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Complaint Filed Concerning US Bitcoin Enforcement Actions

By Milly Bitcoin – June 24, 2013

Atlantic City Bitcoin has filed a complaints with Inspector General office that oversees the Treasury Department and FinCEN.

The complaint involves recent enforcement actions by FinCEN and the State of California involving Mt. Gox and the Bitcoin Foundation.   The complaint points out that the actions appear to be frivolous and that these actions create a media circus and cause rapid fluctuations in the Bitcoin price.  Once people realize there was actually not much to the enforcement actions the price quickly rebounds.  The complaint points out that this activity is very similar to what malicious hackers do by attacking Bitcoin exchanges and waiting for the price to temporarily drop so they can buy in and resell at a higher price a short time later.   The letter also points out that government officials can be held personally liable for rogue actions meant to disrupt the Bitcoin price.  These actions also cause losses to American businesses and simply drives the services offshore.

A letter sent to the State of California:

Dear Mr. Venchiarutti and Mr. Crayton:

I have been made aware from numerous news reports that a letter has been sent to the Bitcoin Foundation claiming they “may” be a money transmitter and “may” be violating some California money transfer rules.  The letter, which was published by various news agencies, fails to provide any sort of specific information and appears to be frivolous.  While I understand you cannot discuss open issues, I assume you are aware the Bitcoin Foundation does not operate as a Money Transmitter.  Of course Bitcoin has no central authority and the Bitcoin Foundation does not hold any special status as an authority over Bitcoin.  I do not represent the Foundation nor am I a member.

My concern is that it appears a number of frivolous, exaggerated, and nonsense actions are being taken against Bitcoin companies.  While your vague letter contains the term “may” it has resulted in a mini “crash” of the price of Bitcoin as compared to the US Dollar.  These types of frivolous enforcement actions have become the subject of “day trading” web sites that discuss the strategy of investing in Bitcoin.  Several of these blogs are now promoting a strategy where they wait for frivolous enforcement actions to buy up Bitcoins when that happens.  The theory being that once people realize the actions were frivolous the price will quickly rebound.   Hacker use similar methods to attack Bitcoin exchanges in hopes of a temporary price drop.  For example see

I had previously filed a similar complaint with the US Department of Treasury concerning the issues with Mt. Gox and Dwolla.  In this case, even if there was a technical violation, the situation did not appear to warrant using Homeland Security to seize funds and create a media circus leading to the price fluctuations seen in the above link.

Be aware that filing frivolous actions, acting as a rogue employee or agency, filing an action to disrupt the Bitcoin market as opposed to legitimate enforcement actions, filing actions for the purposing of profiting from changes in the Bitcoin price, or other actions outside the scope of official duties could result in claims against individuals for conducting these rogue actions.

I had previously contacted FinCEN and the Dept. of Treasury Office of Inspector General concerning similar issues, I feel this latest action warrants an investigation by Treasury’s OIG since your letter also references FinCEN regulations.



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