Rumor That FinCEN Will Act Against U.S. Based Crypto-Currency Companies
A rumor has spread accross Bitcoin Talk forums, Reddit, and other related Bitcoin forums that the Financial Crimes Enforcement Newtork (FinCEN) will take action next month. They are expected to hand out “enforcement actions” against 5 or 6 U.S. based crypto-currency companies. According to the rumor, the FinCEN is targeting companies which are setting up virtual stock exchanges, or virtual assets. The list of target companies includes companies such as Counterparty, BitSharesX, Mastercoin, Maidsafe, and possibly Ethereum.
Taariq Lewis appears to be the originator of the rumor as a chat log was recorded and then re-posted across the internet. Lewis says the companies will receive the notice before the Money 20/20 conference held in Las Vegas from November 2-5. Some in the Bitcoin community are saying Lewis is a gold-bug and that his opinion should be taken with a grain of salt. In the chat log below, there appears to be other names confirming their Bitcoin related companies are being monitored by federal authorities.
- taariq lewis: HEADS UP COUNTERPARTY
- taariq lewis: Just got off the phone with a professional in the Compliance and Prosecution Space
- Wendell: *rolls eyes in advance*
- taariq lewis: Expect 5 – 6 Companies in Bitcoin to be handed enforcement actions
- taariq lewis: before Money 20/20 event on November 4th.
- taariq lewis: By US Gov at the Federal Level.
- Wendell: Good grief. But _companies_ is the underlying word?
- taariq lewis: Not sure whom these companies are, but FinCen, SEC, and Justice Department are expected to make announcements of fines and deferred fines against these companies.
- taariq lewis: If you are in USA and you run a Bitcoin Business that issues tokens and you are not registered with FinCen, expect these fines to be established guidelines going forward
- taariq lewis: Rumors are 3 – 6 USA Bitcoin companies are the targets.
- taariq lewis: I encourage everyone here who is US based and issuing convertible digital money on Counterparty to check with your attorneys and get your guidance on registering with FinCen. If FinCen doesn’t apply to you, don’t sit around and scratch. Write a letter to FinCen and tell them why you are exempt.
- taariq lewis: If you think you’re not being tracked/recorded, think again.
- taariq lewis: Good luck to us all.
- taariq lewis: Oh and yes, the punishments are PUNITIVE back to when these companies first launched or had their businesses running outside of FinCen regulations.
- taariq lewis: Lastly, if the Feds hand down actions, I fully expect the states to follow with their own legal actions as well. Of course, I’m not a lawyer and I could be wrong, but remember 2004 and PokerStars/ FullTilt/ Et al
- David Mondrus: Thanks taariq…
- Evan Stern: (expletive deleted) !
- Tim Swanson: fwiw, Taariq is correct
- Evan Stern: We have already found that the SEC is paying close attention to our project whilst on the phone with them.
- Tim Swanson: i’ve probably had 6-7 conversations with AML/KYC and MSB/MTL compliance experts in the past month who have said similar things
- :Matt: evan, what are you working on?
- Wendell: Oh boy!
- Evan Stern: Permacredits
- taariq lewis: Shit goin git reel.
- # Pastebin GZ1KeBbz
- Wendell: What big companies are actually *issuing* tokens?
- Wendell: SWARM Who else?
- Wendell: Is SWARM even incorporated?
- Xavier Hawk: Hmmm….CP, Bitshares, Swarm, mastercoin,
- Xavier Hawk: Ethereum
- Gavin Knight: ethereum would be a likely target do to the mass volume, but they seemed to have tight legal
- Xavier Hawk: Storj
- Xavier Hawk: Maidsafe
- Michael Sullivan: US companies
- Evan Stern: Starts with a V
- Xavier Hawk: Dogeparty
- Gavin Knight: I think you should differentiate between a protocol, and a company issuing tokens
- taariq lewis: Well, rumor is that after this action there will be NO MORE BITCOIN EXCHANGEs in USA.
- taariq lewis: sux. There’s only 1 left.
- Evan Stern: Wut.
- Shawn D Kennedy: 1?
- Shawn D Kennedy: in the US?
- Shawn D Kennedy: Bittrex, Poloniex and Cryptsy…
- Gavin Knight: they don’t deal with USD
- Gavin Knight: except cryptsy
- Gavin Knight: exchange in the us is just not practical when dealing with USD, which is why coinbase doesn’t function as such. Tether/Realcoin is aiming to integrate USD on the blockchain.
- Nick Rathman: cryptsy is probably a likely target
- Xavier Hawk: I went by there office in Delray fl
- Xavier Hawk: It was empty
- Xavier Hawk: They have a secret office somehwere
- Xavier Hawk: Lol
- Gavin Knight: I met the CEO and someone else awhile ago, decent people. I don’t think they are their full-time, but have 24/7 support
- Gavin Knight: taariq what was the source?
- Xavier Hawk: Yeah T any other horrible things? Lol
- taariq lewis: One of our advisors. I can’t divulge the name, but they were very clear that action is coming after all the rumors and that the Feds will make a statement about this industry.
At the end of the chat, Gavin Knight asked Taariq for his source, which he states is “One of our advisors. I can’t divulge the name…”. Clearly, this rumored FinCEN action should be taken as only a possibility and not a certainty given the second hand nature of the rumor.
Bitcoin Community Plays It Cautiously Against FinCEN
Just a rumor of FinCEN action is enough to send some in the Bitcoin community into panic mode. As the third reply of the Bitcoin Talk thread shows, one poster says: “Guys! I think it is time to short!”. On another Bitcoin related forum one poster says:
rumors of a possible FINCEN imposing fines on btc companies sometime before the nov 4th money 20/20 conference.
expect massive downward spike this month to new lows.
(i am currently shorting small position from 360 on futures at okcoin)
The above posts shows that just the rumor of action from the FinCEN is enough to make people go short on Bitcoin. It should be noted that this is not the first time the US Government has acted against Bitcoin. In July 2014, New York regulations hurt the Bitcoin industry because they made the legality of Bitcoin unclear.
We now ask our readers, does this rumor have any weight? Are you shorting Bitcoin or do you have any more evidence related to this rumor? Leave us a comment below.