Liberty Reserve’s irreversibility was a legitimate and important service

Julia Dixon on June 5, 2013

One of the more worrying aspects of the Liberty Reserve takedown was the constant insistence by US authorities that Liberty Reserve was only a money laundering service with no legitimate use.

Regulators were very concerned with LR’s anonymity which was a serious draw to the service for many people. But what was likely an even bigger factor in LR’s success was its irreversible payments. This is a very important feature for businesses that are at risk of payment fraud or chargebacks, and it’s a feature that is not available in the current regulated financial system.

Jon Matonis via PaymentsSource

In the case of Liberty Reserve, It’s not the individual infractions committed by clients of Liberty Reserve that are worrisome to the regulators, it’s the fact that a semi-reliable platform for private payments existed in the first place.

Liberty Reserve provided a service that had a true market demand from legitimate business sectors and from non-criminals, notwithstanding the government’s claim that “virtually all” its business was illicit. If banks and traditional financial institutions still respected basic client privacy and facilitated some form of digital payments that did not always involve harmful reversibility to the merchants, then companies like Liberty Reserve wouldn’t even be necessary.

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CoinDesk: Bitcoin exchanges need to grow up fast

Julia Dixon on May 31, 2013

CoinDesk does an excellent job of pointing out the very different standards that entrenched TBTF financial institutions are held to as compared to those outside the system. Those choosing to operate alternative financial businesses are going to face many challenges. In fact, if you’re considering running a digital currency exchange you have only 3 choices…

  1. Find some damn good security experts and operate anonymously
  2. Forget about privacy for yourself or your customers and jump through any and all regulatory hoops
  3. Go to jail

Indeed it is time for digital currency businesses to grow up and make some tough choices.

Via CoinDesk

The relationship between big banks and their regulators is pretty dubious, to put it mildly. But expecting federal investigators to give Bitcoin exchanges the same free ride is childishly naive.

When HSBC got caught laundering money for drug dealers and terrorists, it promised regulators it would improve controls.

It didn’t.

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Liberty Reserve Shutdown

Julia Dixon on May 27, 2013

liberty-reserve-logoThursday last week Liberty Reserve went offline. On Friday Arthur Budovsky Belanchuk, the owner, was arrested in Spain after a joint money laundering investigation by US and Costa Rican authorities. The allegations are that Liberty Reserve was financed using money from child pornography websites and drug trafficking.

The Tico Times, an English newspaper in Costa Rica, is reporting that Budovsky has been under investigation since 2011 after a request from a prosecutor’s office in New York.  Liberty Reserve is a Costa Rican business and Budovsky is a Costa Rican citizen of Ukrainian origin.

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The Real Asset Co: Unveiling the gold market’s working parts

Julia Dixon on May 24, 2013

The Asset Company’s Head of Research Jan Skoyles explains where the gold price is set by looking at the three different gold markets; the futures market, exchange traded products and the physical gold market

Via TheRealAsset.co.uk

On April 12th 3.4 million ounces (100 tonnes) of gold was sold in the US futures markets. This was just for starters, the main, side and dessert appeared over the following hours and the next session on the Chicago Mercantile Exchange (COMEX).

As those in the West holding paper gold stood frozen watching the price tick further downwards, those in the East and others looking to buy physical gold, went on a shopping spree. Premiums on physical gold in China, India, Vietnam and across Asia hit highs associated with economic and geopolitical crises. Dealers struggled to keep up with demand.

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Freemans Perspective: Bitcoin – The Tyranny Test

Julia Dixon on May 21, 2013

By Paul Rosenberg, FreemansPerspective.com

An increasing number of people have complained about governments and central banks in recent years, even using the word “tyranny” to describe them. They are, of course, called names in the establishment press: conspiracy theorists, mainly.

Calling someone a name, however, does not erase their argument (at least not among rational people) and both the governments and the big banks stand accused.

Up till now, however, these accusations were never accepted by the general public. The average guy really didn’t want to hear about the evils of government money. After all, that was the only thing he had ever used to buy food, clothes, gasoline, cars, and so on. He didn’t want to acknowledge the accusations because he feared what might happen to him without his usual money.

Now, however, we have a brand new currency (called Bitcoin) available to us: something radically different. This gives us a new way to directly address the subject of monetary tyranny, providing a clear test for the governments and money masters of the world:

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EFF resumes Bitcoin donations “to Support Digital Liberty”

Julia Dixon on May 21, 2013

The Electronic Frontier Foundation, which aims to defend “your rights in the digital world”, has announced that they will again accept Bitcoin donations.

Via the EFF website

Today, we’re happy to announce that we will be accepting Bitcoin donations through our website. You can use them to make one-time donations, set up monthly donations or get an EFF membership (which includes awesome membership swag like EFF hats and digital freedom t-shirts).

While we are accepting Bitcoin donations, EFF is not endorsing Bitcoin.  EFF does not typically endorse products or services, and we certainly do not endorse any of the electronic payment methods that we currently accept (credit cards, PayPal, and now BitPay).

The EFF stopped accepting Bitcoin donations two years ago. They give the reasons for the reversal of this decision as…

  • “Censorship by payment intermediaries is an ongoing problem for free speech online – so it makes sense to start diversifying the available options.”
  • “You can now give Bitcoins to EFF in the same way that you can give stock.”
  • “Our research and FinCEN’s guidance removed a key risk to EFF.”
  • “Our members keep politely asking for it.”