Cigarette Smuggling: Its not just the thing your cool Uncle did for you in high school (besides letting you watch scrambled porn in his wood-paneled den). It is a huge, ever growing, worldwide industry that you probably didn’t even know was a thing. Not that its your fault: in the United States, anyone�18 or over can get them, pretty much anywhere, and turn their lungs into ash (you still can’t legally get fucked up on wine coolers, though). How bad could it be?

Havocscope puts the worldwide illegal cigarette smuggling trade at $50 Billion, with $10 Billion in the United States alone. Or if you’re in the tech industry, that’s 10 Instagrams!

How?! How is something that is legal pretty much everywhere (Sans smoking bans in specific places like bars, restaurants and Idaho) make so much money?! How could Boston be in a situation where it is selling a legal, regulated product, and yet 40% of the cigarettes sold there are black market? In NYC, the rate is estimated to be as low as 48%, and as high as 60% , bringing yearly losses of $419 Million dollars for the state. How does a regulated product you can buy pretty much anywhere bring about such a huge loss? More specifically, who would Ron Paul blame for all this?

The answer is simple: Taxes. People buy smokes from “Alternative sources” (Reservations, states with lower taxes, the kid behind your old high school{go lions}) to avoid paying whatever the higher tax is in that state. See, here’s the thing: Each state has its own special tax on cigarettes. Some states have the infamous “Sin tax“, or that thing old people believe discourages other people from doing things that are bad for them, like drinking, smoking, masturbating, and buying junk food, thus�driving the price of that thing up (It doesn’t work, by the way).

So how does cigarette smuggling work? First, you get smurfers who will run to pharmacies around the state Well, as the Boston Globe explains, in places like Boston or New York (which, thanks to sin taxes, have put historically high taxes on smokes), smugglers will buy from either Native American reservations/factories on their land wholesale, or from states with lower taxes, like New Hampshire or Pennsylvania (Pennsylvania accounts for 60% of smuggled cigarettes in the US).�They then get them to the states with higher taxes. In Massachusetts, if you get caught with under 12,000 packs, its 1 year in jail. Over 12k packs, and its 5 years. Both penalties have fines up to $5,000. Meanwhile,�A Washington Post article from 2004 said that a whole truckload of cigarettes could net $2 Million off 800 cases, or 48,000 cartons. (Adjusted for inflation between 2004 and now, that $2M is more like $2.5M.) Bloomberg says that in the Carolinas, a load of 200 cases headed to New York can net almost $500,000.�So some people are seeing the $5K fine vs. the $500,000 profit, and are saying “Eh, who gives a shit.”

The difference for consumers is generally half the price of legal cigs. In New York, a legally bought pack of cigs can cost $13, whereas a smuggled pack can cost $6.

This sounds like an industry ripe for disruption (God I feel dirty after saying that).

Enter DutyFree, a company�with a beautiful website and a dirty job. They claim to have been in business since 2009, and their (self reported) stats are staggering. Just look at their front page:

Their claims are as follows:

-They�have saved consumers $3,440,000.
-They have sold 76,500 cartons.
-They can keep the cost, per pack, at around $4. (However, when you buy from them, its a carton. 1 carton = 10 packs = 20 Cigarettes per pack, on average.)
-They sell major brands, like Marlboro, Winston, Camel and more.
-BONUS: TAXES R THEFT!

They’re like Dollar Shave Club, only if Dollar Shave club was selling a heavily regulated, cancer-causing product illegally! Yes, this is illegal too, we’re not advertising them so you can get your smokes for free! We’re saying they’re going to jail soon! How? Lets explore:

On their FAQ, the VERY FIRST question is “Who are you and can I trust you with my money”. Their answer includes the fact that they sell on Silk Road, the Libertarian utopia where you can get drugs sent to your front door, as well as other hidden service marketplaces. This was Silk Road slightly over a year ago:

“Yeah, we used to sell there, but then it got shut down by THE MAN.”

Silk Road was shut down once (A second iteration has been running for a while now) for being a drug trafficking site, so the fact that they “Proudly” sell on there is a pretty big red flag.

The whole site is a giant red flag. That’s why everything here is red.

Now, lets go through all the laws they’ve broken so far:

–The PACT Act, a law that was signed by President Obama in 2009 to make the sale of cigarettes illegal online. This buinsess is tailor made to be a “Fuck You” to this law. If they’re caught, that’s a year in jail and their money gets sent to the Postmaster General to help fund operations finding this shit in the mail.

– The�Contraband Cigarette Trafficking Act of 1978�makes it illegal to sell over 10,000 cigarettes in a single transaction. The penalty is 3-5 years. We’ll go with 5, since they’re blatantly advertising how many cartons they’ve sold (75,00 cartons, or, at 200 cigarettes per carton,�150,00,000 cigarettes sold.)

–Being on Silk Road or any other marketplace is tricky. When Nod was arrested, he was charged with Conspiracy to Distribute Cocaine, Heroin and Meth, a violation of�Title 21 USC�841 (a)(1) and (b)(1)(C), and Title 21 USC 846�(Note that he was only charged on one count, despite there being 2 violations.) Yet Silk Road users could also be charged because each sale brings a commission that goes to SR’s management, ie financing a criminal enterprise. There’s also SR’s tumbler feature which mixes BTC to make it untraceable (However, since SR2’s�massive loss earlier this year, I believe they’ve stopped this and rely on 3rd party escrow), which is definitely�laundering�(I say definitely because its a major piece of evidence in the Ross Ulbright trial). Its tricky, but in the end, Nod’s crime would net him 10 years, minimum. Laundering cash is either giving all the money you laundered back, or a $10,000 fine. Between the two, that’s an extra 10 years + $10,000. In USD, not Buttcoins.

Total so far: $10,000 fine (Again, in USD, not Butts), and up to 15 years in jail.

Now how does this tie into BTC? Its all they take. They had bank accounts, but they were frozen. And, like any legitimate business, they have an excuse:

Why would banks ever hate doing business with shady overseas criminals? They’re just holding the money, right?

What happened before was THE MAN froze their accounts, because this is clearly illegal. But now, with Bitcoin, they are unstoppable! No one can find them, because they’re so secure, with their 256-AES encrypted digital money and that’s it!

Except their website is on the clearnet, or the internet everyone knows and loves, and not hidden away like on a Tor hidden service. You know. Easier to find. And with that, easier to see who bought what, when, where it was shipped to, etc. But, hey, you saved $20 bucks this year! Thanks, Reddit!

Also, focus on that last bit. “We’re pretty proud to be introducing new people to this great currency, people who wouldn’t bother buying it otherwise.” This is a pretty big problem with the Buttcoin proselytizers: they are their own worst enemy when it comes to advertising.

You actually think introducing people to the currency of the future through an illicit market is really the best way to get new cult members? Do you actually think that if there was someone who had no idea what Bitcoin was, the best way to introduce them to said �”Currency of the Future” would be through a service hawking illicit cigs? Because, bear in mind, a survey done in February 2014 said that 76% of Americans are not familiar with Bitcoin, and 79% have no desire to ever use it. Bloomberg reported that 6% of their respondents thought Bitcoin was an Xbox game; another 6% thought it was an iPhone game. 80% of respondents said they’d rather have gold, because at least it has value. Worst of all, 38% think that Bitcoin has hurt the US dollar! Its unfounded, but that’s not the point. The point is the public, by and large, thinks of Bitcoin in a negative light, and to be “Proud” of introducing people to it through a shady service like this only cements that idea in their head! How the fuck do you not get this?!

Lets move on to other examples of how stupid they are. On each cigarette package, there’s supposed to be an excise stamp, or a label�that lets the government know that specific product’s taxes (usually tobacco and alcohol) have been paid for. Usually, smuggled cigs don’t have that label on it, so its easy to identify which ones are legal vs. illegal. Our Canadian friends�might recognize this label:

This is what a Canadian Excise Tax looks like, with all the details pointed out. Here’s one�you might see in a Canadian store:

Here’s what they put on cigarettes in Pennsylvania:

Like all things from Pennsylvania, its simple.

See the main connection between them? No? Well, look at one sold by DutyFree:

Oh, yeah. It’s in fucking German.

In their FAQ, they say all their shit comes from Europe. BUT THEY PAY EXCISE TAX!!! YOU CAN VERIFY IT!!!

Except one thing: Excise tax in the US and Canada is usually in�English. Also, the packages are in English, too. I seriously doubt anyone is selling imported Marlboro’s from Moldova just because they like the packaging. Its the same shit. The difference is the countries, and that difference can equal 15 years in jail and $10,000 to THE MAN. Even if you are paying excise tax, and the label is on it, it doesn’t matter, because once it gets stateside, its clearly not the pack you find at EVERY STORE EVERYWHERE.

In fact, putting excise stamps is probably a detriment, because you can really only get official stamps from those specific countries. So buying from these guys is:

A) A guarantee you’ll get a visit from either the cops, the IRS or the ATF for evading taxes/buying drugs from�overseas. And when they see the Moldavian excise stamp on your package of Ukranian cigs, they will use that against you in court.

B) A Complete and total guarantee that “A” will happen, because its a clearnet site. They will be found, and you will be found through them. Silk Road was supposedly 100% anonymous, but they had CAPTCHA’s that exposed their IP address anytime it was used. The CAPTCHA was a clearnet product. This is too, and they will be caught because of it.

C) A clear indication that you’re a cheap fuck, because you refuse to pay taxes over here and instead pay a little less to help al-Qadea.

Oh, I forgot that shit. The main reason the government doesn’t want people buying smuggled cigarettes is because terrorists are using the revenue from this to buy God knows what!

And, yeah, we get that “Terrorism” is a convenient excuse for anything in the media this past decade, but how about the fact that the IRA, Hezbollah, the PKK, CNDP and FARC have all used it for funding their campaigns. This isn’t the Fort Dix incident; these are serious groups doing real harm, and they’re doing it, in part, with funds from cigarette smuggling. That’s why its important. But now you can get cigarettes with Bitcoin, so all that goes out the window!

For a group as fervent as Bitcoin aficionados, they sure do throw their values and common sense out the window when another thing they could buy with cash becomes available for their internet dollars.

Were not saying these guys are propping up terrorists by selling this stuff, but at the same time, we have no idea who they are! If you look at the first FAQ question from before, you see a link that says “OTC web of trust”. This is what pops up when you click on it:

Blazedout419 is a guy I can trust!

To be fair, they seem to be clean and have actually sold product. And its really not fair to accuse them of funding terrorism, when clearly all they want to do is not pay insane amounts of taxes on a product they love, using the currency they love. Its kind of sweet, actually. Love knows no bounds, and this time its going to get a bunch of people arrested and fined. And because they accept Bitcoin, they will never�be blamed for running an illegal business. They’re merely helpless victims sitting on piles and piles of cash.

But at least they have shipped their product, making them slightly better than Butterfly Labs.

The post Buttcoiners Becoming Buttleggers: How One Cigarette Smuggling Operation Will Get Everyone Involved Arrested appeared first on Buttcoin Foundation.

The Federal Trade Commission filed Case �4:14-cv-00815-BCW� on September 15^th, 2014. In their report, the FTC claims that BFL did a bunch of dumb things.�These include:

–Refusing to refund payment, by flipping between two policies: No refunds, and refund offers that were never fulfilled.
–Josh Zerlan, Vice President of Product Development, testified�that BFL used pre-paid rigs to mine for BTC before shipping (if they were even shipped). This may explain why some were broken messes by the time they got to customers.
–Because the products were shipped so late (or not at all), the rigs were incredibly outdated, and because of that, miners couldn’t use the rigs properly. �(Via FTC):
–Refusing to ship the BitForce miner months after pre-orders, then using deceptive marketing to get people to buy or upgrade to a newer miner, the Monarch.

For these reasons, primarily, the FTC had temporarily shut down operations at Butterfly Labs (From what I understand, some operations have since resumed after a TRO elapsed. More on that later). The FTC has said in their later report:

Given their record of repeated law violations, Defendants [Butterfly Labs] cannot expect the Court simply to take their word�for it that they have abandoned their illegal conduct for good� Defendants� business survives upon income obtained through misrepresentations about timely delivery and profitability that�should be returned to their�victims…�[The] Defendants have failed to explain why the Court should�permit them to resume operations and deplete assets available for consumer redress, especially in light of the Commission�s likelihood of success on�the merits. (Case�4:14-cv-00815-BCW�Document�42)

Yeah.

About that last bit, the �Success on the merits� part. As detailed earlier, BFL is fucked. The FTC has multiple points (and evidence) on BFL�s deceptive practices that are quite compelling. These include:

–BFL admitting that they were behind schedule, while using vague terms that didn’t set a firm ship date. Like, openly saying �Two months or longer� to consumers. Which is not considered “Qualifying language”, AKA �Not some vague bullshit�. BFL later admitted that, with Bitcoin mining, �Time was of the essence�. They ended up never shipping most of their orders, and the ones that did ship, as mentioned earlier, were outdated due to the difficulty rate constantly increasing. That basically means that because the miners weren’t delivered on time despite the company admitting that, in order for their product to be competitive, it had to be operational ASAP, the rare few who did receive their broken, piece of shit machines could not recoup their costs and, therefore, lost a ton of money.
–That stupid calculator they put everywhere, stupidly. (More below)
–The language used to explain shipping delays specifically was �Feeble�, and any excuses they use are bullshit because they clearly were not shipping anything or being reasonable in the meantime.
–They lied about testing the Monarch chip, saying it was nearly finished with “Taping” when, in fact, it was barely even beginning, with internal messages saying to expect shipment in early February 2014. This was November 2013.
–Around the same time they were panicking about the Monarch chip not being close to done, they sent an email blast promising early 2014 would be the ship date. This is, again, vague, not qualifying language, and also�deceptive marketing, because it is claiming that a product that is not close to being done is close to being done, and pre-orders are open now! What a great source of revenue: people trying to jump into the mining game not knowing that BFL was supposed to ship that product months earlier!
–They claim to have a full refund policy for orders between August 9^th-November 9^th, 2013. Hilariously, they have no documents proving this, making this one of, if not BFL’s�most blatant lie when you realize the FTC had to consult �The Blogosphere� to see how customers had to force refunds via Credit Card disputes or lawsuits. The main thing from all of the comments in each thread is simple: BFL did not willingly refund a single damn order, probably in part to their confusing refund policy explained earlier. We’ll call it “Kafkaesque”.
–Later on, they allowed consumers an option to upgrade their order without disclosing that by doing so, they would void their opportunity to get a refund. That is illegal, since you have to notify consumers when you change details like that. Its why you get an email from eBay or PayPal or Tumblr saying “Our Terms of Service have changed”.
– By the FTC�s count, BFL had 3 major products that did not ship: BitForce, Monarch and their Cloud�Mining�service that charged $10/GHS using their Monarch miners. Yet they still advertised new products and accepted pre-orders.
–Not one BFL consumer, not a single one out of 20,000 paid-in-full consumers, got a BFL miner on its original ship date. And even if there was a reasonable delay, since this is supposedly very high-tech stuff were dealing with here, and delays do happen, BFL still has literal tons of Monarch orders left to ship almost a year after the original ship date. That’s unreasonable for any company with orders paid-in-full.
–Those stupid �Y U NO SHIP� pitchforks from our last article on BFL? The FTC sees that as the company mocking their customers. And it�s kinda hard to deny.

Nothing says “We love our customers” than using funds that should go to shipping a product instead going to mass ordering foam pitchforks and torches. BFL 1, FTC 0.

The calculator bit is an important one. For those not aware, BFL posted a calculator on its Facebook and Tumblr accounts, as well as its website and a few other official BFL pages, telling people they could see how much they could potentially earn with their rigs, based on the current difficulty level, exchange rate and how much electricity costs. The FTC says the calculator showed when someone would break even with the machine using the calculator. This is a problem, because since the machine never shipped, these calculations would equal an outdated and useless miner, if and when they finally got their machine. There�s also the fact that an employee of BFL has said they lied about how powerful the machines actually were, meaning the calculations outputted were always wrong, thereby misleading customers, a serious charge that will most likely be one of the main reasons BFL will crumble.

So, in the end, what is the FTC charging them under? The Federal Trade Commission�Act of 1914, a law President Woodrow Wilson signed to stop monopolies and unfair trade practices. Section 5(a) of the FTC Act, 15 U.S.C. � 45(a), prohibits �unfair or deceptive acts or practices in or affecting commerce”, which, as demonstrated above, BFL has done in fucking spades. Here’s the full list of violations:

I’d also like to add “Conspiracy”, just to see Reddit go insane.

AND, before we get to BFL�s rebuttal, let�s not forget that BFL Co-Founder and Innovation Officer Sonny Vleisides engaged in mail fraud by participating in a lottery scheme run by his dad that, internationally, netted $25 Million dollars from victims. He was still on probation when all this insanity occurred, so out of all of them, his odds are the worst.

His Prison name was “SonnyV”.

So…�What was BFL�s response?

Hilarity.

–BFL contends that the FTC is basically Dirty Harry, a good cop gone rogue because of their foaming at the mouth hatred of all things Bitcoin and Butterfly Labs, despite the fact that the FTC noted in its earlier report that the IRS has decided to let Bitcoin be counted as taxable property, and therefore okey-dokey.

–BFL called the FTC �Kafkaesque�, with the following footnote:

�From a certain point onward there is no longer any turning back. That is the point that must be reached.� � Franz Kafka, The Trial.

According to Wikiquote, that is actually from Kafka�s 1918 work �Aphorisms�. Also, the FTC is not acting Kafkaesque, its doing its job. The refund thing from earlier? That is definitely Kafkaesque.

–The first footnote, the very first one, is very adamant about how much the FTC is on a �Campaign� to �Destroy� Butterfly Labs. The quote that follows inside the footnote is as docile as an actual butterfly�s queef:

�We often see that when a new and little-understood opportunity like Bitcoin presents itself, scammers will find ways to capitalize on the public�s excitement and interest,� said Jessica Rich, director of the FTC�s Bureau of Consumer Protection. �We�re pleased the court granted our request to halt this operation, and we look forward to putting the company�s ill-gotten gains back in the hands of consumers.�

Considering the harm these guys have done to thousands of paying customers, that is as calm and reasonable as it gets.

–Despite the FTC�s pretty good explanation of what Bitcoin mining is in its first affidavit, BFL is claiming that THE MAN COULD NEVER UNDERSTAND THE BIGGER PICTURE, MAAAAAAAAN.

Because nothing makes sense if you don’t BELIEVE!

And here is the first page (of 2) from the FTC explaining the basics of Bitcoin:

I’d keep going to the next page, but I think I’ve made my point.

Moreover, their argument that the FTC’s claims don’t matter because they don’t understand Bitcoin (They do) is bullshit as well, because you don’t need to understand something to know its a scam. I don’t know a thing about chemistry, but when I see con artists selling juice they claim cures AIDS, I know that’s bullshit. We all know buttsex�is how you cure AIDS.

–I get a very weird Boston Legal-esque vibe from this motion to dismiss. It�s like some guy at BFL handed in a megalomaniacal rant about how the government hates him and his company to a lawyer, and the lawyer was like �I think I can translate this into legalese�.� Case in point:

… if he BOTHERED to pick up the phone, which I know must have been SOOOOOOOOOO HARD, then asked just ONE question about this thing they CLEARLY don’t know about…

That is an actual quote, from a real court document. That is so out-of-bounds rude for any case document I�ve seen in a while. Even the Whitey Bulger trial docs had class, and that guy ran the Winter Hill Gang! They based Jack Nicholson�s character from �The Departed� on him! Yes, that guy! This document is more offensive than Bulger�s trial, and the fact that he actually killed people is on public record, in pretty graphic detail. Depictions of bodies are less offensive than this motion to dismiss. I�m sure there are other motions on record somewhere with language this glaringly condescending, but I haven�t seen it. I think, side by side, this motion for dismissal�will be used to teach law students how to lose a case before the trial has even begun.

The main problem with the language is the condescension. It is clear that whoever wrote the rant that was translated into legal babble thinks he understands Bitcoin than anyone else, even Satoshi, and just KNOWS that no one inside the FTC could possibly understand such a broad concept as digital currency, because OBAMA.�I’d be willing to bet .000001 BTC that whoever decided to add condescension to their motion against the federal government’s case is probably one of the three main BFL officers listed in the original trial docs.

In fact, going through this whole document, it reads less like a professional defense of a company accused by the government of defrauding investors, and more like if you took the out of touch and not at all accurate legal advice from the comments posted on /r/Bitcoin, got said comments complied into one dump of quotes, and shipped it to a law firm with some of the more confident Libertarians standing in the room, bull-headed as ever, demanding their constitutionally protected day in court be as close to Perry Mason Syndrome as possible.

Yeah, guys, you could have TRIED to learn SOMETHING.

–They did ship some of their �Jalapeno� units, and, in fact, did ship other products as well. It isn’t disputed that some product was shipped. However, there doesn’t seem to be any documentation saying it was 45,000 units. There really isn’t any proof of that 45,000 unit number besides them just making it up. Note that there is no footnote, and there isn’t one on any other page mentioning that number. They are blatantly lying in their motion to dismiss against the FTC. I don’t know if that’s a felony or not, but I hope to God it is.

But that�s not the point. They very well may have shipped 45,000 units, but in the meantime they were refusing to refund customers, mining BTC with pre-ordered machines, not shipping paid-in-full units to customers, and then mocked said paying customers with those stupid foam pitchforks. According to�the FTC, BFL didn�t ship anything to something like 20,000 people who had already paid for their machines. �That�s the point: That they conspired to use customer funds to make equipment for themselves, and then ship it off to the customers when they were done. If that wasn’t their plan in the beginning, it certainly became their plan after, lets say, 2 days.

Via FTC.

–This:

Yeah, FTC, you could have at least TRIED to see we were already being sued for what you’re accusing us of doing.

Oh, so NOW the FTC wants to protect consumers, even though we were already being sued for our deceptive practices by someone else! They should have stopped us sooner! Well, it�s too late now, and that�s how law works, so I think were in the clear.

And for those wondering about the footnote, well�

If Plaintiff already knew about the District of Kansas putative class action when it filed its ex parte papers, it had an ethical obligation to inform the Court of the existence of that case.

Basically, the FTC should have known they were already being sued in Kansas, and by not putting that in their briefing they�re basically liars, even though the FTC did mention that there were �at least 2 lawsuits against BFL in the past, in its first report.

–They seem to have lost touch with reality. This, by the way, was the best part of their whole motion:

Y’know, on one hand, they’re calling us fraudsters, but on the other, they’re letting us back in the building, so we win, right?

I seriously cannot fathom the stupidity it must take to write that second paragraph.�BFL is basically saying �The FTC CLAIMS that we stole up to $50 Million dollars from thousands of customers, yet they let us reopen our doors! They must have finally opened their eyes to the future of Bitcoin! It was all just a big mistake!”

Lets explain: On September 23^rd, the FTC announced that, through court order, BFL was shut down through a Temporary Restraining Order, or TRO, on the grounds that the three main officers, Darla Drake, Nasser Ghoseiri, and Sonny Vleisides, respectively the treasurer, CTO and Innovation officer, had done all the fun stuff we�ve covered. Because it was so blatantly obvious that BFL was going to continue doing what it was doing (And, based on the language here, they DEFINITELY would, since they don’t seem to see what they did wrong), the FTC got a TEMPORARY restraining order, meaning that for a short period of time, operations would cease.

What they are contending in that second paragraph is that because a temporary restraining order lapsed, the FTC has no case. Because, as we all know, when time elapses on a legal matter� law.

There is absolutely no point to their contention here. Because the TRO ended, and the Judge decided he wasn�t going to renew it, they win. Because law.

We’ll be keeping track of this story, and any updates will be posted on our new main site, ButtcoinFoundation.org, or by following us on Twitter. Or don’t, I don’t give a shit.

The post An In-Depth Look at how Butterfly Labs is Going to Lose in Court to the FTC appeared first on Buttcoin Foundation.

At the request of the Federal Trade Commission, a federal court has shut down Butterfly Labs, a Missouri-based company that allegedly deceptively marketed specialized computers designed to produce Bitcoins, a payment system sometimes referred to as �virtual currency.�

The FTC�s complaint against the company and its corporate officers alleges that Butterfly Labs charged consumers thousands of dollars for its Bitcoin computers, but then failed to provide the computers until they were practically useless, or in many cases, did not provide the computers at all.

The post Float like a butterfly, sting like the FTC appeared first on Buttcoin Foundation.

So more stuff on trying to cash out of bitcoins and how �simple� it is.

Virtex responded to my friends ticket, and said yesterday said that the transfer that was fucking requested on the 18th, was cleared. However today my friend�s bank has not received a anything. So he calls them and apparently they can�t deal with this over the phone and will only help him if he puts in a ticket. Even though he pointed out that it takes them a week to respond to tickets.

Also my friend decided to try and just sell 2 of his bitcoins on localbitcoins through their online escrow because apparently people keep telling him e-transfers are safe, because interac e-transfers cannot be reversed! So perfectly safe! Yesterday he accepted an e-transfer and was able to add the money to his account and release the escrow.

Then this morning apparently he was notified by his bank that his account and all associated cards are frozen, and he must come into his local branch and speak to someone. They apparently wouldn�t explain why over the phone. Apparently the person he spoke to had some idea of what bitcoins were (), and after explaining how he sold them. The guy apparently explained that:

– Selling stuff online and using e-transfer for payment apparently violates some part of interac�s terms of service.
– The e-transfer he accepted was fraudulent so it was reversed (i thought it wasn�t reversible!)
– His account is to be unfrozen but he is permanently banned from ever using e-transfers again

It is funny because all the �low� risk methods of selling on localbitcoins, are terrible that nobody really uses. I love how many people messaged me about how safe localbitcoins are.

Nobody here is shocked in the least. More about the local bitcoin sales and the trustworthy individuals involved with them:

Pretty much all the methods of payment on localbitcoins are ether unsafe, or terrible from what i can tell. The two exceptions are cash (we know how well that worked out), or a cash deposit (pretty massive pain in the ass), which both are pretty inconvient.

However localbitcoins lists some other payment methods, and ranks them on �low�, �medium�, or �high� risk. The low risk includes well known and �trustworthy� payment services like EGOPay, OkPay, and Perfect Money. Ironically there is also Western Union, a service which bitcoiners declared bitcoin will kill off. The funny part is, nobody uses the low risk payment methods really, because they are all a massive pain in the ass.

Pretty much all the people on Localbitcoins (and there really is not very many in Canada, less than 200 including people who have not logged on in a month), want you to use something like e-transfers, wire transfers, paypal, etc. Which are all not safe at all. Since one party can cry fraud and boom, you loose your money and they walk off with the bitcoins. Well obviously the best solution is to let your feedback/reputation dictate if your a scammer or not. I see this everywhere:

quote:
If your LocalBitcoins profile has less than 10 confirmed trades or at least 1 negative feedback then you must send/release Bitcoins first.

quote:
Unless you have a feedback rating of 10 or higher, coins will be sent to me first direct to my receiving address. If you have a feedback of 10 or higher then we may use the escrow system (although I will pay 0.5% more if you send it direct).

quote:
Because of our established credibility, if you have a feedback score below 10 we�ll require the BTC to be sent first, either directly to our receiving address or released via trade request.

�Fuck you pleb, escrow is only for us captains of the industry�

OKPay: Does Localbitcoins even know that OKPay does not allow people to use their service for selling crypto-currencies?

quote:
Please note that due to the card issuer bank restrictions OKPAY Card order and funding becomes impossible if you perform operations related with crypto-currencies or crypto-currencies exchange.

Our financial provider for GBP bank transfers restricts further usage of funds for purchasing or exchanging crypto-currencies.

Link

If you look around there is some nice whining from people that OKPay has cancelled and closed their accounts for selling bitcoins. But you know, its �low risk�.

Perfect Money: A virtual wallet service, that nobody seems to use. You need to make an account, get verified, get the money into your account, then wait 3-5 days for the transaction to be approved they also apparently do not allow you to withdraw all your money in one shot and you must keep a minimum balance of 300$ at all times. Also from what i can gather the only way to send money is by sending someone an e-voucher. There is no way to verify the value of an e-voucher, nor is there a way to reverse it. So of course this means that all the buyers want you to send them the bitcoins first then they will send you the voucher and not disappear. Apparently only 3 people on localbitcoins is willing to use this method.

Ego Pay: Some sort of virtual online wallet service. Requires you to become verified to withdraw money from there. Also there is some really sketchy stuff in their terms and conditions:

quote:
EgoPay reserves the right to terminate accounts that act as unauthorized e-currency exchangers and all of the related accounts.

Would selling bitcoin count as an e-currency exchanger? I don�t know i can�t find a single post about someone using EGOPay. However the single most stupid thing about Ego Pay is:

quote:
EgoPay account holders can withdraw funds from EgoPay by using Payza or e-currency exchangers. Times to complete a withdrawal may vary due to security reasons, please visit our FAQ for current information.

So let me get this straight, Ego Pay doesn�t even let you withdraw money to your bank account. You need to withdraw it to another FUCKING SITE? Don�t forget no fees*(only 2.5% for deposit/withdrawal).

So? Bitcoin -> Localbitcoins -> Ego Pay -> Payza -> Bank -> Fiat

Western Union: Aside from the fact that all of the buyers expect you to be responsible for 7% fee even though they are already paying you much less than the �actual� price (aka whatever exchange has the highest price, bitcoiners claim thats the value of bitcoins). There are only 38 users willing to buy, and only 18 of them have logged into localbitcoins in the last 7 days. Furthermore, some of the buyers will not deal with you for western union UNLESS you send them the coins FIRST. Aka no escrow.

quote:
Unless you have a feedback rating of 10 or higher, coins will be sent to me first direct to my receiving address. If you have a feedback of 10 or higher then we may use the escrow system (although I will pay 0.5% more if you send it direct).

I am sorry i simply cannot trust people on localbitcoins when the entirety of their forum consists of users crying about getting scammed, by people who are supposed to be reputable. I love how bitcoiners dance between �DONT TRUST ANYONE�, to �trust me with your 20,000$ exchange, i swear i won�t scam you cause i have a whole 20 feedback�.

Don�t you guys see how great and simple these �low� risk methods are? Honestly buying and selling bitcoin has never been easier.

Clearly LocalBitcoins could benefit from BitcoinTalk�s big red �SCAMMER� tags. That way you�d know not to send your bitcoins directly to someone�s receiving address before they consider paying you real money for them.

The post Easy Come, Easy Go appeared first on Buttcoin Foundation.

Defendant�s preliminary response to show cause

The court does not have jurisdiction because it is not within the securities law.

1) freezing Defendants� assets;
It�s ridiculous for the court to freeze my assets that are required to pay rent, utilities, food, etc and be able to pay for an attorney. My wife does not work and cares for our two children.

2) directing Defendants to provide verified accountings to the Commission;
The court has no authority to order this because it is not within the jurisdiction and does not show a need for it.

3) authorizing expedited discovery concerning the location and extent of Defendants�assets;
Three days is too short and there is no reason for it based on other orders. This should be revised based and agreed to.

Have we mentioned he is appearing pro se in court? This should be amazing.

In his ruling, judge Amos Mazzant made the mistake of saying “It is clear that Bitcoin can be used as money” and bitcoiners have taken this to mean that the US court system, along with the rest of the world governments, have declared Bitcoin to be a real currency that will soon destroy the US Dollar, Euro, various Pesos, and so on. Some have simplified it to the point that they are just shouting “Bitcoin is MONEY” at no one in particular.

The post pirateat40 screwed, Bitcoin is real money as a result appeared first on Buttcoin Foundation.

Washington D.C., July 23, 2013 � The Securities and Exchange Commission today charged a Texas man and his company with defrauding investors in a Ponzi scheme involving Bitcoin, a virtual currency traded on online exchanges for conventional currencies like the U.S. dollar or used to purchase goods or services online.

The SEC alleges that Trendon T. Shavers, who is the founder and operator of Bitcoin Savings and Trust (BTCST), offered and sold Bitcoin-denominated investments through the Internet using the monikers �Pirate� and �pirateat40.� Shavers raised at least 700,000 Bitcoin in BTCST investments, which amounted to more than $4.5 million based on the average price of Bitcoin in 2011 and 2012 when the investments were offered and sold. Today the value of 700,000 Bitcoin exceeds $60 million.

The SEC alleges that Shavers promised investors up to 7 percent weekly interest based on BTCST�s Bitcoin market arbitrage activity, which supposedly included selling to individuals who wished to buy Bitcoin �off the radar� in quick fashion or large quantities. In reality, BTCST was a sham and a Ponzi scheme in which Shavers used Bitcoin from new investors to make purported interest payments and cover investor withdrawals on outstanding BTCST investments. Shavers also diverted investors� Bitcoin for day trading in his account on a Bitcoin currency exchange, and exchanged investors� Bitcoin for U.S. dollars to pay his personal expenses.

The SEC issued an investor alert today warning investors about the dangers of potential investment scams involving virtual currencies promoted through the Internet.

�Fraudsters are not beyond the reach of the SEC just because they use Bitcoin or another virtual currency to mislead investors and violate the federal securities laws,� said Andrew M. Calamari, Director of the SEC�s New York Regional Office. �Shavers preyed on investors in an online forum by claiming his investments carried no risk and huge profits for them while his true intentions were rooted in nothing more than personal greed.�

According to the SEC�s complaint filed in U.S. District Court for the Eastern District of Texas, Shavers sold BTCST investments over the Internet to investors in such states as Connecticut, Hawaii, Illinois, Louisiana, Massachusetts, North Carolina, and Pennsylvania. Shavers posted general solicitations on a website dedicated to Bitcoin discussions, and he misled investors with such false assurances about his investment opportunity as �It�s growing, it�s growing!� and �I have yet to come close to taking a loss on any deal,� and �risk is almost 0.� Contrary to the representations made to investors, BTCST was not in the business of buying and selling Bitcoin at all.

The SEC alleges that Shavers, who lives in McKinney, Texas, paid 507,148 Bitcoin in investor withdrawals and purported interest payments. He transferred at least 150,649 Bitcoin to his personal account at an online Bitcoin currency exchange. Shavers suffered a net loss from his day trading, but realized net proceeds of $164,758 from his sales of 86,202 Bitcoin. Shavers transferred $147,102 from his personal account at the online Bitcoin currency exchange to accounts he controlled at an online payment processor as well as his personal checking account. He used this money to pay his rent, utilities, and car-related expenses as well as for food and retail purchases and gambling.

The SEC�s complaint charges Shavers and BTCST with offering and selling investments in violation of the anti-fraud and registration provisions of the securities laws, specifically Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5. The SEC is seeking a court order to freeze the assets of Shavers and BTCST in addition to other relief, including permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.

The SEC�s investor alert, prepared by the agency�s Office of Investor Education and Advocacy, recommends that investors be wary of so-called investment opportunities that promise high rates of return with little or no risk, especially when dealing with unregistered, Internet-based investments sold by unlicensed promoters.

�Ponzi scheme operators often claim to have a tie to a new and emerging technology as a lure to potential victims,� said Lori J. Schock, Director of the SEC�s Office of Investor Education and Advocacy. �Investors should understand that regardless of the type of investment, a promise of high returns with little or no risk is a classic warning sign of fraud.�

I hate to say we told you so, but we told you so.

The post pirateat40 Charged by the SEC appeared first on Buttcoin Foundation.

Before we proceed, let’s take a moment to look at Bitcoin24’s long and untarnished history. Founded in May of 2012, Bitcoin24 was allegedly the largest buttcoin exchange in Europe, with only the mighty Mt. Gox surpassing it in terms of volume and profit. Apparently they also surpass the Magic: the Gathering Online Exchange in terms of utter incompetence and hilarity. Recently, people found the admins asking questions on StackOverflow about how MySQL works and how to round numbers when working with financial data.

This was followed by the site’s trading engine shitting the bed and started to give people more money or bitcoins than they deserved, like a faulty ATM spitting torrents of cash into the street. It then broke down even further, with trades randomly appearing and disappearing before the site’s functionality went down entirely.

A few days ago, the site made the above announcement, in even more broken English. Today, we find this PDF, outlining the following (thanks to SA forums goon Greyhawk�for the translation):

Oh, boy. So first thing this is a very, very bad translation from Polish into German. Very bad. Half of it doesn’t even make sense.

But the gist of it is:
– The German prosecution knows everything there is to know about bitcoin-24 right from when they began operating. And I do mean everything. Current bank accounts, old bank accounts. Who the money was coming from, who it was going to. Everything. In total over 500000 Euro were transferred via these accounts mostly from Germany towards Poland, Romania and Bulgaria
– German prosecution sees bitcoin-24 as a massive money laundering operation and are proceeding against the owner
– German prosecution has evidence that the owner is involved in phishing attacks and is proceeding against him about that too. Apparently the owner was retarded enough to send the “pure profit” of those attacks to the polish bitcoin24 bank account.

Furthermore, we find that his home was raided and he is no longer free.

Meanwhile, MtGOX is suffering from yet another “DDoS” and having a slew of issues with banks and Bitfloor is gone again. Just another day in the life of the currency of the future!

The post Bitcoin24 circles the drain appeared first on Buttcoin Foundation.

Of course, reddit CEO Yishan Wong has clarified that they don’t really accept buttcoins, but instead rely on another company to convert them into real money that a major company can use and report on tax records.

Inquiries on when reddit will be accepting Monopoly bills, chocolate coins, and replica Confederate dollars have gone unanswered.

The post Known haven for pedophiles, racists, and misogynists now accepting Bitcoin as payment for subscriptions appeared first on Buttcoin Foundation.

these type of threads are BULLSHIT

we have always honored our refund requests but a thread like this basically just kills my business

Ask yourself this question:

Do you want a nice friendly refund as we have been giving or do you want to completely put me out of business?

because if you completely put me out of business than you are going to have to come to NY to take me to small claims court.

ask yourself this question, do you really want to come to NY to take me to small claims court? or do you just want to wait your turn and quietly get your requested refund as hundreds of people already have. Keep with the mob mentality its only going to keep you separated from your money longer.

this thread is bad for anyone seeking a refund, and the mods need to take notice and remove threads such as this.

HELLO CUSTOMERS
this is not good for you. Please stop.

im reporting this to the mods myself – I encourage others to do the same.

-Tom

This occurred throughout multiple threads on the Bitcointalk forums.

all CC refunds are processed immediately

if you do a chargeback it will take MUCH longer (just the way the process works)

all refund requests should be sent to [email protected]

there is no delay in CC refunds – only short delay in BTC refunds because we need to buy more BTC

too bad threads like this ruined what could of been one of the best opensource ASIC based miners available.

Go send your money to BFL

blocks will be 12.5 a piece by the time you receive your device

im gone for the night

just KNOW THIS

this is a FUCKING SHAME in the worst kind

we have a completed design and wafers that are nearly completed and chips packaged
all this is grinding to a halt due to mob mentality and massive refunds
i had a good friend who literally has millions of bitcoins step in and say he would save the project

well threads like this have encouraged 90% refund rate, so guess what happens now

I will be forced to sell 16,000 packaged Brute force SHA-256 Bitcoin mining chips to a single buyer who will no doubt use them for their own mining purposes, I dont want to do it but I will have to just to pay the refunds. This mob mentality may be the end of Bitcoin. We will see what this person does with these 16,000 ASICS. but just use your imagination

He’s taking his bits and he’s going home!

this whole project has been ruined by internet trolls, heresay and bullshit

and i dont have the mental energy to carry it forward

im selling the chips
and the design if I can
and im moving on with my life

bye.

Sorry pal, Bitcoin has been a joke since day one.

For Sale : 16,000 Brute Force SHA-256 ASICS – PACKAGED AND READY TO GO
EMAIL [email protected] TO DISCUSS PRICE

THIS IS NOT A JOKE

EACH CHIP DOES ROUGHLY 4.5 GH/S
PRICE IS NEGOTIABLE

This is all vehemently denied shortly afterwards:

Cablepair’s account is compromised. Please treat any correspondence with him as fake until we can confirm that he has obtained control back to his account.

And of course everything’s been hidden away so nobody can see the public freakout. Presumably the sack full of chips is no longer available for purchase.

EDITED TO ADD: bASIC is throwing in the towel for good.

First I want everyone to know – that all that nonsense that was posted on the Bitcointalk forum last night was not me. In fact I have not been on that forum in quite a while. My forum account was compromised and some people had some fun with it. I can’t even get into the account now – so I am assuming that the admins checked the IP address and realized it was not me posting like a madman and locked my account for me. Either that or the intruder changed the password on me. Either way please DO NOT trust or believe anything that has been or is being posted by my Bitcointalk forum account. I plan to email theymos in a few moments to get my account back – I will update you when I once again have control over the account.

Many people have contacted me about buying these 16,000 chips – God I wished I had them, but I am sorry that post was not made by me and I do not have 16,000 chips to sell. I have to pay the second part of the deposit to receive the chips and I am not sure I will even be able to do that – although I am not giving up on the notion. I decided to not accept the loan that was offered to me to keep this company going. With a 90% refund rate there really is no point.

EVERY SINGLE CUSTOMER WILL BE REFUNDED. PERIOD.

I have the list of BTC Refunds and should be making those today.
All other CC orders will automatically be refunded today.

I hope you can please accept my deep apologies, I thought I could pull this off but it was just too much of an undertaking for me, I feel ashamed and embarrassed and I am so sorry that I could not come through for you. Everyone will receive their refunds. As a matter of fact I am starting on them now.

This will take a little time, we are talking thousands of refunds. I wish there was just a “refund all” button but unfortunately there is not one and I have to do this manually.

this forum will be locked from this point forward – if I need to tell you anything else I will post again otherwise you will not hear from me – your refund will come automatically and theres no reason for communication.

The post bASIC overheats, releases magic smoke appeared first on Buttcoin Foundation.

I lost a buttload on my fake money, can the US government bail me out with real tax dollars?

Oh, the irony.

The post Can my imaginary currency loss claim real tax dollars? appeared first on Buttcoin Foundation.