Original article by CryptoCoinsNews.com


The closure of Silk Road, the seizure and disposal of the Bitcoin assets, and the ongoing criminal charges against Ross William Ulbricht, the alleged owner, is potentially hugely damaging to all legitimate online businesses. These actions are indicative of a frightening lack of understanding of the nature of a state and the powers that it is and isn’t correct for a state to enforce. It has been claimed that Silk Road was used for trading illegal narcotics, so the U.S. government swooped, on Silk Road and Ulbricht. The Silk Road’s alleged owner is now facing a staggering array of criminal charges and find himself fighting an opponent with unlimited resources (the U.S. government). Ulbricht is in a very scary place and is in the fight of his life. FedEx, is also facing legal action for similar charges, though Ulbricht will face jail time while FedEx will simply face a tap-on-the-wrist fine, like HSBC.

Judge, Katherine Forrest, stated this week that although Ulbricht hadn’t been involved in buying and selling illegal goods himself he had: “designed the online structure which enabled and allowed transactions, but, in controlling all aspects of its operations, to have set the rules the vendors and buyers had to follow, policed accounts for rule violations, determined commission rates, and taken commissions on every transaction. In addition, he (Ulbricht) allegedly oversaw the efforts of others who assisted him in the administration and operation of the site.”

“The Indictment alleges that Ulbricht engaged in conduct that makes Silk Road different from other websites that provide a platform for individual buyers and sellers to connect and engage in transactions: Silk Road was specifically and intentionally designed for the purpose of facilitating unlawful transactions. The Indictment does not allege that Ulbricht is criminally liable simply because he is alleged to have launched a website that was – unknown to and unplanned by him – used for illicit transactions. If that were ultimately the case, he would lack the mens rea for criminal liability. Rather, Ulbricht is alleged to have knowingly and intentionally constructed and operated an expansive black market for selling and purchasing narcotics and malicious software and for laundering money. This separates Ulbricht’s alleged conduct from the mass of others whose websites may – without their planning or expectation – be used for unlawful purposes….administrators of an eBay-like site who intend for buyers and sellers to engage in lawful transactions are unlikely to have the necessary intent to be conspirators.”

This week a federal grand jury in San Francisco indicted FedEx, the overnight shipping company, accusing it of conspiring to deliver prescription drugs for illegal internet pharmacies.
FedEx is now facing drug-trafficking charges after a federal grand jury in San Francisco indicted the overnight shipping company, accusing it of conspiring to deliver prescription drugs for illegal internet pharmacies. The indictment is based on the legal premise that FedEx was aware, for over a decade, that online pharmacies were using its business. The indictment states that FedEx took steps to protect its business by setting up special credit policies for Internet pharmacies so it wouldn’t lose money if police shut the sites down. A Justice Department stated that:
“FedEx knew that it was delivering drugs to dealers and addicts.”
Patrick Fitzgerald, a senior vice president for marketing and communications, said FedEx has cooperated for decades with law enforcement agencies to stop illegal drug activity. Fitzgerald points out the unreasonableness of expecting FedEx to take responsibility for the legality of the contents of the 10 million plus packages that it delivers each day.
“We have repeatedly requested that the government provide us a list of online pharmacies engaging in illegal activity,” he said. “Whenever DEA provides us a list of pharmacies engaging in illegal activity, we will turn off shipping for those companies immediately. So far the government has declined to provide such a list.”
The actions of the US courts in these two cases alone show a frightening lack of understanding of consequences and have implications for all internet shoppers as well as entrepreneurs considering the setting up of an online business. The American company, eBay, is a multi-billion dollar business with operations localized in over thirty countries. In its early days, the company was not as regulated as it is today and listed many counterfeit items. Would the US have allowed eBay to continue post 1995 or would it have been subject to a closure and seizure from the US courts? What are the implications of this ‘Nanny State” governance? Could there be an anti-Bitcoin movement if bitcoins were used as an underlying technology in paying for illegal items? Further, what constitutes illegal items? Push-Daggers are illegal in the UK, Nazi paraphernalia is illegal in certain European states but not in the US. The implications of the recent US state regulation proposals for Bitcoin when viewed in the perspective of the two court actions shows a poor level of the understanding of over governance in the development of new technologies.