The US government basically claims jurisdiction over the entire global financial system. There are philosophical problems with this stance, but simultaneously the government seems to be trying to lock its own citizens out of that system.
The strategy here, if there is one, baffles me. There seems to be a real cost to taking on US customers. This is just one small facet of a crazy problem.
Do people in America seriously consider it an acceptable trade-off when "Binance blocks U.S. residents from its website"? This just looks like own goal after own goal.
The strategy is to maintain control of the global financial system, and therefore control of the entire world.
They don't need to worry about people or organizations already within the realm of arrest/extradition/freezable-assets, they can squash them whenever. It's only the people and orgs outside that realm that pose immediate risk...especially when the org's product involves holding large chunks of wealth.
I think binance was allowed to run a separate USA-specific operation, but this was simply to keep everything within the mentioned realm.
The cost of taking onboard US customers is always a big issue. Particularly related to insurance. We build open source mobile apps to help people learn about and manage digital security. When we first setup our company in the UK we easily got insurance coverage across the EU and rest of the EMEA for about a few hundred pounds. Want to get if for the US also for a new company? Oh that'll be in the tens of thousands of pounds.
It makes for good Lawyer and Hospital series, the US legal and healthcare systems are filled with emotional (and particularly financial) drama for normal people.
i'm interested in is why it's so much more expensive in the US. Is it monopoly? Why couldn't similar prices be reached in the US, if the insurance offered the same in the EU region?
> Do people in America seriously consider it an acceptable trade-off when "Binance blocks U.S. residents from its website"? This just looks like own goal after own goal.
The people who decide these things are not accountable to the public.
Sure they are. This just isn’t an issue the public cares about. Citizenship based taxation has been the law of the land since it was brought in to punish deserters in the civil war. Americans broadly don’t care though. They should - America is the only country on earth to do this - but they don’t. Apathy towards an issue you care about isn’t the same as lack of accountability, IMO.
Quite right, although they are of course not in a position to enforce this; certainly not in the way America is. I suspect while they say they do, the number of returns they actually get can be counted on one hand. So yes in theory, probably no in practice. I’ve always wondered though if you have some data I’d love to see it!
The tax rate is 2%, and it is estimated to bring in about $100m annually,[1] which is about 5% of Eritrea's $2b total government revenue for 2017.[2] For comparison, US annual revenue from overseas taxation is estimated at $870m.[3]
There are about 1.5m overseas Eritreans,[4] and at least half of them are estimated to be in compliance.[1]
Yes, I know individuals that have needed to dual file and pay. As I understand, they get credited for some amount of taxes paid to the local jurisdiction, so if they live somewhere with a higher tax load and collect a modest salary, they aren't actually paying Uncle Sam. This may explain your observation.
If they live someplace with lower taxes or earn a high enough salary they end up paying both jurisdictions. For the individuals I knew, the company accounted for this by paying them some relocation bonus for a few years to offset the additional expected tax load.
Exactly this. Plus, some tax treaties don't include types of income beyond salary/wage - think income from investments, self-employed/contracting, etc.
Renunciation also of course has high fees and a massive tax burden. One is required to pay taxes on all of their assets as though they disposed of them on their last day of citizenship or leave (I believe) 30% in a trust to the IRS should it be illiquid.
Anyone whose started a small business while abroad is the proud owner of a controlled foreign corporation and required to file form 5471. That ones a mess. The reporting requirements alone are a massive burden, between preparation fees and opportunity cost.
I know of 2 people that have received notices abroad (third world country) about paying US taxes. Neither of them have lived in the us since the early 1970s
Turns out if you are a retiree living your golden years in a low tax jursidiction, you are pretty much ignored.
However, if you want to just live your life elsewhere and dare to end up successful, (for example, buying property >100k) somehow the US government seems entitled to your earnings.
They’re accountable to people who don’t care about your issue, that’s not a lack of accountability. Accountability doesn’t always mean you agree with the direction or outcome.
Binance created the subsidary binance.us for US customers, they have some restrictions due to US laws. Generally the US market is too valuable to be ignored entirely, even when there are significant restrictions. So US residents aren't really missing out or blocked entirely.
there was a time when IP blocking was enough to satisfy regulators but now they're basically saying there is nothing a company can do
one of the case studies in my ethics course during my Computer Science degree was about the regulators being satisfied with IP blocks and aware "determined" people could circumvent them due to the structure of the internet. that was a case 20 years ago.
now they're saying that's not good enough? you don't have to be particularly determined to use a VPN but the state can just give better guidance or be more collaborative instead of adversarial
I'm starting to assume malice rather than stupidity when it comes to the US Government and it's online regulations. I feel like this investigation will serve to push even more stringent requirements for US based KYC/AML and identity verification across all online trading platforms.
Edit: Malice, in the sense that the United States can force its regulations on foreign entities without going through traditional diplomatic channels. I see this as a power-grab.
Yes. I'm asking you to do a little bit of reading and understand that there's a difference between a system that might be somewhat inefficient/wasteful/could be optimised and a system that is BY DESIGN deliberately inefficient, will keep getting MORE inefficient, and (again, by design) can NEVER be made more efficient.
The entire basis of bitcoin is that each miner has to waste more and more energy because if you ever take your foot off the gas pedal, you run the risk of some other mining syndicate executing a 51% attack against you.
No other computer system I'm aware of is designed to keep getting less efficient.
I really don’t see why this is downvoted as I also thought it was the most interesting part of the parent comment.
My understanding is that ethics courses for students of subjects like computer science are uncommon. Ethics courses for engineering are more common and for law or journalism very common (though the ethics taught for law and journalism is basically opposite).
Towards the end of my degree, some faculty at the university made some attempts to create an ethics course for mathematics students that talked about some issues they might face in industry (popular careers were finance, tech or going to “work for the civil service”)
to clarify: the case we were studying at the time is now 20 years old
but yes, was one of my favorite courses. It was basically acknowledging that we will continually be a few decades ahead of any legal framework so it gave us other frameworks to consider in our decision making process
> there was a time when IP blocking was enough to satisfy regulators but now they're basically saying there is nothing a company can do
Come on. KYC and AML laws are very well known and were put in place for a reason. When there are actual issues with regulation that could use reform and modernization, straw-manning negligence regarding the black and white parts that most of modern society unanimously agrees upon is always an odd tack.
Yep, that's my exact point. That's what makes KYC such an important obligation from the firm's standpoint because the only way you can prove that you did everything within your power to obey it is to require it before the user is allowed touch any kind of asset on platform.
Because money laundering is a crime that doesn't recognize borders. If the US wants to take a strong anti money laundering position that is something I agree with.
It is hard not to when you see awful people taking over governments the world over and stealing completely insane amounts of wealth from the people.
This isn't nickel and dime crimes. These are insane crimes that do damage to billions of people on scales you can't even measure. These people should honestly face life imprisonment, but they never do.
How far does it go? Invade other countries to spread democracy and rule of law?
And how much privacy do you violate to stop bad actors? You're okay with AML laws, which are a form of warrantless financial mass-surveillance, so how about wiretapping all communications as well?
How about prohibiting end-to-end-encryption, and public access to strong cryptography? As money becomes wholly digital, you will need warrantless mass-surveillance of all communication to maintain warrantless mass-surveillance of all financial transactions.
I personally think the US has a tradition of liberty, in the Constitution and stretching back to Habeas Corpus, that is worth protecting, and shouldn't be using any sort of mass-surveillance of private interactions. Warrantless mass surveillance is the kind of law enforcement strategy used by authoritarian states like China's.
The reason the power of the state ought to be checked is that the people who work in the state can pose a threat to others, just as anyone can. A threat analysis that does not include the state itself as a potential threat vector, and only considers the threats that emerge when the state cannot invade everyone and anyone's privacy at its whim, is wholly incomplete.
I'd like to think the US has a tradition of liberty as well. But I /know/ the US has a tradition of operating as the world's de-facto global enforcer, especially post WWII. The ship of mass-surveillance has sailed. Does that mean I think we should throw up our hands and accept it? No. As I assume you'd agree with, I think it's wrong, and I want to see it eventually unwound.
With that said, I'm suspicious of litigating the sin of the ship having left the port. I'm more curious to see where the ship has set sail too. Fundamentally, the US dollar has the power it has because it is backed by the US military. And the US military has the power it has because it established America's pole position as global superpower.
So if you're going to talk about unwinding a regime of mass-surveillance, I'd like to think you're also going to talk about how, practically speaking, America moves back into an isolationist geopolitical doctrine not seen since pre WWI at latest. I'll be honest, I really wouldn't mind seeing that. But I also don't really see it happening, because it requires America to cede its global superpower status and return to existence as a mere regional power.
Now, you've said a lot of things about how things "should" be, but you haven't really talked about practically "how" they've come to be the way they are, or how we may get them to be another way. So I'll ask you directly: just how do you propose we get this country enriched by and enmeshed in war to this grand higher existence you envision?
We dont have economic dominance because we have a strong military.
We can afford a strong military because we had economic dominance.
This economic dominance was predicated in strong freedom of association principles , and a policy of neutrality that kept us largely out of expensive disputes early in the republic.
This is how things have really come to be. I will tell directly you reality refutes your adventurism: the roman state collapsed despite having the strongest military in the world.
That state collapsed not because of army defeats, but because of a hollow economic core caused by permanent deficits.
This is where the US today. And pushing more freedom to associate to illegal status is just piling on the US to italy-style irrelevance
Collapse is a strong word, my friend. While we're on the subject of "adventurism" perhaps we ought to consider what you've proposed. I think the word you are looking when you say "collapse" is "decline" -- the Byzantine empire lasted for a millennium and a half, hardly a collapse, no? And I think the concepts you are looking for when you say "strong freedom of association principles" are "colonization" and "manifest destiny."
We can talk about freedom of association until we are blue in the face, and there is nothing wrong with the principle itself -- in fact, as you point out, it remains the brightest part of what enables American prosperity and something that is a lot closer to true egalitarian existence than many other versions of civilization in history. While I can agree with you about that, the fact remains that the frontier spirit was enabled not just by simple expansion of an enterprising band of pioneers into a virgin unspoiled terrain, but rather the forceful pushing out and often wholesale eradication (and trails of tears) of a people who were already present.
For all of our sake, I wish that history was more wholly in accord with your very "enlightened" idea of iconoclastic individualism. Sadly, whether you like it or not, the history of at least the past ten millennia of human civilization has been largely built on the back of war, property and empire -- including the Roman empire you cite as an example. I don't know if it does your argument any favors to torture the truth through deliberate omission to serve the way you wish the world worked. You might run the risk of getting "everything backwards" to borrow your feisty phrase.
And who protects the world from the US when they inevitably play kingmaker in a foreign country again? Quite a few despotic regimes saw their beginnings in US meddling.
You're getting downvoted but you're right. Ideally, we'd live in a world where highly sophisticated multinational cartel like entities don't regularly abuse markets to launder their ill gotten gains and finance their operations.
Perhaps your downvoters (and mine too) in this thread would like to argue that it's a slippery slope akin to surveillance to accept AML laws which a priori purport to protect us from the effects of these crimes while only taking freedom further away and creating more space for despotic selective enforcement. I'm sympathetic to this argument, but only to a point. Another side to this argument is that AML laws should be resisted not just because they are right or wrong, but because they are ineffective.
My problem is while I may have sympathies to these ideas in theory, in practice, proactively addressing, enforcing and prosecuting money laundering is something just about every government has a vested interest in doing because governments fund themselves through taxation. I can understand the desire to limit government AML overstep and surveillance, but wouldn't that simply mean that we leave AML enforcement and surveillance to the private markets? Would it mean we somehow reform society so there would be no nee for money laundering in the first place because we've eradicated criminal enterprise in the first place?
I'll be the first to admit I don't have an answer for you. I'd say I wonder if the downvoters do, but I think we both know the answer to that.
My thoughts on the matter is that the US and other governments deputized financial intermediaries to perform surveillance and pre-emptive enforcement.
This is merely a convenience they’ve gotten in a coincidental electronic transfer system that required those intermediaries. They didnt have it before and they wont have it after. These governments have not been granted any additional rights over money flows and as the intermediaries become unnecessary, it will be prudent for them to remember bot to waste public resources grasping for the convenience of warrantless surveillance. Their ability to implement seamless automated anti money laundering procedures and enforcement evaporates, and they would be better off unburdening people now instead of trying to push for a right they never actually had. They’ll have to create new tools to deter and prosecute whatever behavior they are actually trying to stop.
Don't be pedantic. It's /exactly/ about KYC. The spirit of preventing unregistered futures and swaps being "merely" inaccessible by US residents is to /prevent/ money laundering. That's the whole point of registering.
Binance has a history of lax KYC [1]. For a global exchange to not risk blowing up means to gain affirmative proof of a user's legal identity, jurisdiction, tax residence. If you try and use an IP ban to loophole around having to add a robust KYC flow into your product, don't be surprised when a major governmental authority (and the general public) remain generally unconvinced that you did your best to be above ground.
US registered futures and swaps have a KYC/AML component and obligation.
The CFTC's case is about Americans accessing unregistered futures and swaps, and with this case they have created no latitude for any company to exclude Americans so that they would never establish jurisdiction.
The point is that this AML/KYC "debate" is a complete red herring. It is inherently a component eventually, but not really. Even if they did force AML/KYC before any kind of trading, then it's still Americans trading unregistered futures and swaps. So you see, unless the CFTC says "we're coming after you because of the lax AML/KYC" then its not about AML/KYC. Could they force AML/KYC and then say "ah you're American you can't trade", sure. Could an American use a fake ID and the CFTC uses that to establish jurisdiction, sure.
So the productive thing here would be for the CFTC to be more collaborative and say exactly what the exact threshold a non-US organization can have to be in a safe-harbor with the CFTC.
I have an opinion that the productive thing here would be for the CFTC to be more collaborative and say exactly what the exact threshold a non-US organization can have to be in a safe-harbor with the CFTC
How would this be a conduit for money laundering if you can't withdraw USD? Your still just stuck with crypto; I'm not sure how it gets you any closer to "clean" money.
hi, I started this subthread. it is very easy to money launder with crypto and isn't the crux of my argument. my argument is simply that this case is about unregistered futures and swaps being traded in US jurisdiction, and that its not about aml/kyc.
to your question, "if you can't withdraw USD?" is very limiting and seems based on heavy misconceptions about both money laundering and a limited idea of utility of crypto, not sure where to start there. the other person's response talks about reintegration which is a very accurate tip of the iceberg. layer and reintegration is much easier with crypto.
Its not and for you to write that you didn't really visualize what I described
At the bare minimum you should realize that any KYC’d individual can convert billions of dollars of crypto to US Dollars in a day without moving the markets more than a few percent
and after that you should realize that classifying a transaction as clean is not difficult
But if you don't want any transaction associated with anyone’s identity it is simply more time consuming, eventually you are still getting to a KYC’d individual that can receive a wire transfer in dollars at any meaningful amount in a day
And finally, you can try to reread what I wrote earlier, jot the steps down on a napkin if you need to, its not that complicated you are just starting from a place that assumes an omniscient state and a culture of stigmatizing the movement of money, and thats just flawed
based on your comments, this all seems pretty pointless. why mess with binance when you could just use a distributed service like coinjoin. Seems like money laundering is easy!
> And finally, you can try to reread what I wrote earlier, jot the steps down on a napkin if you need to
give me a break bud. talking down to people makes me assume you're clueless.
Great question. So money laundering consists of several phases -- placement, layering and integration. In particular, even if you can't withdraw USD, there's an enormous amount of movement you can conduct on platform which contributes to the layering phase. Even if you don't place or (to your point) integrate it on platform, you can still get quite a bit closer in the process.
Yep. Ironically, BTC mixers seem like they'd be quite poor at the job of actually mixing because unlike more sophisticated looking layering activity, it doesn't actually mimic legitimate transaction activity which could otherwise slip under the radar. On the contrary, it sticks out like a sore thumb and because the blockchain is immutable, has been used by the authorities to trace less sophisticated actors.
Sorry, I regret my word choice there. I did not mean "blowing up" in the colloquial definition (from financial instability), but rather from regulatory infractions.
Nothing mindless about being concerned about 1. privacy violations, 2. additional financial friction and 3. financial exclusion, that are documented consequences of AML laws.
If you'd like more objectives citations supporting these points, I'd be happy to provide them, but your belligerent demands that I not express myself, and your disingenuous characterizations of my arguments as "spam", are not constructive.
What is mindless is posting a video which cannot be read and forces your reader to be subject to propagandized, hyperbolized points exaggerated for effect.
You yourself admit that there are more "objective citations" supporting these points. If that's the case, you could have led with them. Why not lead with them? Why lead with something less objective? It's not arguing in good faith, it's arguing in proselytizing faith. It's deeply suspicious.
My characterizations of your arguments as spam are constructive, given that they've led you to admit that you're not leading with objectivity or respect for your reader. I'd say they've accomplished their goal.
>>If that's the case, you could have led with them. Why not lead with them?
Because I'd need to provide multiple citations, and I felt that was overkill for a starter comment in an informal discussion. I thought if someone disputed the claims in the succinct video I provided, I could then provide a more academic-style comment with the sources you mention.
Calling it mindless - not to mention 'spam' despite it being completely ontopic, just because you disagree with the veracity of the arguments - instead of just asking for more objective sources, is belligerent to the point of being unconstructive.
Should Iran also investigate if Iranian residents trade on Binance? And if they do, why is it Binance responsability to bow to the Iranian government? And if they don't bow, why should Binance bow to the US?
>Should Iran also investigate if Iranian residents trade on Binance?
It isn't a matter of should. But they definitely could, if Binance operates in Iran, and they suspect Binance is doing something that is against the law there.
>And if they do, why is it Binance responsibility to bow to the Iranian government?
If they want to conduct business with Iran, then they have to take on that responsibility. If they don't care about conducting business with Iran, they are welcome to not listen to any demands and just walk away.
>And if they don't bow, why should Binance bow to the US?
If they don't bow, they won't be able to conduct transactions and business with US entities completely, such as banks and payment providers. Whether they should bow or not is up to whether they want to continue that relationship.
For context, Binance DOES operate within the US, they just have a separate entity set up for it called Binance US that is fully compliant with US regulations and doesn't allow trading crypto derivatives (only regular crypto coins). Binance (the non-US one that allows derivatives) is self-blocking US users. The allegation is that despite all of that, Binance allowed derivative crypto trades to slip through the cracks in the US.
If Binance doesn't comply and is at fault, then they are risking getting their Binance US entity prevented from operating in the US. This has nothing to do with world policing or anything like that. If the business you are conducting in a country doesn't comply with local regulations, you are running a risk of getting investigated and asked to either fix it up (if you were given such a chance depending on circumstances) or get out, as simple as that.
US based companies are subject to EU privacy laws if they want to operate in EU. Facebook and Google both had to make huge infrastructure investments to comply with the GDPR.
The US fined US based tech companies for not complying with US age restrictions in the past as well.
There isn't anything controversial here. US government makes laws for US citizens and US based companies. Same with every other country on the planet.
Imagine you are US based company, who letting only US based people in, but getting fined from EU for GDPR, because some people from EU using vpn to access to your website.
Assuming you are talking about a case where some app is illegal in US, but not in UK, as long as Apple has sufficient safeguards, they should be in the clear. For example, don't you need a valid address in another country to create an app store account there? Or maybe a credit card from that country? If yes, then that sounds like a sufficient safeguard.
Not that it really matters, given I haven't heard of any Apple app store apps that are legal in UK but are explicitly illegal in the US. I remember there was a scare like that with TikTok/WhatsApp last year, but it never went through, so there isn't really a real life situation that could've set the precedent for such a thing.
I don't doubt that once such a situation occurs, Apple might indeed get looked into by the regulators. Would be an interesting case to observe for sure. Either way, that hypothetical situation is much much less clear-cut than what's happening with Binance right now, though I can definitely see the similarities.
Yeah the problem here is, US is expecting more than standard controls. Basically from the article, People from US trying more imaginative ways everyday.
This shouldn’t be necessary, or maybe LE should go after that people a bit too? I never heard any enforcement to US citizens doing this, but always regulatory pressure.
PS: in Apple case, as long as app is free , you can create any account from any country. But regulators would not be able to show teeth there for sure anyway
Or maybe Binance should put some effort (they are a tech company after all) into figuring out if a user is from the US instead of telling its users to use a VPN.
I'm actually a BNB holder but the arguments here are silly.
If a US regulatory agency doesn't want its residents to interact with foreign websites, it should block their internet access to websites outside of the country. Other entities outside of the US have no moral obligation to run these checks on behalf of the US government.
>Other entities outside of the US have no moral obligation to run these checks on behalf of the US government
Those other entities are businesses. If they want to conduct business in the US, they have to abide by the local laws. Just like any US business has to abide by EU laws if they want to operate in EU.
>If a US regulatory agency doesn't want its residents to interact with foreign websites, it should block their internet access to websites outside of the country.
US is literally acting in the interests of the business here trying to help them. US could block Binance, sure. But I think it is more merciful of them to give Binance a chance to fix their shit up and still let them operate in the US. Blocking those website is the last resort, as it should be.
Also, again, no one forced Binance US to register as a legal business entity in the US and conduct business here. Binance US is supposed to operate within US laws. It is their dedicated US branch for US customers that is supposed to provide services legal in the US (no derivatives, as opposed to their non-US Binance platform). Except they, allegedly, let some stuff from the non-US branch that is illegal in the US to slip through to the US customers. Binance cannot have their cake and eat it too. They either don't operate in the US or they do so while abiding the law.
I think a better way to look at it is: people paying to park wealth in the worlds most stable and transferable currency. Even North Korea likes holding US dollars.
We have the most stable, predictable economic environment in the world, and the oldest functioning constitution. Why would we not extract some of the value in that?
Another point: Inflation plays a domestic role as well, as it increases the velocity of money.
It's definitely fantastic for anyone with employees. If the currency was deflating, you better believe your boss would be doing a downward cost of living adjustment ever single paycheck. As it stands, they can just keep your pay fixed and you are constantly becoming a lesser business cost until they begrudgingly give you a 1-2% annual cost of living adjustment.
Basically, it's easier to manipulate individuals into working for less if the number they're getting remains the same or even goes up, but slower than real inflation.
> Basically, it's easier to manipulate individuals into working for less if the number they're getting remains the same or even goes up, but slower than real inflation.
I could be wrong, but it looks like that is comparing an aggregate/mean ('total productivity's) with a median ('typical wage'), which would paint a very innaccurate picture of what's happening.
Like, imagine everything stays the same, but a new class of extremely productive high paying jobs is invented, and grows to 10% of the workforce. This would have only a marginal effect on median wage but a huge effect on aggregate productivity. Nothing would change in any other industry (bread factories still have the same output and still pay the same) but it would make this stat look like like 'the rich are stealing our wage growth'.
Total deregulation is the only way. People should be free to contract as they wish, without limitations imposed on them by centralized regulatory authorities.
The alternative in this age of instant global communication is this: US regulatory agencies having to prosecute companies in other countries because people living in the US were able to access the companies' services through the internet, resulting in no company anywhere on Earth being allowed by arms of the US regulatory system to provide financial services that do not ID and track customers.
You are absolutely right but it gets even worse. The KYC bullshit is on the brink to spill over to non financial services, like messaging apps, hosting, email, and what not.
"He turned. In his hand was a revolver that the Constitution said he had every right to own. He fired at me and missed. I pulled my own gun, put a quarter in it, and fired back. The bullet lodged in a U.S.P.S. mailbox less than a foot from his head. I shot the mailbox again, on purpose." [1]
Instituting warrantless mass-surveillance, which makes institutional tyranny far more likely, to reduce crime from non-state-actors, is a terrible trade off. It's not even effective at reducing crime:
The strategy here, if there is one, baffles me. There seems to be a real cost to taking on US customers. This is just one small facet of a crazy problem.
Do people in America seriously consider it an acceptable trade-off when "Binance blocks U.S. residents from its website"? This just looks like own goal after own goal.