Bitcoin FinCEN Rumors Confirmed And Investigated

FinCEN Likely To Act In November Against Bitcoin Related Companies

Last week BitcoinPriceLive was the first news site to report about the rumor of upcoming FinCEN actions before the Money 20/20 conference on November 4. The originator of the FinCEN rumor Taariq Lewis responded to our story via Twitter to say that BitcoinPriceLive got the basis of the story “absolutely WRONG”.

Additional research was done on the FinCEN and director Jennifer Calvery to learn about how FinCEN may act in the future. We spoke with experts in the field of banking and financial regulations to get another opinion on the authenticity of the rumor.

Taariq Lewis Responds About FinCEN Rumor

Taariq Lewis Responds About FinCEN Rumor


Taariq Displeased At Posting The FinCEN Rumor Chat Log

Taariq says we got the basis of the story wrong and that it was “shoddy hearsay journalism”. We responded that the chat log was already posted on Reddit Bitcoin and on Bitcoin Talk, so therefore it was already in the public domain. If the information was truly confidential it should have never been posted in the public CounterParty chat room. Interestingly, Taariq never denied it was him speaking or that what he said was incorrect. It appears the issue he had with the story was that we made the rumor more public than it already was.

BitcoinPriceLive Speaks With Financial Expert About FinCEN Rumor

To learn more about the FinCEN rumor we spoke with an expert who knows the inner workings of the FinCEN organization. One important thing we learned was that FinCEN rarely pursues multiple companies at once.

Based off historical precedent, it is unlikely FinCEN will pursue “5 or 6” companies simultaneously. However, it is possible that the FinCEN rumor may be partially true with FinCEN warning 5 or 6 companies at once by sending a letter to the companies saying they must comply with US financial regulations.

FinCEN likes to have a clear and cut case before taking a company to court; this ensures that FinCEN wins most of their cases. FinCEN is generally pursuing large scale financial crimes such as the Bernie Madoff scandal where JPMorgan cleared the trades. FinCEN acted against JPMorgan they were fined $461 million.

JPMorgan FinCEN

JPMorgan FinCEN

The press release states:

WASHINGTON, D.C. – The Financial Crimes Enforcement Network (FinCEN) today fined J.P. Morgan Chase Bank, N.A. $461 million for willfully violating the Bank Secrecy Act (BSA) by failing to report suspicious transactions arising out of Bernard L. Madoff’s decades-long, multi-billion dollar fraudulent investment scheme. In consenting to the assessment of a civil money penalty, JPMorgan admitted to the facts set forth by FinCEN and that its conduct violated the Bank Secrecy Act.


“When JPMorgan suspected Mr. Madoff’s fraud, it focused on its own investment exposure and saved itself approximately $250 million,” noted FinCEN Director Jennifer Shasky Calvery. “If it had given the same attention to its anti-money laundering responsibilities, it could have saved itself $2 billion, and potentially saved thousands of other fraud victims untold misery and loss.”

In this particular case, FinCEN was concerned with money laundering and fraud victims.

How FinCEN Traditionally Works

When an organization wants to transmit money it must register with the FinCEN as an MSB (Money Services Business). This includes mom and pop shops which might do something as simple as running a convenience store with a Western Union terminal. Failing to the register with the FinCEN can cause the business to get a fine or be shut down.

Due to recent FinCEN regulations banks have taken a cautious stance against companies which may violate FinCEN compliance. MSBs already have a difficult time working with banks. Other industries that have difficulty setting up bank accounts include casinos and futures trading companies. If a bank decides to stop working with a client they usually send them a notice that their accounts will be shut down in 30 days.

FinCEN Investigative Wing Started In 2013

Our correspondent told BitcoinPriceLive that FinCEN recently started an “investigative wing” in 2013. The top talent of the FinCEN organization is being concentrated here and the FinCEN rumor if acted upon, would likely come from this department.

Earlier this year Charlie Shrem was indicted on money laundering charges. Shrem and his business partner were charged with two counts of operating an unlicensed money transmitting business. Whether or not these charges came from the FinCEN investigative wing is not clear, but is definitely a possibility.

Jennifer Calvery Takes FinCEN In New Direction

Jennifer Calvery At Bitcoin Hearing

Jennifer Calvery At Bitcoin Hearing

Jennifer Calvery is known to be on good terms with the United States Treasury department and may have further political ambitions. Her press releases show a directness that is not usually found in government officials. She is not likely to make an uncalculated move against a Bitcoin related company. It is likely that Bitcoin companies will be warned in advance to comply with regulations.

Other Regulations In USA May Be Wild Cards

While Calvery may work in predictable ways, there are other financial regulators in the USA which are less predictable. The U.S. Commodity Futures Trading Commission (CFTC) was created after the 2008 financial crisis and may be looking to make a name for themselves. Whether Bitcoin can be classified as a commodity is highly debatable.

There is also the Consumer Financial Protection Bureau (CFPB) which gathers complaints from consumers and then takes legal actions. Bitcoin mining companies may be at risk as mining companies often receive complaints about the performance of their machines, and have missed delivery dates before. The CFPB was a crowning achievement of the Dodd-Frank act, and already people are complaining that the CFPB is overstepping its bounds.

Final Speculations About FinCEN Rumor

For those looking to short Bitcoin from this rumor, BitcoinPriceLive would recommend a cautious approach. If it turns out that FinCEN sends letters to Bitcoin 2.0 companies asking them to comply it will likely not impact the Bitcoin price drastically. However, if members of CounterParty are indicted on federal charges, it could send shock-waves through the Bitcoin industry and crash the price of Bitcoin.

November 4 is coming soon, and the wait will be over to see if the FinCEN rumor comes true. Do you have any more information for BitcoinPriceLive about the FinCEN rumor? Leave us a comment below.

Author: Satoshi Nakamoto

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