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I read something about this, but it seems pretty unenforceable. I understand US-exchanges need to be liscened as money transmitters in every state, but how can US states fine a foreign entity for making transfers to US accounts? What kind of laws are being broken?

As far as I understand, the exchange is only bound by the laws in the country which it does business and transfering money to US bank-accounts isn't exactly breaking any sort of laws. The US customers would still be coming onto the website, presumably hosted in the foreign country, so the business would still only be considered taking place in that foreign country.

I'm no expert on the legality here of foreign entities. Can anyone offer some advice.

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  • Why don't you delete this?
    – Wizard Of Ozzie
    Sep 7, 2015 at 17:24
  • Why delete it at all? It seemed like a perfectly fine question.
    – Nick ODell
    Sep 7, 2015 at 17:57
  • Besides the question of whether the unlicensed exchange violates any laws by doing business with US customers, another question is whether the customers are violating any laws.
    – Nate Eldredge
    Sep 7, 2015 at 20:00
  • The laws of country X do not apply on businesses operating in country Y. A foreign exchange needs to be licensed in every US state just as much as it needs to be licensed in every Chinese state, every North Korean province, and every Congolese dukedom.
    – RocketNuts
    Sep 8, 2015 at 8:40

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As CTO of Bit2C, Israel bitcoin exchange I can tell from my experience that the exchange has a bank account at it's local country, the exchange required by the bank which holds the customers funds to "know your customers" and in Israel we are obligated to ask from customers who make deposits to sign a document declaring they have no us citizenship, so we can't deal with US customers.

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