Safety and Soundness: That's the DFI's motto.
The California Department of Financial Institutions (DFI) has warned the Bitcoin Foundation to stop exchanging money without a license. Thing is, the Foundation doesn't do that, at least according to its Secretary, who would know about these things, you'd think. The DFI's C&D letter is also said to have given the Foundation an impossible deadline to respond.
In IT Blogwatch, bloggers accuse the DFI of a dirty turf war.
Your humble blogwatcher curated these bloggy bits for your entertainment.
Jeremy Kirk beams us the enterprise view: [You're fired -Ed.]
a California financial regulator [the DFI] warned the Bitcoin Foundation...that it is a violation of state and federal law to be involved in money transmission without registering. ... [It] does not accuse the Bitcoin Foundation of violating laws but says the regulator thinks it "may be engaged" in a money transmission business.
...The Bitcoin Foundation, which is based in Seattle, was established to promote the currency and help guide the development of software. ...it does not sell or trade in bitcoins. MORE
The Bitcoin Foundation's Jon Matonis spills the beans:
following last month’s Bitcoin 2013 conference event in San Jose, CA that brought decent revenue into the state, [the DFI] decided to issue a cease and desist warning. ... If found to be in violation...penalties can be severe [and] could result in fines and/or imprisonment. ... Additionally, it is a felony violation of federal law...punishable by up to 5 years in prison and a $250,000 fine.
...The Bitcoin Foundation...mission is to standardize and promote the open source Bitcoin protocol. ... the foundation does not engage in...money transmission. ...that activity would also be against the original charter. MORE
Danny Bradbury says Bitcoin users are "reeling" at the news:
The cease and desist order was dated May 30 [and] gave the Foundation 20 days to respond, although it was only received last week.
...“It appears that the California DFI is on a bit of a fishing expedition,”...said Patrick Murck, general counsel for the Foundation ... “I know at least one other company has [received a letter] and I have hints that others have as well. ... It’s less resource- and time-consuming to send out cease and desist ‘warning letters’...than to build an evidentiary basis for action.” MORE
Chris Hawkins has been there, done that, bought the novelty shirt:
I received a letter ordering us to cease and desist from doing online notarization. ... We were not doing so, so [we said] "We have not, and never have, conducted the activity you accuse us of." ... A few weeks later, they posted a "consumer warning" on their website saying that our company was in effect defrauding companies. Then, several other states copied that language without contact. ... I told them we were hurt by these baseless accusations, and they admitted that they really had no evidence. ... They basically said "we are too busy to update the website right now."
...After months of effort, I was able to one by one get most of these ultimately removed or reworded. ... California was the last holdout. I basically began the process of suing them for massive damages...the only thing that was able to get them to change the wording. ...it genuinely scares me what government agencies can do without any evidence or judicial process. MORE
Yet CraigJ goes further:
I hope the Bitcoin Foundation embarrasses the hell out of the [DFI]. ...the California state departments make the IRS look like a fuzzy little kitten. ... They are inept, and corrupt to the core. I once had an agent tell me that I needed to be nice to her or she would just disallow all my...tax exemptions. This is after they went after me for a blatant mistake on their part [when] they tried to accuse me of fraud...(their ****** OCR equipment read the wrong number on one of my returns and then hilarity ensued).
...I’m just waiting for them to outlaw usage of cash since it can’t be tracked. MORE
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