“What… is… that?!”That’s what one colleague asked when she saw this on my desk…My face, according to 3-D printing“My face,” I said. “What does it look like?”“Uh…”OK, sure. It’s a rough depiction. Eh. It’s pretty choppy…And, as you can see, the glasses didn’t really take well… making for an eerie sunken eye look.Didn’t really turn […]
Bitcoin has been pretty quiet lately. But that doesn’t mean big things aren’t taking place behind-the-scenes for the digital currency. In today’s Laissez Faire Today, Chris Campbell pulls back the curtain and shows you how Bitcoin is quietly slipping into the mainstream. He also shows you why now could be the time to buy now, or forever hold your peace. Read on…
In an odd mix of fate, protesters and corporations are holding hands. They both have one common goal: save the Internet from the evil cable companies. We all have a common hate for them. But what if the cable companies aren’t as evil as once thought? What if there’s an even bigger evil lurking behind them? There is. Read on…
Want to get rich? Don’t listen to financial “gurus,” says Chris Campbell. In today’s Laissez Faire Today, Chris shares a Zen proverb and shows how understanding it is the only real way to get rich (and live a rich life). Read on…
Ben Franklin once said, “An ounce of prevention is worth a pound of cure.” In today’s Laissez Faire Today, you’ll learn about one FREE website that has the potential to not only keep your family safe – but also open your eyes to what’s happening in your own neighborhood. Chris Campbell has all the details. Read on…
All over the world, power is dying. The dictators and tyrants of the world are no longer able to wield it like they once used to. And they’re losing it to the “little guy.” Chris Campbell shows you how to be the king of your castle by taking advantage of this fact. Today, you’ll learn how to grab “power gaps” in the market and channel them into your product idea or project. Read on…
Chris Campbell got more than he bargained for during Sunday brunch. In a packed restaurant, he learned about a hidden sex boom that’s taking the world by storm. You won’t believe how much money ordinary Americans are making in this boom. It’s so much…you may even consider cashing in yourself.
Hundreds of pictures of nude celebrities were leaked onto the Internet last week. The mainstream is blaming twenty-something hackers, but according to Chris Campbell, everyone must’ve already forgotten what we learned about the NSA only a year ago. Read on…
The fireflies along the tidal rivers of Malaysia show "feats of synchrony that occur spontaneously, almost as if nature has an eerie yearning for order." Chris Campbell tells you where else this might occur in the world. Also, new technology may revolutionize the agriculture industry and what we think of as a farm.
Jeff Davis is running for Governor in Hawaii and has an interesting campaign strategy. Also, what motivates hackers is revealed and the findings might surprise you. Finally, Ferguson is discussed in a new light. Chris Campbell has more...
When the government pumps trillions of dollars into the economy, they’re not actually printing the money. It enters as digital entries in banks across the country. It’s made the system fast, responsive, and, unfortunately, vulnerable. Now our money is no longer something we hold in our hands, but something that exists on a very susceptible network.
When’s the best time to invest in something? When everyone else is trying to get their money out of it. It might go against conventional thinking, but following the crowd usually makes you miss the real opportunities. At one monetary metal conference recently, the smartest guys in the industry sat down to discuss where these real hidden gems lay.
Say goodbye to your boring morning commute. New technologies are changing the way people drive their cars. It’s making them safer, more fuel efficient, and could reshape the way America builds its roads and cities. The only thing that could stand in the way...
In a 2009 article, the Huffington Post went into considerable detail about the number of people with PhD degrees in economics employed by the Board of Governors of the Federal Reserve System. This is the government’s branch of the Federal Reserve. It is not one of the 12 regional Federal Reserve banks, all of which […]
When the NSA surveillance news broke last year it sent shockwaves through CERN, the particle physics laboratory in Switzerland. Andy Yen, a PhD student, took to the Young at CERN Facebook group with a simple message: “I am very concerned about the privacy issue, and I was wondering what I could do about it.”There was […]
Remember that correction we’ve been quietly talking about over the past couple of months?Well, it might be right around the corner. Stocks waited until the last day of the month to nose-dive. The S&P 500 posted its first 2% down day since April — and the Dow wasn’t far behind. Early this morning, futures continue […]
I was talking with one of my colleagues the other day, and he raised a very interesting question, one that deserves consideration by anyone worried about their digital privacy. He read an article that championed the idea that the more steps one took to protect their privacy by using anonymous Web-browsing tools like Tor, the […]
Health care costs in the U.S. have been rising so steadily for so long that containment barely seems possible. Even optimists don’t dream of cutting the price tag. As its official name — the Patient Protection and Affordable Care Act — suggests, Obamacare aims for affordability, not radical reduction.But at a time when we’re all […]
When you type a website address into a browser, you might have noticed that the letters “http” appear at the front. “HTTP” stands for Hypertext Transfer Protocol. In typing a Web address, you are actually sending an HTTP command to transmit that website to you. Hypertext Transfer Protocol is the means by which information is […]
Picture the scene. It’s 2020. You’re at the checkout in a convenience store with a carton of milk. But you’ve got no cash and you’ve left your cards at home. No problem. You scan your right index finger; the green light flashes. Purchase approved and you leave. Easy.Is this a realistic vision of the future, […]
After a week of reckoning about the American oil and gas boom… I’ve got to get something off my chest.I can’t stand it when a coworker takes credit for something I did.Whether it’s a special report I wrote or just a little investing trick I found on my own — if someone takes it and […]
Franklin Delano Roosevelt famously used the term “forgotten man” in a 1932 speech to describe those at the bottom of the economic pyramid who, he felt, government should aid.But the originator of the phrase “forgotten man” had a whole different meaning in mind. He aimed to expose the seeming good intentions of government to reveal […]
I want to share some insight and give you a front-row seat to America’s next big shale play.Let’s get to it…Over the past 10 years, the U.S. has turned the ship around, quite literally.We’ve gone from a country that was expecting to import massive amounts of oil and gas — to a country that’s sitting […]
Whatever your views on the role of government, one thing is clear: There will be no way to pay for it if the economy doesn’t grow. And I’m not talking by a measly percentage point or two. If we can’t find our way back to 5% annual economic growth or above soon, America’s accumulated federal […]
What if I told you that the march of human progress could be traced in a direct line from the Epicureans of Ancient Greece… through the 18th Century’s cure for smallpox… to where Steve Jobs and Bill Gates found inspiration as scrappy teenagers… to the flying car of tomorrow?Stay with me and I’ll show you […]
Real progress happens through real people, ideas, and innovations. Not by legislation argued and debated in Congress. Right now, one of the most influential technologies is changing the way people do business. And reinventing the future in the process.
Innovation can change the world… if the world lets it. Unfortunately, society’s gatekeepers make it a point to constrain, regulate, and control these ideas. But their power is limited, and the power of innovation is too great. Unfortunately for regulators, there are some technologies they can’t control.
BitInstant CEO Charlie Shrem, along with alleged co-conspirator Robert Faiella, was arrested by federal authorities last week for allegedly laundering more than $1 million worth of Bitcoins. This is a tiny amount compared to the largest drug-and-terrorism money laundering case ever. Yet when British bank HSBC was found guilty in 2012 of laundering billions, the firm paid a fine of $1.9 billion. Authorities made no arrests, and HSBC still turned a $13.5 billion profit that year.
Rolling Stone’s Matt Taibbi detailed the crimes HSBC helped fund, including “tens of thousands of murders” and laundering money for Al Qaeda and Hezbollah. By contrast, Silk Road users have only been shown to have bought and sold drugs. (The six murders-for-hire commissioned by alleged former Silk Road head Ross Ulbricht were never carried out.) In fact, by moving transactions online, Silk Road likely decreased the violence associated with the drug trade.
Again, no individual associated with HSBC paid any money or spent a day in jail. Shrem is currently in custody. Why is there such a disparity? Clearly the size, scope, violence or effect of the crime can’t justify the discrepancy in response. The Justice Department explained it by saying that HSBC is, in essence, Too Big to Jail.
“Had the U.S. authorities decided to press criminal charges,” said Assistant Attorney General Lanny Breuer during the announcement of the HSBC settlement. “HSBC would almost certainly have lost its banking license in the U.S., the future of the institution would have been under threat and the entire banking system would have been destabilized.”
What are the moral and practical underpinnings of a law whose punishments are harshest for those who violate it least? The Justice Department is here admitting that the costs of fairly enforcing the money laundering laws as written — potentially shaking up a major bank — outweigh the benefits.
Charlie Shrem founded BitInstant, a service that let users quickly buy into Bitcoin, in his family’s garage with $10,000 of their money while still in college. He became a founding member of the Bitcoin Foundation and served as vice chairman of the board — a position he’s since stepped down from. But his startup was plagued by regulatory troubles from the start, fueled by a lack of clear regulation pertaining to Bitcoin. In a trailer for the Bitcoin documentary “The Rise and Rise of Bitcoin,” Shrem claims to spend “thousands of dollars on lawyers every day just to make sure that I’m not gonna go to jail.”
While Shrem operated in regulatory uncertainty, and didn’t know the charges against him on the day he was arrested, HSBC received 30 different formal warnings in just one brief stretch between 2005 and 2006. Even then, HSBC was openly flouting the rules. The bankers knew, for instance, that they were funneling money for people such as one of 20 early financiers of Al Qaeda, a member of what Osama bin Laden himself apparently called the “Golden Chain,” according to Taibbi. Another customer was powerful Syrian businessman Rami Makhlouf, a close confidant of the Assad family.
Some, including Taibbi, have called for equal jail time for all offenders. There is no doubt that the Justice Department is overstating the lasting, worldwide effect of justly applying money laundering laws. However, the drawbacks to enforcing laws against what’s estimated to make up a third of all transactions are very real. In this reality, it’s legitimate to ask whether laws against money laundering should be applied to anyone.
Money laundering is, simply, the process of concealing sources of money. While the standard image of money laundering involves murders, Mexican narco-gangs, and Al Qaeda, in reality there are many reasons that normal people would want to keep their transactions anonymous — which is a big reason why Bitcoin gained popularity with libertarians in the first place.
As J. Orlin Grabbe wrote, “Anyone who has studied the evolution of money-laundering statutes in the U.S. and elsewhere will realize that the ‘crime’ of money laundering boils down to a single, basic prohibited act: Doing something and not telling the government about it.” Criminalizing this means that by default government has the right to know the source of all of every citizen’s money. In some jurisdictions, money laundering can be just using financial systems or services that do not identify or track sources or destinations.
Writing in American Banker, Bitcoin advocate Jon Matonis explains that “from President Roosevelt’s 1933 seizure of personal gold to the Nazi confiscation of Jewish wealth to the recent deposit theft at Cyprus banks, asset plundering by governments has a long and colorful tradition. Protecting wealth from oppressive regimes continues to this day.”
In that piece, Matonis calls money laundering the thoughtcrime of finance, a sentiment that’s gained traction in libertarian circles. Hiding or failing to report where money comes from is, in and of itself, a victimless crime. The theory is that everyone owes it to the government to make enforcing laws against violent crime easier. But that’s not really accurate, as most of the laundered money is used in other crimes whose violence stems from their being illegal, such as gambling and the drug trade.
This reporting to the government comes at a significant cost, both in terms of resources and privacy.
The Economist has estimated the annual costs of anti-money laundering efforts in Europe and North America to be in the billions. Even its most legitimate function, trying to keep people from financing terror, has been deemed a costly failure by the magazine. Curiously enough, the Economist concedes that efforts to reduce identity theft and credit card fraud are most effective at combating money laundering.
Perhaps this cost could be justified if the information gathered through the reporting requirements was used to cut off funds to terrorists. But as the HSBC case shows, that’s not the case. After getting notice after notice about failing to properly report on its customers, HSBC simply hired former call center employees to “investigate” cases of money laundering to unsavory characters. And when one employee actually did, he was fired.
Besides costing billions, efforts to stamp out money laundering also erode privacy. Ensuring every transaction is above board forces banks to be cops through so-called “know your customer” laws. These laws essentially conscript private businesses “into agents of the surveillance state,”according to the American Civil Liberties Union. Bitcoin offers an interesting counterpoint: Even if accounts may be anonymous, transactions are all public, which is a level of transparency not seen in the fiat currency system.
So why does alleged Bitcoin laundering deserve jail time? On a pure cost-to-benefit basis, perhaps it makes sense to jail Shrem while giving HSBC executives a slap-on-the-wrist fine. Revoking the bank’s license would rock the entire financial system, while Shrem’s enterprise was already on hold at the time of his arrest.
However, laws which result in jail time for minor infractions while the worst offenders walk free deserve their own cost/benefit analysis. If money laundering laws are worth their cost to companies, to the government, and to privacy, surely they are worth applying fairly and evenly. If not, perhaps its time to rethink whether they make sense at all.
— Cathy Reisenwitz
This article originally appeared here on Vice.com.
Cathy Reisenwitz is an editor at Young Voices and a D.C.-based writer and political commentator. She is editor-in-chief of Sex and the State, and her writing has appeared in Forbes, the Chicago Tribune, Reason magazine, Talking Points Memo, The Washington Examiner, and the Daily Caller.