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My close friend who is the biggest currency rebellion I know. He introduced me to Bitcoin. Earlier he told me about some guy called Nothaus who created currency, in HI. However he got arrested for it.

Honestly he turned me onto BTC by advertising it as no banks, decentrized currency out of government control. Sounded great but is it legal, and is there something that is different in Nothaus's case as to why he was arrested?

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    For more on the Nothaus case, and its differences from Bitcoin, see this question. In particular, it appears that Nothaus's crime was that his currency was intended to be passed off as a genuine US dollar, which is certainly not the case with Bitcoin. – Nate Eldredge Mar 23 '14 at 15:23
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The United States government has specifically stated that Bitcoins are not inherently illegal and have legal uses. You can find this both in the new FinCEN guidance and in the legal documents submitted in the Ross Ulbricht case.

See, for example, pages 12 and 13 of this complaint: "Bitcoins are not illegal in and of themselves and have known legitimate uses."

  • Do you have any links? – John Devor Oct 21 '13 at 3:11
  • See, for example, pages 12 and 13 of this complaint. "Bitcoins are not illegal in and of themselves and have known legitimate uses." – David Schwartz Oct 21 '13 at 3:15
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It is legal. There are things you can do such as buying drugs online that are not legal.

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This guy may have been operating his own currency, which is different than crypto currency. One of the issues of having 51% of the hashrate on a coin (besides the loss of a trustless currency) is that you are operating a money services business (MSB), at the very least. It could also be possible that Nothaus may have created a non-crypto currency which would be centrally managed, thus needing to file an MSB, or get other licenses.

If you are buying or selling coins, this is OK.

If you are providing the service of matching buyers and sellers (i.e. operating an exchange), you need to file as a money transmitter, as stated in the original Fincen guidance: http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

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