Who Needs Law School?

Recently I reported on Internet cause célèbre Ross Ulbricht, allegedly Dread Pirate Robers, founder and leader of online black market The Silk Road. Hailed by Libertarians far and wide as a hero fighting The Man, Ulbricht has been accused of building a website whose express purpose was to sell illegal items, including but not limited to, drugs. Ross’s mother Lyn Ulbricht recently appeared at Libertarian celebration Porcfest where she gave a speech about her son, then an interview where she spoke about the horrors that would be visited upon the citizenry of America should her son be convicted.

 

The narrator (presumably the person who interviewed Mrs. Ulbricht) says “This case is the birth of law for the digital future. Watch it as a spectator at your peril. How will the results affect everyone’s future regarding the Internet, liability, privacy, and Bitcoin?” and the response is, as you would expect, highly hyperbolic.

Mrs. Ulbricht believes that this case will set some sort of precedent whereby the Government will now begin to intrude on people’s freedom on the Internet, which would be an incredible leap from their existing behaviour of respecting people’s privacy online. And we don’t want that, now do we?

She goes on to argue that her son should not be held responsible for what people used the Silk Road for since he only hosted the web site, he didn’t sell any contraband himself. That means her little boy is protected under the Communications Decency Act which prevents website operators (like Facebook, for instance) from being held liable if a user posts something illegal on the site (like a death threat against the President, for example.) Further, Mrs. Ulbricht believes (likely as a result of attorney Joshua Dratel’s advice) that money laundering charges don’t apply here because bitcoin isn’t money! Check-and-MATE motherfucker!

Law school, bitch!

Law school, bitch!

Now, I am not a lawyer myself, so Mr. Dratel definitely has a leg up on me there. I have watched a shit ton of cop shows on TV, however. Not so much the courtroom dramas, but I still like to think that I have a fairly firm grasp on the fundamentals of the US legal system. So after I found this video posted up on Reddit, I decided to post my views on it.

  1. The TOR scare isn’t very valid. The government developed TOR and they know who uses it (lawyers, journalists, corporations) and why they use it (to protect State Secrets, corporate Intellectual Property, to protect journalistic sources, etc) so saying “And if you use TOR the gubment is going to call you a criminal!” is spurious. That will just be added as evidence along with other behaviors you engage in to build a case. Using TOR by itself means nothing.
  2. If I exchange a kilo of cocaine for a Cadillac El Dorado I cannot say in my defense “No money changed hands!” because that is a ridiculous argument. I am still trafficking in contraband and it doesn’t matter what I exchanged it for. If, however, I make the exchange for a precious commodity like gold or bitcoin, then money laundering charges may apply, especially if the commodity in question is sold for fiat currency. NOTE: That does not mean I agree that cocaine should be illegal, but I don’t have the power to change that law.
  3. Ross Ulbricht cannot say he cannot be held responsible for people selling drugs on his website since his website was designed to facilitate the sale of drugs. Further, since he held money in escrow for both parties, that makes him an accessory before and after the fact.

This counts as studying for the bar, right?

A few hours later, after interviewing one of the founders of 21st Century car service Beepi, I decided to swing by Wired.com to see what was happening. Turns out, there was an update on the Ross Ulbricht case:  Judge Katherine Forrest issued a 51 page ruling declining to dismiss all charges against Mr. Ulbricht, presumably while trying to keep a straight face in light of the ridiculous reasons offered by Mr. Dratel.

Among the charges she refused to dismiss were: narcotics trafficking conspiracy, money laundering, and hacking conspiracy charges, as well being charged with “continuing a criminal enterprise” better known as the “kingpin” statute used to prosecute criminal gang and cartel leaders.

Filed in April, the motion to dismiss raised interesting questions: Can Ulbricht be accused of running a drug-selling conspiracy when he merely ran a website that made the narcotics sales possible? And can he be charged with money laundering when bitcoin doesn’t necessarily meet the requisite definition of money?’

Judge Forrest apparently watched the same TV shows I did (not sure if she watched them while at law school or home) because her answer was yes and yes . Every argument was rejected (probably with “DUH” interjected every so often) starting with the idea that Ulbricht had merely provided a platform for hosting the Silk Road’s e-commerce, just like eBay or Craigslist.

“Silk Road was specifically and intentionally designed for the purpose of facilitating unlawful transactions, Ulbricht is alleged to have knowingly and intentionally constructed and operated an expansive black market for selling and purchasing narcotics and malicious software and for laundering money. This separates Ulbricht’s alleged conduct from the mass of others whose websites may—without their planning or expectation—be used for unlawful purposes.”

Dratel, had attempted to make the case that if anything, the Silk Road should be covered by a law known as the “Crack House Statute.” Passed in 1986, the law was created to hold landlords accountable for knowingly owning a property where drug deals were taking place. Dratel reasoning went along the lines that this law would be unnecessary if the more serious narcotics charges in his client’s case applied.

Forrest, however, countered that Ulbricht is accused of being much more than a negligent landlord. By allegedly designing the Silk Road to maximize user anonymity via Tor and bitcoin, she argues that he had invited drug dealers onto the property.

“Ulbricht’s alleged conduct is more akin to a builder who designs a house complete with secret entrances and exits and specially designed traps to stash drugs and money, This is not an ordinary dwelling, but a drug dealer’s ‘dream house.’”

She also noted that Ulbricht is accused of working to organize, control, and take a commission from all sales on the Silk Road—the kind of behavior that would make him an active participant.

“The allegations amount to Ulbricht acting as a sort of ‘godfather’—determining the territory, the actions which may be undertaken, and the commissions he will retain; disciplining others to stay in line; and generally casting himself as a leader – and not a service provider.”

Law SCHOOLED, bitch!

So far, I’m doing okay here, right?  The Judge and I agree that you cannot create a platform for the express purpose of creating criminal activity, then say “Holy shit, I didn’t believe anyone was actually going to DO it!  Although I made sure they understood they had to pay me a cut of the action if they DID decide to do it!” 

What about the bitcoin isn’t money, argument, though?  Both FINCEN and the IRS say it isn’t, but I have argued that barter still counts since the IRS will tax you regardless. Well, according to Judge Forrest, barter still counts when you are conducting drug deals.

“Sellers using Silk Road are not alleged to have given their narcotics and malicious software away for free – they are alleged to have sold them. The money laundering statute is broad enough to encompass use of Bitcoins in financial transactions. Any other reading would—in light of Bitcoins’ sole raison d’etre—be nonsensical.”

Apparently owning this makes you a paralegal.

This ruling is going to have a tremendous impact for a few other people, starting with Charlie Shrem, the former Bitcoin Foundation vice chairman who was arrested last January and charged money laundering for helping a Silk Road client exchange his bitcoins for cash. And of course, Cody Wilson who told a reporter for Wired magazine that DarkWallet is “money laundering software” because there’s no possible way for statements like that to come back and bite him in the ass.

And to ensure that no one took him out of context, Wilson went on to say “I want a private means for black market transactions, whether they’re for non-prescribed medical inhalers, MDMA for drug enthusiasts, or weapons.”

That’s a bold attitude, and one that I have no trouble admitting that I can admire. The question, however, is can he keep it up when the police are knocking on his door?

The Wolf of Bitcoin Street, Or How I Learned Crypto Investing the Hard Way

Some of you are really tech-savvy people, way more than I am, to be honest (I’m looking at you, Phelbore), but some of you aren’t. So, if I was to just start talking about Bitcoin, some of you would automatically know what I was referring to, others wouldn’t. For that reason, allow me to set you up with a really fast primer on the topic.

Behold the FUTURE

About 6 years ago a paper was released to the internet talking about a new way to make digital tokens of a finite supply. The creation of these would be done through cryptography, the creation and distribution of every token would be annotated by the software itself making counterfeiting impossible, and the entire process would work in near-total anonymity.

The idea was confined to the ultra-geeky for a while, until the arrival of drug bazaar Silk Road. Now that there was a place to use these tokens, called bitcoins, their value began a crazy rollercoaster of value leading to numerous boom-bust cycles that made a lot of people a lot of money.

Yeah, something like this.

I tried to get in on the ground floor of this, but again, I’m not quite as techy as I would like to be, so I kind of missed the boat. However, I did manage to jump on board the Bitcoin express before the value got TOO ridiculous (they have peaked at $1200 each), but I’m really wishing I had gotten them when they were just $2.

So, I got together about $350 to cover all the various fees that I had to pay in order to buy 3 Bitcoins from future cautionary tale Mt. Gox in Japan. Once I had them I immediately downloaded two of them into a cold wallet on my PC, leaving the other in Mark Karpeles’ sweaty little hands.

burning-cash

Yep, this is about what happened.

Karpeles, dumbass that he is, never bothered to file paperwork with the US government as a financial service bureau and the Fed seized $5 million dollars in assets. Then the rest of Gox’ problems started, and now I’m stuck with one bitcoin (along with some cash)  trapped in limbo while I try and advance my cryptocurrency trading agenda.

So when Bitcoin was around $900 each I sold my remaining two and set to work re-investing in other cryptos, waiting for the lightning to strike again. After all, Litecoin (the silver to Bitcoin’s gold) rose 490% in value in one year, who’s to say the game was over?

Then this guy showed up.

How can you not love that dog?

Dogecoin was a fork of the Litecoin protocol developed by Jackson Palmer who just thought it would be funny to mock the crypto movement by putting a picture of a dog making a silly face on a coin. And it succeeded beyond everyone’s wildest expectations. His joke saw a 3,200% rise in value in 30 days. And that was just the beginning.

The community that rallied around this coin is really big on charity and social development, so they first made a name for themselves by sending the jamaican bobsled team to the Sochi Winter Games which, as it turns out, was kind of a dubious achievement. They also helped some Indian athletes participate before funding a clean water campaign.

And this weekend, Dogecoin will pull off the biggest publicity stunt in the history of cryptocurrency:  they are sponsoring a NASCAR driver. This one event is going to bring more publicity to the crypto movement than the arrest of Dread Pirate Roberts. People love to hear about crime stories, no doubt, but the absurdity of a Shiba Inu-sponsored race car is too much for any news outlet to pass up on.

You have to admit, it’s got pizzazz.

 I’m not exactly a fan of NASCAR, never have been. Still, enough people are fans of it that I fully expect the price of Dogecoin to rise rather significantly right after this race. That price will likely crash in the very near future because, going forward, Doge is going to be facing some Wiemar-style inflation that is going to crush the price. When that happens and Doge ceases to be profitable to mine, I expect to see the price drop.

I have small stakes in various cryptos right now including:  Dogecoin, Kittehcoin, Potcoin, and Bitcoin and I’m actively experimenting with day trading now. It’s not that I expect to get rich suddenly, I just want to get a better understanding of this technology. It’s one thing to read about the stock market, another to actively participate. And for such small stakes, it’s not really a problem for me win or lose. And right now, I’m losing big. Kittehcoin was a disaster that completely caught me by surprise. Who knew that the Internet would favor a coin based on a dog over a coin based on cats?

That being said, I’ll be making weekly updates on the growth of the investment, showing how much I invested and how much I paid. I don’t like to sell at a loss, so I may end up holding a few of these for some time. Guess we’ll find out soon enough.

 

 

Dogecon SF

As some of you know, I am a big supporter of cryptocurrency, the so-called “internet of money.” I have eagerly followed all of the developments since I first heard about the mysterious Satoshi Nakamoto and his creation bitcoin in 2009. In the past 5 years cryptocurrency has exploded in popularity, giving life to nearly 2o0 different coins, some of which are actually truly innovative.

And then there’s Dogecoin.

2014-04-25 16.14.27

Named after an internet meme based around an adorable Shiba Inu, this currency celebrated it’s 138th day of existence yesterday at Dogecon in San Francisco. Since I happen to live right across the Bay, I made sure to put in an appearance.

So did this Shiba Inu

So did this Shiba Inu

Just yesterday I was reading a review of the new bitcoin documentary “The Rise and Rise of Bitcoin” and the reviewer’s main complaint was how it centered around white males in their 20s and 30s. So naturally when I arrived at Automattic my attention was directed at the demographics of the con’s attendees. While there was definitely a lot of caucasians there, I found a healthy mix of Asians in attendance, and a couple black guys were in the audience as well.

Aside from the very personable Tina Hui from Follow the Coin, and Litecoin creator Charlie Lee, however, the stage was dominated by white males. I’m not saying that this is a problem, per se, but I can definitely see how other people would argue that it is a problem. The lack of minority (and female) representation in Silicon Valley is well documented, and the crypto movement seems to be an extension of this, although it is a much more difficult case to make since anyone can release their own crypto if they can cough up $50 for it.

And now that I’ve made a nice case for how the crypto movement is (inadvertently) racist, allow me to present a video from yesterday’s conference.

 

That was Andreas Antonopoulos giving one of the best speeches I’ve ever heard about cryptocurrency and its transformative powers. It’s easy to become jaded when all you hear is nonsense from the Libertarian anarchists that founded the crypto movement, but this is something entirely different. It was a well-reasoned, factually accurate message about the power of cryptocurrency to bring the world one tiny step closer to true equality.

Financial power is the most easily wielded, and most publically acceptable, form of domination in the world today. While I was a student at the University of Washington I studied the crushing effects of economic domination, not only on the Global South, but here in America as well. The War on Poverty morphed into a War on the Poor and the a great many poor people eagerly enlisted to fight against their own best interests.

Every time I hear someone talking about electing Hillary Clinton to the Presidency in 2016 I find myself wondering if they have any fucking clue what they are asking for?  This is the same Hillary Clinton whose husband repealed the Glass-Steagal Act instead of vetoing it on his way out of the White House.  The Obama Administration has been run since day one by Clinton insiders, all of whom had strong ties to Wall Street.

Where are we now, as a nation?  Obama has been following damn near every fucking policy of George W. Bush, but giving much better speeches while doing it.

We need a better way, and I think that Andreas is correct; that way is cryptocurrency, the blockchain, and all of the benefits that come with it. There will be some rough roads ahead, no doubt, but Rome wasn’t built in a day. When it was finished though, people were pretty fucking stoked about the final product, even if it wasn’t perfect.