Daily Archives: June 12, 2015

June 11, 2015, 4:43 PM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons

Its been barely a week since the BitLicense was released, and it has already driven a bitcoin startup out of New York.

ShapeShift.io, a bitcoin startup that allows people to quickly exchange digital currencies without an account or arduous signup process, has completely cut off service to New York in response to the states new regulatory policy for digital currency businesses. The BitLicense, which was finalized last week, sparked fear among the bitcoin community during its revision process over the past year, and now that it is out, has courted criticism for the various licenses and approvals it requires of companies that store and transmit money for customers. It is seen as too stringent and restrictive of innovation.

The BitLicense backlash began last week with official statements and responses from bitcoin startup executives as well as policy pundits. ShapeShift is the first business to promptly get out of dodge in response to the policy. (Bitcoin wallet provider Xapo moved its headquarters to Switzerland last month, but stated that it was not out of fear of regulation.)

The company has suspended service to all users in New York State, and is redirecting its homepage for Internet visitors there to PleaseProtectConsumers.org, with a long note about the issue of identity theft and how bitcoin and the blockchain can prevent it.

A blunt passage toward the end of the text reads: Bitcoin and blockchain technology have enabled a new standard of financial privacy and consumer protection Unfortunately, in spite of the technological achievements that now protect consumers, some jurisdictions have legally mandated the continued extraction of sensitive private information. Then it lists those jurisdictions; they are New York State and North Korea. That likely isnt the company, in terms of privacy law, New York wants to keep. ShapeShift is inviting other digital currency companies to do the same: cut off service to New York and redirect its web site there to the PleaseProtectConsumers page.

It is quite a statement by a buzzy startup and a big name in the bitcoin community.

While Shapeshift has so far raised only a seed round of just under $1 million from Roger Ver (nicknamed Bitcoin Jesus) and Barry Silbert (founder of the Digital Currency Group), CEO Erik Voorhees is a widely followed voice in the digital currency world who founded Coinapult and worked at BitInstant. Vorhees founded ShapeShift and ran it using an alias at first until he came out as its CEO in March.

When the Bitlicense was announced last week, Voorhees tweeted that California is winning. ShapeShift investor Roger Ver, meanwhile, tweeted a longer screed:

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Bitcoin company ditches New York, blaming new regulations ...

A 17-year-old Virginia teenfaces up to 15 years in prison for blog and Twitter posts about encryption and Bitcoin that were geared at assisting ISIL, which the US has designated as a terror organization.

The teen, Ali Shukri Amin, who contributed to the Coin Brief news site, pleaded guilty(PDF) Thursday to a federal charge of providing material support to the Islamic State in Iraq and the Levant.

According to the defendant's signed "Admission of Facts" filed Thursday,Amin started the @amreekiwitness Twitter handle last June and acquired some 4,000 followers and tweeted about 7,000 times. (The Twitter handle has been suspended.)Last July, the teentweeted a link on how jihadists could use Bitcoin "to fund their efforts."

According to Amin'scourt admission(PDF):

The article explained what Bitcoins were, how the Bitcoin system worked and suggested using Dark Wallet, a new Bitcoin wallet, which keeps the user of Bitcoins anonymous. The article included statements on how to set up an anonymous donations system to send money, using Bitcoin, to the mujahedeen.

In August, the youth tweeted that the KhilafahIslam's political system and messengerneeded an official website "ASAP" and that ISIL should stop releasing propaganda "in the wild" and instead should consider using JustPaste.it.

"Through various tweets, the defendant provided information on how to prevent the website from being taken down, by adding security defenses, and he solicited others via Twitter to assist on the development of the website," according to his signed admission.

On his blog, the boy "authored a series of highly technical articles targeted at aspiring jihadists and ISIL supporters detailing the use of security measures in online communications to include the use of encryption and anonymity software, tools and techniques, as well as the use of the virtual currency Bitcoin as a means to anonymously fund ISIL."

Sentencing for the honor student at Osbourn Park High School of Manassas is scheduled for August 28. The boy remains jailed.

Amin's lawyer, Joseph Flood, said his client's motivation was religion and distaste for the Syrian government."Sometimes people feel frustrated in their inability to effect change against a government committing atrocities," Flood said. "He was blogging on the Internet. It's as simple as that."

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Jihadist US teen faces prison for blog, tweets about ...