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Bitcoin Foundation attacked by California over alleged money transfers

updated 06:20 am EDT, Mon June 24, 2013

Complaint to cease and desist money transfers sent to Bitcoin support organization

The California Department of Financial Institutions has attacked the Bitcoin virtual currency, by sending a cease and desist letter to the Bitcoin Foundation. The group, which serves to standardize, support, and promote the Bitcoin protocol, was sent the order to stop late last month due to alleged monetary transmissions without proper licensing.

If the group is found to be violating the California Financial Code, it could be forced to pay between $1,000 and $2,500 per day, and can still face criminal prosecution with further penalties of more fines or imprisonment possible, according to Forbes. Federal law also states that it is a felony to "engage in the business of money transmission without the appropriate state license or failure to register with the US Treasury department," which itself is punishable with up to $250,000 in fines and fives years in prison.

The original article is written by Jon Matonis, who discloses he serves on the board of directors at the Bitcoin Foundation itself. He defends the foundation, stating "One activity that the foundation does not engage in is the owning, controlling, or conducting of money transmission business. Furthermore that activity would also be against the original charter of the foundation." The letter mentions that the order had 20 days for compliance, but the article does not mention how the foundation responded, if at all.

Companies related to the decentralized virtual currency have seen a number of issues in recent months. The world's largest Bitcoin exchange, Mt. Gox, has received interference by the
Department of Homeland Security, has been sued by CoinLab for $75 million, has suspended US dollar withdrawls for two weeks, and is one of over 100 tech companies being sued by Aaron Greenspan over apparent ongoing and willful violations of the California Money Transmission Act, a complaint similar to the one addressed by the California Department of Financial Institutions.





by MacNN Staff

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