Quote from: MSantori on June 23, 2013, 07:52:50 PM

Hi everyone. I have not been retained for this matter. I believe the Foundation has its own competent legal counsel, so I'm happy to weigh in on this independently.

One of three things just happened:

1) California's DFI just derped. Hard. Someone over there (whether it's Crayton, Venchiarutti, both or someone senior to them) believes that the Foundation actively issues, exchanges or transmits BTC or fiat. They might have even confused the Bitcoin Foundation with the Bitcoin Project. ...Let's get serious for a minute: These men are so ignorant as to believe this. To the contrary, they strike me as fairly intelligent people who would have done their diligence before sending a C&D. I think (1) is out.

2) DFI did not derp at all. DFI believes that the Foundation's passive role in the industry means it "conducts, controls, manages, supervises, directs, or owns" a money transmission business. The Foundation is about to face a very real legal battle with DFI fighting this theory. I don't believe this is the case either. To use a popular example: the RIAA does not conduct, control, manage or supervise any recording business. It's the other way around. EMI, Sony, UMG and its other constituent businesses control the RIAA. I don't think DFI has any evidence to the contrary. I think (2) is out as well.

3) DFI is being political. It doesn't know for sure what the Foundation does, doesn't know for sure whether it has its hands in any money transmission business, doesn't know the extent of its relationship with the Bitcoin Project and doesn't know the extent of its relationship with its constituent businesses. I would wager that only Foundation insiders (that's a very short list) know this. DFI isn't going to sit on the sidelines while this information stays in the Foundation's black box. Instead, it has begun a dialogue with the Foundation via a very special political method: a nasty letter. The Foundation is now compelled to respond and show their cards to a certain degree. Not legally compelled, of course, but practically compelled to explain their role in detail, and perhaps even provide evidence for their characterizations. By opening this dialogue, DFI will not be caught with its pants down when "this whole Bitcoin thing" gets big. To be sure, it is discharging its regulatory and investigative duties. Practically, though, it's doing a little CYA to put itself in a good position to say "We got out in front of this early." You've all probably gathered that this (3) is precisely what I think is going on. (1) and (2) above don't strike me as likely at all.

Some of you seem to believe that a battle line has been drawn, that the regulators are now on the offensive against BTC, and will conduct your businesses accordingly. I would caution against that approach. I don't think yours is a "conspiracy theory", but like conspiracy theories, this approach presumes that there is some powerful group, or at least a loose association of people at the helm of the regulation, who are steering the course of BTC in a way that favors their stakeholders - banks, paypal, Western Union, etc. I think that the truth is actually more terrifying: the regulation is rudderless. There is nobody and no particular group of people at the helm. There are only competing interests, like banks, bitcoiners, money transmitters and legislators who are all pulling at their own oars, trying to propel the ship in their own preferred direction. There is no course plotted. The ship will move forward, that's for sure. But the strongest, loudest and most dominant rowers will determine its path.

It will be interesting to see if this is part of a larger, blanket effort. The coming days will tell.

Reading the letter, it seems they are in direct violation of CA Code 2030. Could you shed some light on this?