Operators of Coin.mx arrested by the FBI (opens in new tab)

Interesting charges. Are they ever applied to companies that allow money to be wired or otherwise transferred between banks?

MURGIO and his co-conspirators allowed & enabled business owners to reclaim priceless data from their computers quickly as legitimate exchanges like coinbase would process transactions in a scope far outside the ransom window.

Banks Contributing to Crime as well, however the people in charge don't get persecuted. Why is this different.

1. Wachovia laundered $378.4bn in drug money. Fined $160M[0]

2. HSBC £78 billion in dubious assets, £1.2 billion in fines[1]

3. JPMorgan Chase violated the Bank Secrecy Act and failed to file a Suspicious Activity Report after red flags about Madoff were raised at the bank. Madoff's Ponzi scheme totalled $65B[2]

4. Bank of America had money funneled through it by a Mexican cocaine-trafficking cartel, where it was laundered by buying US Racehorses[3]

5. CitiGroup facing federal inquiry about Banamex a mexican subsidiary, expects legal costs of $4B[6]

US Government & Bitcoins

1. US Federal Agents extorted Ross Ulbrict and diverted seized funds to personal accounts[4]

2. Regulators "easing up" proposed "BitLicense", firms need only maintain adress information for their own customers and keep that info for 7 years instead of 10[5]

WHAT IS THE POINT

Murgio was using a well known "scheme" in the bitcoin world where one sells some cheap innocuous object for bitcoins. Having registered a transaction of incoming currency and then transferring bitcoins. Often a collectible is still shipped to legitimize the transaction[6]. So they were actually transacting collectibles and sending BTC with those collectibles. It is speculated on bitcointalk that the govnerment took control of their twitter[8][9] and used it to spread disinformation.

So we have a regulatory framework that allows banks to transact with known drug cartels and create, distribute and short assets with no criminal liability, however an exchange transacting in approximately 1.8M dollars via collectible sales has been shut down. The exchange and parent company were "legitimate" businesses and the money transmitted was for actual goods sold. Similar to the JP Morgan/Madoff charges Murgio and Lebedev are being charged with failure to support suspicious activity.

The US Gov't has shut down 70 "scams" some of which were likely actual scams[11], but this pattern is to consolidate bitcoin exchanges into as few entities as possible, force them to keep detailed information about their customers and have the ability to map transactions to actual people. This defunds lower level drugs transactions and allows them to keep control of a competing currency. Also, through some of these raids they became owners of bitcoins, which they sold or were stolen by agents working for them.

In summation, the government is tightening control on BTC, while largely ignoring larger problems of big banks transacting with drug cartels and terrorists. They even named COINMX as being party to hacking as they facilitated transactions for the hacked parties. Big banks collude with drug cartels but no one is named criminally, small btc exchange is cited for money laundering.

Edit 2: The arrests in Florida were tied to JP Morgan hack. It is not specified in what capacity and numerous people were named in the article, so while Murgio is mentioned by name as being arrested, it is unclear if he was one of the parties involved[12]. Coinbase also tieing them to hacking of JP Morgan[13]

[0]http://www.theguardian.com/world/2011/apr/03/us-bank-mexico-...

[1]http://www.businessinsider.com/stats-hsbc-money-laundering-a...

[2]http://www.forbes.com/sites/nathanvardi/2014/01/07/jpmorgan-...

[3]http://www.wsj.com/news/articles/SB1000142405270230329220457...

[4]https://www.fbi.gov/sanfrancisco/press-releases/2015/former-...

[5]http://www.cnbc.com/2014/12/18/bitcoin-lawsky-softens-bitlic...

[6]http://www.reuters.com/article/2015/02/25/us-citigroup-banam...

[7][from linked article]front-company, “Collectables Club,” and maintaining a corresponding phony “Collectables Club” website. In doing so, they sought to trick the major financial institutions through which they operated into believing that their unlawful Bitcoin exchange business was simply a members-only association of individuals who discussed, bought, and sold collectable items, such as sports memorabilia.

[8]https://bitcointalk.org/index.php?topic=1131070.0 [9]https://twitter.com/coin_mx/with_replies

[10]http://www.coindesk.com/70-bitcoin-scams-shut-new-york-law-e...

[11]http://www.coindesk.com/70-bitcoin-scams-shut-new-york-law-e...

[12]http://www.usatoday.com/story/money/2015/07/21/jpmorgan-chas...

[13]http://www.coindesk.com/coin-mx-arrested-operating-illegal-b...

For those that don't know the acronym 'KYC' is 'ķnow your customer' and a core principle of Anti-Money Laundering (AML) laws. The idea is that if you know your customer, for example age, occupation etc, than you can--and are obligated by law to--flag suspicious financial activity to authorities.

For example, large and infrequent international wire transfers to say Bermuda may look suspicious if your 'KYC' information tells you the account is owned by a teenager in Utah with no ties to Bermuda. This wouldn't look suspicious for someone in their 50s who has a business and family based in Bermuda.

The government is likely to win in the end. It's not yet regulated because of it's small circulation and young age. If it were the first thing in history the government could not figure out a way to regulate I would be surprised. http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?...

If only banks had such a compunction.

An example where you cannot avoid lying to a bank: if you move to the UK, banks require a proof of residence in the form of an electricity bill or similar with your name and new address on it. But the electricity company requires a UK bank account in order to send you the first bill. How do you break the loop? The easiest way is to fake an electricity bill.

That's just poor wording. What it means is "Everything described as a fact in the complaint should be treated as an allegation."

Criminal complaints are written as if everything in them is a true fact, unlike, say, newspaper articles that use phrases like "the alleged thief."

For example, a newspaper article about this complaint would say things like "The FBI's criminal complaint alleges that..." - even though the complaint itself states it as a fact.

That means the statements are presented as facts, but are not yet proven and thus are technically only allegations.

Generally, one shouldn't present allegations as facts (use phrases such as 'allegedly'), but doing so is standard for criminal complaints.

Fact and allegation are indeed xor. Saying that facts should be treated as allegations is.. well... strange.

The phrasing probably comes from the legal-style-wording in which I imagine they are trying to ensure they are not able to be sued by the defendant under e.g. defamation by presenting their facts (by saying they are all allegations not facts, they cover all of their bases).