Quote from: mgio on May 28, 2013, 09:11:53 PM

We need to be accepted by the mainstream, by large companies like amazon.com in order to succeed. That is just beginning to happen now but if bitcoin is made "illegal", those companies are going to run, far, far away and bitcoin won't be used by anyone but the techies, the libertarians, and the crazies on this forum Wink

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Right now, Bitcoin is accepted at Amazon through Gyft. I bought a large gift card today, cashing out a few coins around $129, mostly because I'm bearish on the LR news, and it was time to cash out 10% anyways. (side note: Bitpay gives a reasonable exchange rate, apparently at the point where enough btc are available on the bid side at MtGox to cover the sale of the card's btc).

The LR news may push the former LR users into bitcoin with whatever money that wasn't seized, but as you correctly pointed out, businesses are less likely to send money to an online currency exchange with front-page NYTimes headlines like "A case against Liberty Reserve, an online currency exchange, is believed to be the largest global money laundering prosecution ever, the authorities said." link

Already, the LR news has had a chilling effect with the voluntary cutting off of OKPay to bitcoin exchanges. Also, because of the recent FinCen action against MtGox, Bitfinex voluntarily stopped using MtGox citing the risk of a MtGox seizure, which is why Bitstamp and MtGox exchange prices have diverged. The feds are taking action, and are having a measurable effect on bitcoin already.

The feds have shown that they
1) have very long arms that can reach even into Costa Rica and grab a former American that had renounced citizenship, and start extradition proceedings. Japan isn't too far.
2) are willing endure the collateral damage of hundreds to thousands of legitimate users of LR

The Feds may not be able to shut down bitcoin, but they know the mantra "follow the money", and I think they might start coming down on exchanges. The justification won't be that bitcoin itself is illegal. What they'll do is say that the exchanges are not stopping money laundering, online drug sales, weapon sales, or child porn. At least, that's what the headline will read, regardless of factual accuracy.

Best case scenario for Bitcoin is that MtGox is working with US feds to identify SR vendors, and announce a mass bust of them. This would mean that the feds are working _with_ the exchanges to identify lawbreakers, rather than trying to shut down the whole damn thing like they did with SR. No one likes the strict MtGox AML rules, but that might be the difference between the exchanges getting shut down LR style, and being allowed to exist by the Feds.