The Bitcoin circus is back in New York City. The New York State Department of Financial Services opens their hearings on Virtual Currencies under the shadow of the impeccably timed indictment and arrest of Charles Shrem (24). The United States Attorney’s Office of the Southern District of New York grabbed a major piece of the week’s news cycle. Press release here. Shrem was indicted for conspiracy to launder and sell over ONE MILLION DOLLARS of Bitcoin while the CEO of BitInstant. BitInstant is a failed Bitcoin exchange company, financially backed by the Winkelvoss twins, large Bitcoin supporters and owners, who are set to testify at the hearings, beginning today, continuing tomorrow.
One can’t help but see his indictment and arrest as a government adornment. Shrem’s arrest came on the eve of presenting Sunday at an oversubscribed Virtual Currency conference in Miami, and then the Hearings in New York City. Understanding that money laundering is a serious matter that deserves simple treatment, I look forward, with anticipation, to seeing the final result of Shrem’s indictment.
Four Cases For Your Consideration
Here are four recent money fraud cases for you to consider. I’ve included the number of guilty pleas and verdicts along with jail time by executives. Each just a little bit bigger than ONE MILLION DOLLARS.
- December 2012 Money Laundering –HSBC– Fined $1.9 Billion, yep that’s with a “B”, for laundering close to $700 million worth of illicit drug money.
“In documents filed in federal court in Brooklyn, the Justice Department also charged the bank with violating sanctions laws by doing business with customers in Iran, Libya, Sudan, Burma and Cuba.”
Story from Reuters here
Guilty pleas and verdicts: Zero
Personal jail time by executives: Zero
- 2012- The Standard Chartered bank was at the center of a huge money laundering accusation. Benjamin Lawsky of the New York Department of Financial Services labelled them a “rogue institution” and accused Standard Chartered of hiding $250 billion in transactions involving Iran.
The Bank reached a settlement that included a fine of $340 million and allowed it to keep its license.
Story by KYCAML.ORG Here
Guilty pleas and verdicts: Zero
Personal jail time by executives: Zero
- November 2013- JPMorgan’s $13-billion settlement includes $4 billion allocated for consumer mortgage relief. “The nation’s largest bank admitted to knowingly peddling the toxic securities that helped lead to the housing bubble and the worst financial meltdown since the Great Depression. The settlement is the largest made by any single American company in history.”
I admit that JP Morgan inherited a lot of these problems by forced acquisition during the financial meltdown of 2008, but c’mon. Somebody’s gotta pay with some time on the pokey. No?
Story from LA Times here
Guilty pleas and verdicts: Zero
Personal jail time by executives: Zero
- MADOFF-January 2014- Excerpted from Story from the Washington Post here
“JPMorgan as an institution failed, and failed miserably,” Manhattan U.S. Attorney Preet Bharara, whose office led the government’s investigation, said during a news conference. “In part because of that failure, for decades Bernie Madoff was able to launder billions of dollars in Ponzi proceeds through a single set of accounts at JPMorgan.”
“Justice hit JPMorgan with a $1.7 billion penalty for violating the Bank Secrecy Act, a law that calls on financial firms to alert authorities to suspicious activity.”
None of JPM employees will face criminal charges.
It’s Personal
Frontline did an in depth investigation on why not even one bank executive went to jail as a result of the 2008 financial crisis. In their April 2013 piece titled “The Untouchables” Frontline details a system rife with flaws and describes a year when trillions of dollars of the world’s wealth eroded in the blink of an eye. 
I think we can see that every system has its bad actors, it’s not surprising. But I, for one, sure would like to see some faces attached to the crime. I’m not satisfied that, because they were caught, Big Bank “X” had to pull money out of its legal war chest to pay huge fine “Y”. It’s priced into their model! It’s paid for by customer fees!
I guess that’s what makes this week in Virtual Currency so intriguing, it’s personal.
The actors are right there front and center putting their names and companies on the line.
What for?
Low friction money. That you might deposit your money somewhere other than a bank; spending your money using something other than a credit card.
Gilbert “Gil” Valentine is a Virtual Currency advocate and entrepreneur. He has been using Bitcoin since early 2011. He is the editor of GLCBitcoin.com and publishes his writings there among other places you can catch his Bitcoin and Virtual currency writings on MrTopStep.com and his blog on the Lincoln Park Patch. You can contact him at glcbitcoin-at-gmail-dot-com.
