Virtual Money Laundering & TPEs

[kevin350]

It's obvious that emotions on this issue make impossible to discuss it with any sense of coherency .

 

This post was about illegal money laundering activity and loopholes in process of electronic currencies.  I'd venture to say that few posters even read the links I provided.

 

This isn't hard to undersand:

1) The US Cyber Crimes Division have determined that electronic currencies offer an opportunity to launder money easily and that can be used for everything from illegal drug, gambling or even terroist activity.

2) Because currency can be "exchanged" using LL and Third Party Exchanges that deal in various electornic currencies, such as Bit Coin, LL and the other TPE's must comply with new US Federal Banking Regulations that prevent illegal activities of face fines and being shut down on June 1 by the Feds or the Federal Trade Commisison.

3) This is an inconvenience for EVERYONE involved, including LL.

 

 

If said illegal group opened 200 email, LL and various BitCoin related acounts, and simply passed $100 a day to each account (on non flaggable transaction) said groups could easily funnel $20,000 a day from mutliple countries to one location and fund all kinds of evil things.

This issue is NOT about the good people of SL, it's those exploiting it for not so good things.

Wake up and look beyond your own tiny little problem with the issue.

 

 

[Jadeclaw Denfu]

And one of the nastiest I think is Wonga.

Ok, back to the topic at hand:
A bunch of forumites have pointed out in other threads, that government intervention and the rise of Bitcoin has something
to do with the TPE shutdown. These forumites might be onto something here.
I found this today: Department of Homeland Security Shuts Down Dwolla Payments to and From Mt. Gox
""The DHS issued a "seizure warrant" for the funds associated with Mt. Gox's Dwolla account.
Warrant Reveals Homeland Security Seized Mt. Gox’s Dwolla Account for ‘Unlicensed Money Transmitting’ "

And the way, the TPEs worked, it could be interpreted as 'Unlicensed Money Transmitting'. And LL panicked...
I expect, this isn't the last time we hear something like this about Bitcoin or any other virtual currency.

 

[kevin350]

Jadeclaw -- Exactly, though I think the panic was warranted and they are scrambling to adhere to new regulations.

 

I just showed an example of how a terrorist organization could easily funnel $20,000 a day to any organization that were bomb building in any country.

LL and Bitcoin transactions = millions per month.

 

 

[Dillon Levenque]

My goodness. There is some SERIOUS money floating around in all this. Mt.Gox' volume over the last 30 days was over 445 million USD: http://bitcoincharts.com/markets/mtgoxUSD.html . Would most people feel comfortable moving money around in those volumes with a company that doesn't even bother to have the required license? The stock exchange is still suffering from fraud and insider deals even with constant oversight from the SEC. This guy appears to have no oversight from anybody.

[Qie Niangao]

It would be interesting to know how the transaction volume for goods and services compares to the total transaction volume including currency transfers and exchanges, for both L$s and Bitcoin. We know that ratio is minuscule for Bitcoin (there's not much one can actually purchase with it, which is hardly surprising given its volatility) but I have no idea what it is for the L$.

The Lab, however, should have a pretty good sense of it. If the average lifespan of an L$ between purchase and sale on the LindeX is low, that would pretty much show the L$ to be a popular money-laundering currency. (Here's where that volatility thing turns up again: Such currency turnover could be driven by speculation in the case of Bitcoin, but L$s trade in such a narrow range that speculating on the LindeX is a sport for those over-excited by watching paint dry.)

If it also turns out that many islands are merely fronts for such operations, we might see an abrupt drop off in estate sims coinciding with FinCEN-dictated inability to fund transactions anonymously. That could hurt the Lab's balance sheet, but a good thing nonetheless.