Heads Or Tails? CoinFlip/Derivabit Forced To Cease Operations By CFTC | dinbits


You'd think BitCo's would be getting the point already. If you buy or sell digital currency, it's a regulated industry, and there's a few things you need to have in order if you want to operate. 

This is not something to be taken lightly. 

Falling On Deaf Ears?

Earlier this year, Ripple received a $700,000 spanking from FinCEN. They weren't registered or operating pursuant to the Bank Secrecy Act and about 7 other regulatory acts bitcoin related companies are required to comply with. 

A few months later, the Feds completely demolished Coin.mx for operating their exchange, however, in that case they tacked on the allegations of money laundering and from what the evidence has shown so far, it doesn't look good for those folks. 

Just before 2015 began, John Powell was sentenced to 5 years in prison for trading on Localbitcoins.com without MSB registration in December and just this month Florida's Pascal Reid pled guilty for operating a money transmitters business without a license, which ended in a sentence of Jail time and an extra special activity where Reid is to help train the police on digital currency. 

Although the most disturbing part of that is that the police have to be trained at all and let me tell you, it's no joke. I know people first hand who have had to deal with police when it involved digital currency and they were damn near laughed out of the station resulting in the majority of the time spent explaining bitcoin, and themselves, rather than discussing information that may be useful in catching the actual criminal.

Point being, it's not like this is some big surprise where the United States government suddenly decided that digital currency is regulated.

Led most vocally by the Financial Crimes Enforcement Network, the United States has been warning companies for a few years now, most predominately in 2013 and 2014, and they are starting to put their foot down, hard, this year. 

It's likely just started scratching the surface of what is really coming in 2016 and beyond, so the only  real surprise is why on earth isn't anyone listening or paying attention? 

A Commodity Is Born

CoinFlip, a Delaware state incorporated organization, and its Derivabit platform, have basically been forced to cease and desist having been called out by the Commodity Futures Trading Commission (CFTC) for operating illegally. CoinFlip, nor CEO Francisco Riordan, were registered with the commission as a Swap Execution Facility or Designated Contract Market.

CoinFlip has agreed to stop everything its been doing wrong in a settlement, but interestingly enough, the Order in which they settled labels bitcoin as a commodity

This is certainly the more realistic way that bitcoin is traded, but until now, has not been officially pegged a commodity. This means that in the United States governments eyeballs, bitcoin is no longer a money-transmittable property that isn't really money, but it's now a non-money commodity property that can be money transmitted!  

That tends to make you wonder if these agencies ever actually speak to each other. 

Regulation and Compliance

This is once again more proof, more action, more explanation, and more warning that the United States is not going to ignore digital currency violations of regulation. If found in violation, the penalties are steep and in some cases criminal. 

It's very simple folks. If you buy and sell bitcoin, move it around in some way, or even just hold it when it belongs to another, you are operating in a regulated trade. 

Get registered, license up, and/or whip your organization into compliance with the regulations administered by your regulator or your going to be sitting funny at some point down the road after a receiving a federal spanking. 

At this point in the game, if you end up on the receiving end of that kind of federal punishment, then you will have only yourself to blame.

They've been blowing the foghorn for quite a while now.




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  1. From my experience the best Bitcoin exchange company is YoBit.

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