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Dwolla is one of many companies violating money transmitter laws. Having a bank processor as an investor does not make one exempt, nor is such an excuse consistent with the fact that Dwolla had to register as a money transmitter in Iowa.

Our formal complaint to the DFI is below.


As I've made clear in the past (http://www.aarongreenspan.com/writing/brown.html), I'm not at all a fan of the laws, but if I have to obey them, so should everyone else.

Ok, so no one likes the law. I've read your stuff - you are scared of going to jail while your competitors are building up cash to defend themselves against potential enforcement. Meanwhile you are filing complaints against them.

You are complaining about a slow government, while your competitors are moving around the government, building their business and waiting for the whistle to be blown (if it ever is).

Seems like they are taking a risk, and putting themselves in a position to gain reward.

In the end, won't your competitors be the people that actually impact legal change by spending earned dollars to fight enforcement in the courts? How does your strategy to impact change through filing complaints have any chance of success?

Do you always drive under the speed limit, 100% of the time? Do you call the police when you see people speeding? Do you complain about speeding laws? Or do you take part in the class action lawsuits that crop up when a group of citizens is sick of being fined by illegal red-light cameras?

Later this week you'll see exactly how.

Aaron, I hold you in the highest regard, but this makes you look less than nice.

Essentially what you have done here is rat out a competitor who may have broken a law (how do you know they have not registered?), presumably because you are in competition, not because you are concerned for the well being of your fellow citizens.

If you really are not a 'fan of the laws' and you are just mad at having to obey them I think that you should stand up against those laws, rather than to rat out those that break them.

It's like someone driving 55 Mph on the highway calling the police because they're overtaken by someone else doing 60, after all, if you have to obey the law so should everybody else.

Technically you're in the right, but this leaves me with a weird taste, especially because you say you don't like those laws.

Fair points, all.

The list of registered licensees is public...


...as are lists of recent applicants (updated monthly)...



The complaint against Dwolla is one of 34 I have filed with the DFI. I don't plan to file any more complaints, but I'm not done yet.

I don't think the intent here is to put others out of business. The intent is to force the legal system to clarify the rules for playing in a new disruptive game. In fact, if his plan succeeds, he will surely have many more competitors than the handful of companies at the fringes now. If the courts rule that the laws on the books regulating the industry are invalid, I'm sure Dwolla will thank him for suing them.

Besides,many Supreme Court cases originated with deliberately provocative lawsuits and/or violations of unclear or unjust laws.

I like to believe the motivation is not because of competitin, jealousy or holding a grudge, but because of a deliberate strategy to raise the stakes of the game and getting others, that should be concerned but aren't, involved when different companies can make a stand together, to change something that someone strongly believes is wrong.

Of course, you may disagree that it is worth the cost, but I don't feel there's any need to assume malicious intent.

False analogy. The guy doing 60mph does not compete with the one doing 55, and even if he was the reward is simply reaching his destination a few minutes earlier, not millions of $$$ that are at stake here.

So you confirm my suspicion that this is all about competition and not about equality before the law.

The analogy is predicated on both parties wanting to break the law, one does, the other doesn't.

It is then up to the authorities to establish that the law was indeed broken and to decide to prosecute.

Filing a complaint about a competitor breaking a law that you yourself say you do not agree with looks pretty sleazy to me.

Everybody can deal with this in their own way, some will break the law some will abide by it. In the end it is up to the authorities to decide who to go after. Some of those may decide to sue the state and try to get the law rescinded or changed.

No need for tactics like these. If this was a principled matter than the amount of money should not matter. The fact that there is a lot of money at stake is why this was done, not because of some other concern.

Basically the government and a law perceived as unjust by all parties involved are used to attack a competitor.

The whole reason this law exists in the first place is because large companies have managed to lobby to get this law on the books, what better end result for them than that would be competitors use it to destroy each other?


I'd happily agree with you if Aaron would have written that he agreed with those laws. If you think a law is unjust then I think that you should not be doing the authorities work for them.

Aaron, in this case you can't beat 'em. I'd recommend joining them instead. (Dwolla, not the gov)

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