Many of you were skeptical about Litepay. You were right.
It's time we got back to the fundamentals of blockchain.
"Don't Trust, Verify"
The point of a blockchain is to remove trust in a transaction. You don't need a 3rd party to confirm whether your transaction went through. In this way blockchain tech is a peer to peer currency. The reason for this is that trust can be easily built, leveraged, abused, and manipulated.
We now urge people to question everything. Don't take news at face value.
As for the Litecoin Foundation, its employees, or its volunteers, every business we retweet is not an endorsement nor an indication that we have thoroughly reviewed their business model. We're just excited about different people adding LTC support. But we will also be more cautious about what we retweet.
If litecoin were a business, we would micromanage every part of this. But as it is an open-sourced project, anyone body can build on top of Litecoin. Unfortunately, this may include bad actors sometimes.
So please be cautious, wary, and think critically. It is much better to verify the legitimacy of businesses yourselves rather than to trust our word on it. edit1:
This post isn’t in regards to Litepay as it was a unique and unfortunate situation that the LF invested in. Also, this was not written with Litepal in mind. But the following information is relevant.
Update on Litepal
First of all, I wanted to thank u/Mogwai56
for first bringing this to my attention.
Also another LTC supporte (retracted by request) from twitter helped me a lot.
I do not enjoy sharing this information. But I feel like I must in good faith towards the community.
- Here is proof tying edin to the hacker profile Cod3ing. It is a cease and desist letter from Edin to a Glen D. Pearl to stop using various iterations of Edin and Cod3ing.
- This is Cod3ings hacker profile. It has a very low reputation.
- This hacker profile has been associated with "illegal malware sales" according to allegations by a person called backopy, the moderatoadmin of HackForums. Admittedly this is a bit of hearsay but is consistent with Cod3ing's low reputation.
- This is a recording between Cod3ing and Shadow about Cod3ing taking down some sort of hacker forum. It gives you an inside look into what appears to be beef between two hackers. One line that sticks out to be is "You're really good at social engineering."
- The next bit of information speaks to his behavior. If he is 21, it means he was very young. Something to consider.He signed an NDA but then consequently broke it after being refused a position at Crissic. This is SkylarM CEO of Crissic tying edin to the experience.
Based on the information above, make your own conclusions about Litepal. Edin is also welcome to share his story or explain himself. edit2
Edin's response to mogwai in another thread:
Mogwai56, Edin here again. LitePal does not currently have any paid employees, we're a startup with no third party investment or funding, this was something we clarified to a few users through Twitter; I'm not sure if I can find the specific messages sent but they are definitely somewhere there. https://www.reddit.com/litecoin/comments/87d0fh/first_litepay_now_litepal_satoshilites_big/dwcc0nj/
We have two other people, not including myself involved with the development of LitePal in some capacity.
LitePal has never made any false promises, when we first came out with our idea, we did so with a timeline of launching in Q2 to Q3, we were very clear about this. You can see the explanation above as to why we changed our schedule around.
I greatly and sincerely apologize for not being more transparent about some of my personal history, people can and do change. I genuinely have the best interests of the community at heart and I want LitePal to provide a means for merchants and buyers alike to transact using Bitcoin and Litecoin; my specialisation and interests in cybersecurity will allow LitePal as a company to protect our digital assets using the latest in cutting-edge technology, which is paramount for companies in the cryptocurrency space.
I'm unfortunately not in a position to make any further comments on your findings or accusations, however, I would be very happy to answer any and all other questions you may have about LitePal.
The top few articles on /bitcoin
right now are about the cease letter sent to Bitcoin foundation: http://www.reddit.com/Bitcoin/comments/1gwuql/bitcoin_foundation_gets_cease_an_desist_order_fo
To catch everyone up to speed:
- Bitcoin is a program made by people on the Internet you download and run
- Nobody "owns" Bitcoin just like nobody owns BitTorrent and other online protocols (agreements in how we transfer data)
- California is sending a letter to a company that develops the software for not having licenses to transmit money (they make software, not transmit money)
As pointed out by another poster, similar precedent was set with the LimeWire case where defendants were ruled against for developing software for their users actions.
I made this post so people can manage their expectations and understand how things play out in response and why so many people are using crypto tools now like RetroShare, TOR, and I2P.
If they start targeting or intimidating people like Gavin and other developers all you will see is those developers disappear and be replaced by entirely anonymous developers - quite possibly the same people and you'll never prove it even if you are monitoring their internet connections.
The same is true for making rules against whistle-blowers. All you're going to get now are purely anonymous leaks, probably very slowly over time to protect the interests of the leaker.
Please start using more crypto tools and help make those networks robust.
By ROBIN SIDEL and ANDREW R. JOHNSON State regulators are warning virtual-currency exchanges and other companies that deal with bitcoin that they could be closed down if their activities run afoul of state money-transmission laws, according to people familiar with the matter.
According to people familiar with the situation, banking regulators in California, New York and Virginia in recent weeks have issued letters telling the companies that they need to follow the state rules or prove that the rules don't apply to them.
The warnings fall short of formal "cease and desist" orders, which would demand that the companies immediately stop engaging in their business, these people said.
Still, the moves show that state regulators have moved beyond merely scrutinizing virtual currencies and now are taking steps to prevent people and companies from using them for illegal activities. Federal regulators already are cracking down on virtual currencies.
Similar actions are expected from other states in coming weeks and months, according to people familiar with the matter. California, New York and Virginia are three of the 48 states that require the companies to obtain money-transmission licenses to operate. South Carolina and Montana don't have such rules.
The money-transmission rules vary among states, but most require detailed financial data, business strategy and information about the company's management. States also typically require companies to put up a bond that could run as high as several million dollars.
Bits and Pieces
Read about Bitcoin's evolution.
The actions aren't related to the announcement last week that Mt. Gox, the largest bitcoin trading exchange, has halted withdrawals of customer funds in U.S. dollars. The Tokyo company said it was making system improvements.
Unlike dollars or euros that are backed by a central bank, bitcoin users can create the units in a process called "mining." Users also can trade the currency on a number of exchanges or swap it privately.
The state actions come three months after federal regulators issued guidelines placing virtual-currency exchanges under the same comprehensive anti-money-laundering requirements as traditional money-transmission businesses such as Western Union Co. Since then, a handful of bitcoin exchanges have registered with the U.S. Treasury Department's Financial Crimes Enforcement Network.
The California Department of Financial Institutions has issued at least three warnings to bitcoin-related companies in recent weeks, according to people familiar with the actions. One of the recipients is the Bitcoin Foundation, an industry-backed group that promotes the digital cash.
Patrick Murck, general counsel for the Bitcoin Foundation, said it is a nonprofit organization and doesn't engage in money transmission. The group is formulating its response to the letter it received from regulators last week.
A spokeswoman for the California banking department declined to comment on the warning letters, saying the communications are confidential and "the goal is safety and soundness and compliance with the laws that DFI enforces."
California is particularly important to the bitcoin community because many of the startup companies that are tied to the virtual currency are based there. California and New York are known for having stricter money-transmission laws than other states.
Bloomberg News Bitcoin supporter Peter Vessenes
"Bitcoin businesses are spending a lot of time and energy figuring out how to stay out of California," said Peter Vessenes, chief executive of CoinLab, a Bainbridge Island, Wash., company that has registered as a money-services business with the Financial Crimes Enforcement Network. CoinLab is waiting to launch any exchange-related services until it gets its "state licensing strategy sorted," said Mr. Vessenes, who also is chairman of the Bitcoin Foundation.
The New York Department of Financial Services issued a similar letter to BitInstant, a New York company that allows customers to buy and sell bitcoins. The company earlier this month alerted customers on its website that it wasn't accepting cash deposits "as we make steps to transition to our new website."
Charlie Shrem, chief executive of BitInstant, couldn't be reached for comment. The company has registered as a money-services business with federal regulators.
"Virtual currency firms inhabit an evolving and sometimes murky corner of the financial world," Benjamin Lawsky, superintendent of New York's Department of Financial Services, said in an interview.
"The extent and nature of their operations morph constantly, so it's important for regulators to ask the hard questions and stay ahead of the curve in order to root out dangerous or illegal activity," he said.
In Virginia, a company called Tangible Cryptography suspended the purchase of the currency through its service called FastCash4Bitcoins after receiving a letter from state regulators who received a complaint that the company was operating as an unlicensed money transmitter, according to a notice on its website. Company representatives couldn't be reached for comment.
Tangible Cryptography said on its website that its activity is exempt from licensing requirements and that the commission's initial assessment contained factual errors.
"While we respond to the commission's notice, the prudent action is for the company to suspend all new transactions," the company said.
A spokesman for the Virginia Bureau of Financial Institutions declined to comment on whether it has issued similar notices to other companies.
Write to Robin Sidel at [email protected]
and Andrew R. Johnson at [email protected]
A version of this article appeared June 26, 2013, on page C1 in the U.S. edition of The Wall Street Journal, with the headline: States Put Heat on Bitcoin.
The Bitcoin Foundation has issued an incredibly detailed response to the cease and desist letter it was sent by the Department of Financial Institutions (DFI) in California.. According to the DFI’s letter, which was sent on May 30, the Bitcoin Foundation requires licensure as a money transmitter under California law. The Bitcoin Foundation has published a reply to the cease and desist order that the organization received on May 30 from California’s Department of Financial Institutions. The cease and desist order was a vague one, telling the foundation to “cease and desist from the business of conducting money transmission in this state” without specifying what the foundation was actually doing that ... Bitcoin Foundation sent a cease and desist letter, said to be operating illegal money transfer in California . By Jon Xavier – Technology Reporter, Silicon Valley Business Journal . Jun 24, 2013 ... The Bitcoin Foundation has issued an incredibly detailed response to the cease and desist letter it was sent by the Department of Financial Institutions (DFI) in California.. According to the DFI ... The cease and desist order was dated May 30, one and a half weeks after the Bitcoin 2013 conference in San Jose. The letter said that the Bitcoin Foundation may be a money transmission business ...
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