I have some questions for the Federal Bureau of Investigation (FBI). Since public broadcast is our protagonists’ preferred method of communication, I figure I will respect that and stay with the communication method of preference.
Who taught you all to steal so well?
Are you sure you haven’t been spending a bit too long with the crooks you catch? Do you frequently take credit for someone else’s work? Earlier this year, a whole series of news articles appeared about a gentleman named Daniel Mercede (go here to see a list of them) after the FBI brandished about a press release boasting about them catching a credit card thief (not what you would commonly associate worthy of releasing to the press on theFBI website, but we will get to that).
Apparently, too, the FBI were pretty handy when it came to solving the really hard part of the crime — how Mercede was washing the money:
“A lot of the material that we got out of his apartment led me to believe there was something much, much greater going on here than a simple fraud,” said Detective Sergeant Andy Capwill of the Chagrin Falls Police Department. What he found while sifting through thousands of pages of data was evidence of large money transfers, dozens of checking accounts, and what appeared to be a robust business trading in the digital currency and payment network known as bitcoin. “I realized I was going to need some help here,” said Capwill, who called the FBI.
In their joint investigation, Capwill and special agents from the FBI’s Cleveland Field Office discovered Mercede was buying large quantities of bitcoin from legitimate foreign exchanges and then reselling the bitcoin himself at a premium. The inherent appeal of his business, Cryptocoin Capital Management, was its location in the U.S. — not in Russia or China, where people are leery to send their money — and that it did not require the same lengthy waiting period as the more reputable exchanges.
“A lot of the time, people who want bitcoin want it now, so they will go through more peer-to-peer transactions,” said Special Agent Gary Sukowatey, one of the FBI investigators. “He was buying larger quantities and waiting whatever period was necessary to wait, then he would sell it to people that wanted bitcoin right away.” The problem, he said, is these transactions are illegal if you don’t have a license.
Operating a money transmitting business requires registration through the U.S. Department of the Treasury, which has a bureau — the Financial Crimes Enforcement Network, or FinCEN — dedicated to collecting and analyzing information about financial transactions to combat money laundering, terrorist financing, and other financial crimes.
“You’ve got to do it the right way,” said Special Agent Milan Kosanovich, who specializes in complex financial crimes and investigated the case with Sukowatey and Capwill. “It’s perfectly fine to operate as a money exchanger for bitcoin. However, those exchangers, like other financial institutions in the U.S., have specific rules to follow to ensure compliance with anti-money laundering requirements.”
In September 2014, Mercede boasted about his profits to a reporter for an online bitcoin publication. He claimed he averaged returns of 8 to 15 percent per day by buying off Chinese exchanges and then selling locally. “I can get some crazy returns right now,” he was quoted saying.
The reason I ask is, well, that “reporter” you talk about; that was me. But far from you having to trudge through stacks of data to find out what was going on, that reporter — me — actually gave you the whole caper, hook, line and sinker, don’t you remember?:
As the value of bitcoin has been tumbling into the zone of pre-December 2013 levels, it appears that there is a big gap forming between what the exchanges in China are reporting and what individual traders are in fact practicing using their own Rolodexes.
Ohio-based trader Dan Mercede buys from exchanges, including Bitstamp and Lake BTC, and sells mostly in the form of over-the-counter (OTC) transactions to his own regional customer base of private clients. He said former long-term holders of bitcoin that sold out in weeks past are getting back into the market in a big way now the price is dropping further.
“Demand is really high with low prices and all the sellers that [were] holders before are actually returning buyers again right now,” he said.
Mercede, who is CEO of Cryptocoin Capital Management (CCM), claims he has made an average return of between 8%–15% per day mostly by buying off Chinese exchanges and selling locally, or vice-versa.
“I can get some crazy returns right now,” said Mercede, who cited a trade this weekend where he purchased 20 BTC at $375 and resold the units at $560 to a client within hours. CCM has been executing similar trades for amounts up to 50 BTC per trade a number of times in September, according to Mercede.
It is common practice in North America for retail investors to buy at premiums via local trusted brokers in the case of many asset classes. What is unusual is that customers are happy to pay such large premiums. Many speculate this is the direct result of exchanges being associated with countries such as China and Russia, which do not resonate well with the American public.
CCM is in the process of looking at registering with the US Securities & Exchange Commission (SEC) so that it can expand its product suite, and Mercede is also raising additional cash to service bitcoin arbitrage transactions beyond the borders of his home state.
So why did you take credit for these brutal man-hours of work? I didn’t know where Mercede was obtaining the money from at the time, naturally, but … well, I asked enough questions to help you along with catching him. And you didn’t bother saying thank you or helping me back. You just took credit for it yourself and for that knowledge, which again was hard to come by at the time. Which brings me to Question 2:
Why do you even bother wearing uniforms?
Why not just go to work dressed like the thugs you really are? At least that would be genuine. For me, a bigger question looms: did you purposefully leave out crediting me because you had been too busy trying to chase me down for a “scam” I never committed?
Dial back to July — August 2017, and some group of relentless professional thugs went ahead and smashed a market up that I created with a really robust trading outlook, with two cryptocurrencies, called COE and MNY. No end of trolls dogged me day and night, and my community day and night, and then, all-of-a-sudden, just after you prosecuted Merecede in November 2017, two lawyers show up by the names of Messers Silver and Miller with a ridiculous and entirely confabulated lawsuit that reads more like a fiction novel than it does a piece of legislative script.
Silver Miller are a contingency law firm. That means they charge no upfront fees, and get commission payments in return, a bit like your average cold caller telesales marketer. Thing is, flicking through their website reveals what a peculiar business this is. Their most recent win was against the Cryptsy exchange boss; prior to that, the only recoded victory of theirs listed is a 2013 settlement. But, hold on, those two are contingency lawyers. That means that for 4 years the pair of them either weren’t working at all, or they were working and earning nothing. How did they live? Where on earth did they come from?
The incoherent lawsuit the pair of lawyers filed on behalf of a bunch of plaintiffs, most of whom I have never met, incidentally, leads me to believe that you are driving this madness, in an attempt to crack down on cryptocurrencies.
This is not without reason . Let’s look at Daniel Merecde’s case again. Closer inspection reveals it wasn’t at all about illegal money transmission, but rather about identity theft. In other words, credit card fraud. You brought money transmission into it only thanks to my article, but it was incidental either way. You billed Mercede as a Bitcoin thief, when it was a standard case of credit card fraud. Why the antagonism against Blockchain assets? Would you have reacted the same way if it was dollar bills that Merecde had used to launder the stolen proceeds?
Lest you think I am paranoid then let me remind you of a very embarrassing article about one of your double agents who was undercover as the head of the South Carolina Ku Klux Klan that I published. It was way better than the CoinDesk piece, but that is because it was written by the legendary journalist Nate Thayer (although it appeared around the same time as the CoinDesk article appeared, coincidentally):
At a major demonstration this Saturday “to defend the Confederate flag”, Ku Klux Klan protest organizers will hoist a more controversial flag over the South Carolina state house grounds–the Nazi flag of Hitler’s Germany.
But the KKK Imperial Wizard also wears another hat: Christopher Eugene Barker is currently working as an undercover agent for the U.S. Federal Bureau of Investigation–working for and protected by the U.S. Joint Terrorism Task Force (JTTF).
You won’t believe how excited I was to grab that story. The only reason I got it was because Vice didn’t have the balls to publish, but I did. But that is because I hold truth to be sacred, and Nate Thayer, perhaps somewhat combatant for your tastes, is one of the best tellers of the truth there are alive right now. The best of the best. And he caught you red handed, shuffling the public interest game. In that sense, that little publication I ran must have really pissed you off, huh?
In fact, Mr. Thayer keeps catching your undercover agent beating up his wife, riding around drunk with pink panties on and other acts of public nuisance, but you keep dropping all the felonies that the police charge him with.
Which brings me to my last question:
Aren’t you a disgrace to everything we fought for?
Your notions of liberty and specifically, justice, run contrary to everything that the Founding Fathers of your country installed, don’t they? Did you set up CoinDesk to falsely misrepresent the lawsuit once the judge denied to default against me?
The thing that got me was the way in which that publication where the Mercede piece got snatched up by your trusty plagiarists — sorry, I mean Agents — that same publication CoinDesk completely failed to report the story accurately. Look at the html in the address bar: it says “ICO Founder Found Guilty”. But the opposite was true! And upon being politely asked to present my words aside your lawyers’ words, why did Coindesk fail to print my words aside the words of the attorneys Messers Silver and Miller:
Which is I expect what I will get to these three questions.
But know that your silence speaks louder than a blowhorn right now, and I am just getting started. You picked the wrong guy to fuck with this time, that’s for sure.