{"id":11576,"date":"2019-01-02T22:20:11","date_gmt":"2019-01-02T22:20:11","guid":{"rendered":"https:\/\/davidgerard.co.uk\/blockchain\/?p=11576"},"modified":"2019-01-02T23:38:34","modified_gmt":"2019-01-02T23:38:34","slug":"news-georgia-state-senator-jailed-over-bitcoin-miners-bitmain-ceos-stablecoin-money-laundering-fca-kleiman-v-wright-deltec-and-tether-notes-from-the-crash","status":"publish","type":"post","link":"https:\/\/davidgerard.co.uk\/blockchain\/2019\/01\/02\/news-georgia-state-senator-jailed-over-bitcoin-miners-bitmain-ceos-stablecoin-money-laundering-fca-kleiman-v-wright-deltec-and-tether-notes-from-the-crash\/","title":{"rendered":"News: Georgia state senator jailed over Bitcoin miners, Bitmain CEOs, stablecoin money laundering, FCA, Kleiman v. Wright, Deltec and Tether, notes from the crash"},"content":{"rendered":"<ul>\n<li>It&#8217;s 2019. If you&#8217;re still holding cryptos\u00a0\u2014 <em>repent!<\/em> Sell them all and buy copies of <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/book\/\">my book<\/a> (<a href=\"http:\/\/amzn.to\/2xSxs1e\">US<\/a>, <a href=\"http:\/\/amzn.to\/2iW7kzW\">UK<\/a>) for everyone you know, and everyone you don&#8217;t know!<\/li>\n<\/ul>\n<p>The government of Georgia will hold a <a href=\"https:\/\/docket.hallcourts.com\/result\/2018CR001554\">special official event<\/a> for state Senator Michael Williams\u00a0\u2014 author of a <a href=\"https:\/\/legiscan.com\/GA\/text\/SB464\/id\/1739174\">2017 bill<\/a> for Georgia to accept Bitcoin for taxes\u00a0\u2014 so that he can explain his <a href=\"https:\/\/www.ajc.com\/news\/local\/former-candidate-for-governor-indicted\/mFyt65azxuJhQPu5ANuRbJ\/\">secret crypto mining technology<\/a> to goverment employees! That is to say &mdash; he&#8217;s just <a href=\"https:\/\/eu.usatoday.com\/story\/news\/politics\/onpolitics\/2018\/12\/27\/michael-williams-georgia-jail-insurance-fraud\/2420141002\/\">reported to jail<\/a> after his indictment for insurance fraud. He&#8217;s charged with falsely claiming $300,000 of Bitcoin miners had been stolen from his office, and lying to investigators.<\/p>\n<p>Bitmain recently <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2018\/12\/28\/news-bitmain-fires-half-its-employees-and-all-of-bitcoin-cash-bitcoin-private-exploit-kleiman-v-wright-proceeds\/\">fired half its employees<\/a> \u2014 now, founders and co-CEOs Jihan Wu and Micree Zhan <a href=\"https:\/\/news.8btc.com\/jihan-wu-and-micree-zhan-alleged-step-down-as-ceos-of-bitmain\">may be stepping down.<\/a><\/p>\n<p>A stablecoin user is <i>shocked<\/i> that <a href=\"https:\/\/www.ccn.com\/paxos-standard-hassling-ethereum-traders-trying-to-redeem-stablecoin-pax-for-dollars\/\">the Paxos Standard has to obey anti-money-laundering laws.<\/a> The aggrieved trader in question literally quotes Paxos&#8217; email explaining that the problem is &#8220;the inbound Huobi transactions valued at 9,965 each, occurring multiple times within a single day&#8221; \u2014 that is, the trader&#8217;s blatant <a href=\"https:\/\/en.wikipedia.org\/wiki\/Structuring\">structuring<\/a> to move a large amount of money, but keep each transaction under the $10,000 reporting requirement. If you don&#8217;t think the <a href=\"https:\/\/en.wikipedia.org\/wiki\/Bank_Secrecy_Act\">Bank Secrecy Act<\/a> applies to cryptos, you&#8217;re in for an <i>educational<\/i> time.<\/p>\n<p>In the UK, the Financial Conduct Authority is <a href=\"https:\/\/www.ft.com\/content\/04e22444-0c32-11e9-acdc-4d9976f1533b\">investigating 18 businesses involved in the sale of cryptocurrencies.<\/a> This is out of the 67 they were investigating in <a href=\"https:\/\/www.telegraph.co.uk\/investing\/news\/city-watchdog-steps-inquiries-crypto-firms\/\">November.<\/a><\/p>\n<p>The case of the Estate of Dave Kleiman v. Craig Wright <a href=\"https:\/\/www.courtlistener.com\/docket\/6309656\/68\/kleiman-v-wright\/\">survives another motion to dismiss<\/a> (<a href=\"https:\/\/www.courtlistener.com\/recap\/gov.uscourts.flsd.521536\/gov.uscourts.flsd.521536.68.0.pdf\">PDF<\/a>) \u2014 with the judge granting that Bitcoin is sufficiently money-like that a claim of <a href=\"https:\/\/en.wikipedia.org\/wiki\/Conversion_(law)\">conversion<\/a> is a possible claim to make. I mentioned this <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2018\/12\/28\/news-bitmain-fires-half-its-employees-and-all-of-bitcoin-cash-bitcoin-private-exploit-kleiman-v-wright-proceeds\/\">last week,<\/a> but I just spotted one interesting thing in the PDF \u2014 the claims of misappropriation had passed the three-year statute of limitations, because Ira Kleiman, executor of his brother&#8217;s estate, was apparently contacted by an auditor from the Australian Tax Office concerning Wright in April 2014. Wish I&#8217;d known that for <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/table-of-contents\/\">Chapter 6<\/a> of the book &#8230;<\/p>\n<p>It looks like the money Bitfinex\/Tether had deposited at <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2018\/10\/17\/bitfinexs-banking-problems-solved-snitches-get-stitches\/\">Deltec in the Bahamas<\/a> was there just long enough for Deltec to issue that <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2018\/11\/04\/news-tether-winklevoss-vs-shrem-regulation-consensys-asteroid-mining-ethereum-analysis-proof-of-work-is-still-awful\/\">letter<\/a> certifying the money&#8217;s existence \u2014 and was <a href=\"https:\/\/twitter.com\/ExkrementKoin\/status\/1077052141792051200\">withdrawn soon after.<\/a> Also, the money <a href=\"https:\/\/twitter.com\/ExkrementKoin\/status\/1078117314330087425\">may not even have been present<\/a> at the time of Deltec&#8217;s letter.<\/p>\n<p><strong>MY PRICE PREDICTION FOR 2019:<\/strong> Bitcoin will remain tradeable for actual money, at <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2018\/01\/04\/why-you-cant-cash-out-pt-3-bitcoin-is-not-a-ponzi-scheme-it-just-works-like-one\/\">various prices.<\/a> Larry Cermak goes through some <a href=\"https:\/\/www.theblockcrypto.com\/2018\/12\/31\/here-comes-the-new-year-please-stop-irresponsibly-predicting-cryptocurrency-prices\/\">ridiculous Bitcoin price predictions for 2018<\/a> \u2014 a pretty good roundup, though somewhat incomplete in not at least mentioning Mr McAfee&#8217;s <a href=\"https:\/\/twitter.com\/officialmcafee\/status\/887024683379544065?lang=en\">bold and famous price prediction,<\/a> even if that was for 2020. Keep in mind that the ridiculous price predictions are all attempts to get a headline, to make Bitcoin look good to the general public \u2014 because the <em>entire<\/em> game is to get <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2018\/01\/04\/why-you-cant-cash-out-pt-3-bitcoin-is-not-a-ponzi-scheme-it-just-works-like-one\/\">new actual money coming in,<\/a> since the incoming supply of actual money dropped precipitously when all the suckers from the bubble went home.<\/p>\n<p>&#8220;Normally people would be pulling their hair out&#8221;: <a href=\"https:\/\/www.smh.com.au\/business\/markets\/normally-people-would-be-pulling-their-hair-out-how-are-bitcoin-backers-handling-the-crash-20181231-p50owa.html\">How are Bitcoin backers handling the crash?<\/a> Apparently by claiming &#8220;my mouth isn&#8217;t filled with blood, it&#8217;s <a href=\"https:\/\/twitter.com\/dril\/status\/460673146451161088?lang=en\">victory wine.<\/a>&#8221;<\/p>\n<p>&#8220;Fund managers specialising in cryptocurrencies are <a href=\"https:\/\/www.ft.com\/content\/46f022a2-0e65-11e9-a3aa-118c761d2745\">appealing for patience from investors.<\/a>&#8221; I bet they are. Specifically, Pantera and Galaxy Digital. &#8220;The asset class continues to show signs of maturity,&#8221; Galaxy alleged in a November letter to investors. Michael Novogratz of Galaxy <a href=\"https:\/\/www.ft.com\/content\/9e94a4fc-e9c0-11e8-885c-e64da4c0f981\">told his aggrieved investors<\/a> that <em>instititutional investors!!<\/em> will get into cryptos big time in the first quarter of 2019: &#8220;That\u2019s when prices start moving again,&#8221; apparently.<\/p>\n<p>&nbsp;<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">In theory, there should be no connection between what happens with cryptocurrencies and what happens with enterprise blockchain.<\/p>\n<p>In reality, &quot;blockchain&quot; has always just been an attempt to ride crypto&#39;s cool factor. So if coins crash, people stop caring about blockchain. <a href=\"https:\/\/t.co\/mC67ZutkoS\">https:\/\/t.co\/mC67ZutkoS<\/a><\/p>\n<p>&mdash; Joe Weisenthal (@TheStalwart) <a href=\"https:\/\/twitter.com\/TheStalwart\/status\/1075378329811865601?ref_src=twsrc%5Etfw\">December 19, 2018<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>&nbsp;<\/p>\n<p>Cryptocurrency failed so hard as <a href=\"https:\/\/bitcoin.org\/bitcoin.pdf\">&#8220;electronic peer-to-peer cash&#8221;<\/a> that a lot of newbies are literally unaware it was ever anything other than a speculative &#8220;investment.&#8221; From Reddit \/r\/CryptoCurrency \u2014 surprise and amazement at the idea of <a href=\"https:\/\/np.reddit.com\/r\/CryptoCurrency\/comments\/aa1lhu\/do_you_guys_like_this_idea_basically_a_market\/\">a <i>market,<\/i> where you could <i>buy<\/i> stuff with cryptos!<\/a><\/p>\n<p>Morrison Cohen LLP&#8217;s <a href=\"https:\/\/www.morrisoncohen.com\/news-page?itemid=471\">MoCo Cryptocurrency Litigation Tracker<\/a> is regularly updated \u2014 last update 17 December 2018 \u2014 and is a heartwarming read.<\/p>\n<p>Stephen Palley wrote a piece on insurance against Bitcoin losses for the American Bar Association last year, and it&#8217;s finally <a href=\"https:\/\/www.americanbar.org\/groups\/litigation\/committees\/insurance-coverage\/articles\/2018\/coverage-bitcoin-losses\/\">up on the ABA website.<\/a><\/p>\n<p>Nancy Nakamoto: <a href=\"https:\/\/medium.com\/@nancynakamoto_11949\/the-princess-bride-and-the-mystery-of-the-tether-business-model-d76a08c94734\">The Princess Bride and The Mystery of the Tether Business Model. <\/a><\/p>\n<p>Nic Carter&#8217;s <a href=\"https:\/\/medium.com\/@nic__carter\/fifteen-dead-cryptocurrency-predictions-twelve-months-on-d08e7b310ff1\">Fifteen dead cryptocurrency predictions, twelve months on<\/a> is surprisingly good for a Bitcoin maximalist take.<\/p>\n<p>In January 2018 I posted about where ICO &#8220;advisors&#8221; come from \u2014 usually, it&#8217;s a <a href=\"https:\/\/davidgerard.co.uk\/blockchain\/2018\/01\/27\/where-do-ico-advisors-come-from-paid-endorsements-and-nothing-else\/\">paid celebrity endorsement deal,<\/a> where you let them use your name and photo for a pile of tokens. The ICO was <a href=\"https:\/\/wiix.io\/\">wiix.io<\/a>, and the <a href=\"https:\/\/coinmarketcap.com\/currencies\/wxcoins\/\">WXC<\/a> token is another decaying altcoin; I&#8217;m pleased to say none of the people who were cc&#8217;d on that email with me signed up as advisors. But assume other outside &#8220;advisors&#8221; just sold their names.<\/p>\n<p>&nbsp;<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">10. <a href=\"https:\/\/twitter.com\/davidgerard?ref_src=twsrc%5Etfw\">@davidgerard<\/a>, <a href=\"https:\/\/twitter.com\/JorgeStolfi?ref_src=twsrc%5Etfw\">@JorgeStolfi<\/a> and friends at \/r\/buttcoin provide a much-needed service in shedding light on the crypto space&#39;s worst excesses, and good crypto communities should welcome their scrutiny.<\/p>\n<p>&mdash; vitalik.eth (@VitalikButerin) <a href=\"https:\/\/twitter.com\/VitalikButerin\/status\/1079688727058939904?ref_src=twsrc%5Etfw\">December 31, 2018<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>&nbsp;<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"und\" dir=\"ltr\">Uzbekistan representing (by Jamesv1985) [image] <a href=\"https:\/\/t.co\/uKGHujkKix\">https:\/\/t.co\/uKGHujkKix<\/a> <a href=\"https:\/\/t.co\/8ve8wIUCIi\">pic.twitter.com\/8ve8wIUCIi<\/a><\/p>\n<p>&mdash; r\/Buttcoin (@r_Buttcoin) <a href=\"https:\/\/twitter.com\/r_Buttcoin\/status\/1079044532711366657?ref_src=twsrc%5Etfw\">December 29, 2018<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>&nbsp;<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">I was chatting to a fellow CTO a few months ago who had a client who asked how you add a column to a blockchain. He realised the client thought it was just a database.<\/p>\n<p>&mdash; Paul Lomax (@PaulLomax) <a href=\"https:\/\/twitter.com\/PaulLomax\/status\/1078214861509791745?ref_src=twsrc%5Etfw\">December 27, 2018<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>&nbsp;<\/p>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">Showerthought: When measured in forks per second, Bitcoin scales quite well.<\/p>\n<p>&mdash; Emin G\u00fcn Sirer (@el33th4xor) <a href=\"https:\/\/twitter.com\/el33th4xor\/status\/1080105503324291072?ref_src=twsrc%5Etfw\">January 1, 2019<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>&nbsp;<\/p>\n<br><br><div align=\"center\"><p><a href=\"https:\/\/www.patreon.com\/bePatron?u=8420236\"><img src=\"https:\/\/davidgerard.co.uk\/blockchain\/wp-content\/uploads\/2021\/10\/become_a_patron_button.svg\" alt=\"Become a Patron!\" title=\"Become a Patron!\" width=217 height=51><\/a><br><p style=\"align:center;\" class=\"patreon-badge\"><i>Your subscriptions keep this site going. <a href=\"https:\/\/www.patreon.com\/bePatron?u=8420236\">Sign up today!<\/a><\/i><\/p><\/div>","protected":false},"excerpt":{"rendered":"<p>&#8220;In reality, &#8216;blockchain&#8217; has always just been an attempt to ride crypto&#8217;s cool factor. So if coins crash, people stop caring about blockchain.&#8221;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[38,343,146,493,977,166,1105,9,235,6,948,1104,1103,1106,1082,906,120,39,745,1107],"class_list":["post-11576","post","type-post","status-publish","format-standard","hentry","category-uncategorised","tag-bitfinex","tag-bitmain","tag-craig-wright","tag-dave-kleiman","tag-deltec","tag-fca","tag-galaxy-digital","tag-ico","tag-jihan-wu","tag-links","tag-michael-novogratz","tag-michael-williams","tag-micree-zhan","tag-morrison-cohen","tag-pantera","tag-paxos-standard","tag-stephen-palley","tag-tether","tag-united-states","tag-wiix"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/11576","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/comments?post=11576"}],"version-history":[{"count":43,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/11576\/revisions"}],"predecessor-version":[{"id":11620,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/posts\/11576\/revisions\/11620"}],"wp:attachment":[{"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/media?parent=11576"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/categories?post=11576"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/davidgerard.co.uk\/blockchain\/wp-json\/wp\/v2\/tags?post=11576"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}