprehensible in its own right (unless they are violent drug
dealers); it's just dumb to do in an obvious way with thousands of people
watching you (and not even charging a ridiculous mark up!)

~~~
downandout
The last ~200 pages (like 2,000 posts) of the Bitinstant support thread at
Bitcointalk.org before they shut down were essentially all complaints about
undelivered orders and excuses by staff, including Charlie Shrem, about why
orders weren't being delivered. Things got so bad that they hired someone
specifically to respond to complaints in that thread, and then after a month
or two he quit.

~~~
eof
Right; but they were getting fucked over in the fiat world left and right up
until that point too. Not saying they didn't over-promise and under-deliver
but you can't really examine these things in a vacuum.

------
wyager
So can someone clarify this for me? It sounds like he didn't actually do any
money laundering, but sent money on behalf someone who _was_ accused of being
a money launderer? 2 years seems pretty harsh for that.

~~~
Meekro
It was harsh, doubly so because nobody at the time knew what the money
laundering rules for bitcoin were supposed to be.

They were trying to bring down Silk Road, and this guy was accused of
buying/selling bitcoins for a major Silk Road dealer. This isn't about
banking, it's about the war on drugs.

~~~
ChuckMcM
I think you are being a bit too charitable. If you send something which is
being traded into and out of currency on behalf of someone else, or on your
own behalf, you are have to ask the question if this is legitimate or not.

Now if you sell PEZ collectibles on Ebay for others, and find they start
sending you back the same collectable you sold before, you have to sit back
and ask, Hmm what is really going on here? And if you don't do that, then you
risk finding yourself, like Shrem did, in a place which really wasn't a legal
place to be. The key here was the judges observation, "months and months" of
activity. If you do this and stop for a second and say "Hmm, why is this so
profitable for me, what is the deal here?" a couple of weeks in, maybe even a
month in, and you document seeking legal advice. Then you get off with a wrist
slap. It was like the bitcoin for gift cards site that someone here said was
"amazingly profitable", you have to stop and ask yourself where is the "value"
here that I'm getting to keep so much of it.

------
ilamont
_“I screwed up,” Shrem told U.S. District Judge Jed Rakoff. “The bitcoin
community, they’re scared and there is no money laundering going on any more.
"_

Does this claim have any basis?

~~~
meowface
If you deal with legitimate US companies like Coinbase, then yes, it does.
Bitcoin is now seen with some degree of legitimacy by the US government and
the parts of the US public that are aware of it.

Bitcoin, like anything else built on strong cryptography and/or
decentralization (Tor, BitTorrent), is of course still used for nefarious
purposes including money laundering and funding of criminal enterprises. But
the legitimate use likely outweighs the illicit use. And the bulk of the
illicit use is primarily for what I would consider very minor crimes (like
buying drugs for recreational use in one's own home).

~~~
kiba
US dollars are used for illicit purposes, in much greater volume than Bitcoin
in its entire history. I don't see how this change anything with bitcoin.

~~~
meowface
You're right, but there is a difference.

Cash can be easily used to launder, but it has to be done physically and
generally requires in-person interaction. Cryptocurrencies can be used to
launder but can be done remotely and through various forms of proxied mediums.

~~~
baddox
But that difference is one caused by all sorts of technological advancements,
including completely unrelated advancements, and in my opinion is not a great
excuse to preemptively treat the currencies differently. By your same
reasoning, the advent of air travel made laundering cash easier.

~~~
meowface
>By your same reasoning, the advent of air travel made laundering cash easier.

That's true, though. Law enforcement agencies around the world had to account
for plane flights as a potential way to trade illicit substances and gains
from those substances. They had to hire experts in satellites and radar
systems to track air vehicles carrying contraband when necessary.

And the same is true of cryptocurrencies. Law enforcement has to quickly adapt
to the new medium and overcome extra hurdles.

I'm not discounting cryptocurrencies or air travel at all, I'm just saying
that technological inventions often create many new intended and unintended
externalities for all sorts of entities.

------
consz
This guy doesn't sound too bright. His best plea to the judge was, what, that
he could be a motivational speaker for not obviously flaunting AML laws? He
really couldn't come up with anything better than that?

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marlinspire
He was threatened with 30 years so he took a plea-deal.

It is a shame he was denied a trial.

May or may not have been guilty - taking a plea under such extreme duress is
hardly an admission of guilt.

~~~
higherpurpose
Yet people here keep defending these ridiculous charges because they "don't
matter", and "aren't real anyway". Yeah, tell that to the person that had to
hear that charge and then got scared shitless into accepting "only 2 years" of
prison time.

~~~
spacemanmatt
I haven't seen that. Prosecutorial abuse is better understood around HN than
most of society, that I've seen. YMMV.

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shiven
For those who may have read ‘The Billionaire’s Apprentice'[1], Jed Rakoff is
the same judge who was involved in sentencing Rajat Gupta.

[1]: [http://www.nytimes.com/2013/06/30/books/review/the-
billionai...](http://www.nytimes.com/2013/06/30/books/review/the-billionaires-
apprentice-by-anita-raghavan.html?pagewanted=all&_r=0)

------
arto
Reddit thread on /r/Bitcoin:

[http://www.reddit.com/r/Bitcoin/comments/2pu0b2/american_jus...](http://www.reddit.com/r/Bitcoin/comments/2pu0b2/american_justice_hsbc_launders_billions_no_jail/)

