Doctor Bitcoin jailed for selling – Bitcoin Magazine
In 2011, journalist and tech entrepreneur Mark Hopkins shared dinner with a longtime friend who offered to pay for half of the meal by sending Hopkins a newly minted bitcoin, which the friend had himself mined on his laptop. In a recent phone interview with Bitcoin Magazine, Hopkins joked that he had never heard of the world’s first peer-to-peer cryptocurrency before, but “being a good geek himself,” he brought his laptop and downloaded the necessary hardware for to accept the offer (about half a bitcoin to cover a coffee house meal – “13 or 14 dollars” of magic internet money – in case you were wondering).
This transaction began a year-long journey down the Bitcoin rabbit hole for Hopkins, launching an “AND” path that included adopting the online teacher persona of Doctor Bitcoin, becoming vice president of Geosyn Mining (based in Fort Worth, Texas), and selling his personally mined bitcoin for many years to interested parties, in person against cash or through bank transfers all the way across the board.
Hopkins said his interest in selling bitcoin was “mostly to meet people” for networking purposes, and that he rarely bothered to make money except for the biggest deals, instead focusing on turning higher-net-worth buyers into long-term clients for his customers. marketing company.
Hopkins noted that at the time there was “no federal guidance at all” regarding bitcoin sales, so he regularly sought advice from Texas lawmakers, who assured him (and published 2017′ Memorandum 1037 that said) they would not require licenses or regulation. the sale of bitcoin in the state. In fact, they encouraged Hopkins and others to “bring innovation to Texas,” Hopkins said.
Yet September 5, Hopkins announced via his Twitter account that he would report to the Beaumont Federal Correctional Institute “for the crime of selling #Bitcoin a few years ago.”
“A king pin in a lottery scam”
The arrest raised questions about exactly what crime Hopkins had committed, especially if he had received assurances from Texas lawmakers that he was operating within the law.
In 2019, the Financial Crimes Enforcement Network (FinCEN), a federal agency under the US Treasury Department, published 18 USC 1960, which requires the now-familiar “money transmitter license” to be obtained by those who wish to sell bitcoin and other cryptocurrencies to the public, with a proposed penalty of up to five years in prison for selling bitcoin without obtaining the license. This is the crime for which Hopkins said he is now serving time, but selling bitcoin is not the activity that originally caught the attention of federal law enforcement.
Hopkins reports that one of his former clients was under observation for suspected participation in a Nigerian lottery scam. The buyer initially told Hopkins that she was buying bitcoin “for her husband’s electronic repair business” (he believed her at the time), though she later told investigators that she herself was “beat up by a Nigerian,” according to Hopkins.
Charitably described by Hopkins as “an unsophisticated user”, not only did he sell bitcoin to this client on around 20 separate occasions, he also patiently helped and educated her on custody best practices, as well as how not to “trigger” banking problems by using specific terms such as could lead to the closure of her bank account (which is a fairly common occurrence and known concern for Bitcoin enthusiasts, especially at that time). According to Hopkins, prosecutors later falsely accused him of teaching this woman “how to commit bank fraud.”
Suspecting that Hopkins was somehow “a kingpin of a lottery scam” due to the amounts of money “flowing” to him, Hopkins’ family home was raided by “15 armed agents, brandishing guns and search warrants…” and which confiscated over $60,000 worth of his personal property, Hopkins said.
Hopkins was cooperative and “completely transparent” during the raid, saying he informed federal agents of his public Doctor Bitcoin and professional LinkedIn profile, and he shared details of his past consulting work with several US government agencies (including the Federal Reserve) on bitcoin and blockchain technology. Hopkins claimed that he even personally explained to the raid agents some best practices for using bitcoin wallets (eg automatically generating new addresses at random with each new use) and was quite surprised that agents from this white-collar crime branch were not already well acquainted with such technology.
Based on his credentials and the nature of his work (and especially his claimed innocence of lottery fraud that was actually under investigation), Hopkins was confident that these agents would soon understand that they “definitely have the wrong guy” and would even apologize .
However, Hopkins now states that “what probably happened” was that “they spent so many resources rolling out 15 agents to a guy’s house to solve a serious crime and came up empty, so they had to find something I was guilty of” avoiding egg on their faces, and that his named crime was “operating a money transmitter business without a license, based on some vague guidance provided by FinCEN … about a year earlier.”
As the case progressed, Hopkins says “they decided not to just come after me, but my wife because she was in my bank account” and threatened them both “not only with the money transmitter offence” but for banking-related advice given to his client, which could result in 35 years in prison for both Mr. and Mrs. Hopkins.
“The government is fighting it tooth and nail”
Hopkins now believes the agents are guilty of “prosecutorial misconduct or blackmail, depending on how you want to look at it” for offering to leave his wife and three children out of the case if he agreed to plead guilty to selling bitcoin without the necessary money transmitter license. But he added that, despite defending what is right or wrong, “I cannot abandon my family (or) take such a gambit; my family comes first regardless of my principles.” And then he accepted the plea deal.
In the wake of his sentencing, Hopkins is using his Twitter account and media interviews to warn others about “the encroaching state war on privacy, and the general brokenness of the criminal justice system.”
“I mean start with Ross (Ulbricht); start with (Julian) Assange; start with (Edward) Snowden. Look at what’s happening with the Tornado Cash developer (Alexey Pertsev), the removal of Monero from various exchanges (and) every attempt to improve privacy – and not just in cryptocurrency – but cryptography in general over the last 20 to 30 years. The government is fighting it tooth and nail. It’s honestly getting old, because people like us … get caught in the crossfire.”
Hopkins called for the “separation of money and state,” warning that because the Bitcoin blockchain is a permanent record, multiple government forces (including the newly hired Internal Revenue Service) will come after many more Bitcoiners based on old transaction history if they do. not contacting their legislators and “holding their feet to the fire” to protect existing First Amendment principles and privacy laws. He warned that 18 USC 1960 (the money transmitters’ licensing requirements) is an “existential threat… It’s there every time someone trades peer-to-peer… like buying a truckload of bitcoin, or if I share dinner with you and you pay for your half with bitcoin, you are committing a federal crime.”
“You can see very clearly that there is an increase” in prosecuting 18 USC 1960 cryptocurrency-related crimes, he said. And the targeting of those to be charged or prosecuted is to “move away from major crimes. The Department of Justice,” Hopkins maintained, is holding “clinics on how to apply the law more liberally.”
In addition to promoting his own cause, Hopkins is now actively involved with FreeRossDAO (working to free Ulbricht, who founded the early Bitcoin darknet marketplace Silk Road, from prison). Hopkins said Ulbricht is “a martyr” whose legal situation far outweighs his own, saying: “I sold some bitcoin, I spent money in a way that the government didn’t like. My life is crazy today, but … it will be better in a year. But Ross will still be in prison.”
“If we … don’t demand from our government that they change this law and the application of it, given time they can come after every one of us,” Hopkins added.
Hopkins’ son will maintain his father’s Twitter account while Hopkins serves his sentence.
This is a guest post by Guy Malone. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
