Re:Mt. Gox Dwolla account frozen by DHS
by rdl on Wednesday May 15, 2013 @01:47AM
(#5710381)
The problem is essentially all the buyers of drugs are in the US, and pay cash. You end up with a bunch of $5-20 bills in the US. You need to either pay electricity/personnel/fertilizer/rent/etc. to grow pot, or pay Chinese companies for research chemicals, or South Americans or Central Asians for cocaine or heroin, or old people/poor people for pharms (or sometimes foreign companies).
The direction is
product: producer (foreign) -> reseller (USA) -> user (USA)
The hard part is the initial stage of taking US physical $5-20 bills and depositing it into a bank account without arousing suspicion, at scale. You can't just deposit it into a US account and wire it overseas, and you can't as easily play the remittance game where you give ~$500/wk to a bunch of Mexicans to "remit to Mexico" to accounts you control.
Right now, the best thing to do is actually "bulk currency export", where you put it in a bunch of bags and ship it overseas, then deposit it into foreign accounts. Once you get it into a foreign bank, you SWIFT it to a slightly less shady jurisdiction, going through a bunch of steps to obfuscate (although doing traffic analysis on SWIFT is a solved problem; I suspect FinCEN is a Palantir customer...), then put it into investments, usually government approved/affiliated, which won't be questioned.
By buying slightly government affiliated assets (real estate?), you then get rent streams which are "clean", and then you invest those in the US.
Your average dude buying a few hundred pounds of weed in Humboldt for $1500/pound and flipping it for $3200/pound in NYC just moves bulk currency back in the same manner he shipped his product cross-country, pays his vendors in cash, and ends up with a lot of cash, which he spends on flashy purchases for his personal life (paying rent in cash, etc.), and with the excess, may make cash investments in assets (small businesses, whatever) which generate licit revenue, on which he pays taxes and then does whatever.
Bitcoin is totally irrelevant to that.
The market where bitcoin might make sense is if you're a US research dealer who wants to buy, say, 100 grams of some new RC from a manufacturer in China. The dodgy "sell to individuals" front there might be willing to accept BTC then fedex it to you. Otherwise you have to go through the trouble of doing a wire to a foreign account, etc.
It also could make sense if your retail buyers also take bitcoin. Maybe selling cocaine to VCs in SF/NYC could meet that (1 BTC ~= 1 eight ball), assuming you can then somehow take a bunch of BTC to buy larger quantities of cocaine (maybe via silkroad?). But in practice I think the only people selling serious weight for Bitcoin above the retail level are pharm, RC, or pot.
The direction is
product: producer (foreign) -> reseller (USA) -> user (USA)
money: buyer (USA) -> resller (USA) -> producer (foreign)
The hard part is the initial stage of taking US physical $5-20 bills and depositing it into a bank account without arousing suspicion, at scale. You can't just deposit it into a US account and wire it overseas, and you can't as easily play the remittance game where you give ~$500/wk to a bunch of Mexicans to "remit to Mexico" to accounts you control.
Right now, the best thing to do is actually "bulk currency export", where you put it in a bunch of bags and ship it overseas, then deposit it into foreign accounts. Once you get it into a foreign bank, you SWIFT it to a slightly less shady jurisdiction, going through a bunch of steps to obfuscate (although doing traffic analysis on SWIFT is a solved problem; I suspect FinCEN is a Palantir customer...), then put it into investments, usually government approved/affiliated, which won't be questioned.
By buying slightly government affiliated assets (real estate?), you then get rent streams which are "clean", and then you invest those in the US.
Your average dude buying a few hundred pounds of weed in Humboldt for $1500/pound and flipping it for $3200/pound in NYC just moves bulk currency back in the same manner he shipped his product cross-country, pays his vendors in cash, and ends up with a lot of cash, which he spends on flashy purchases for his personal life (paying rent in cash, etc.), and with the excess, may make cash investments in assets (small businesses, whatever) which generate licit revenue, on which he pays taxes and then does whatever.
Bitcoin is totally irrelevant to that.
The market where bitcoin might make sense is if you're a US research dealer who wants to buy, say, 100 grams of some new RC from a manufacturer in China. The dodgy "sell to individuals" front there might be willing to accept BTC then fedex it to you. Otherwise you have to go through the trouble of doing a wire to a foreign account, etc.
It also could make sense if your retail buyers also take bitcoin. Maybe selling cocaine to VCs in SF/NYC could meet that (1 BTC ~= 1 eight ball), assuming you can then somehow take a bunch of BTC to buy larger quantities of cocaine (maybe via silkroad?). But in practice I think the only people selling serious weight for Bitcoin above the retail level are pharm, RC, or pot.