Legal Implications of Activating Wallets?

[Guest]

11 hours ago, karlos said:

All ready to go!

Please be advised that if you activate an account of someone that you do not know, you are linking your own identity to this account, and you will be exposing yourself to future legal / fiscal risks concerning transactions on that account. Gatehub should activate their customer's wallet, since they also do the KYC stuff. They don't do that anymore?

Edited November 22, 2016 by Guest
Topic split from https://www.xrpchat.com/topic/581-new-member-would-like-to-activate-gatehub-wallet/

[karlos]

26 minutes ago, lucky said:

Please be advised that if you activate an account of someone that you do not know, you are linking your own identity to this account, and you will be exposing yourself to future legal / fiscal risks concerning transactions on that account. Gatehub should activate their customer's wallet, since they also do the KYC stuff. They don't do that anymore?

Yeh who knows what bad things they might do with 40c. Guess I better stop giving people change on the street then..

[Guest]

3 minutes ago, karlos said:

Yeh who knows what bad things they might do with 40c. Guess I better stop giving people change on the street then..

It's not about the 40c. Its about all other transactions that will happen on that account, which are now linked to your identity, for the lifetime of RCL, and for which you may one day be asked to provide an explanation.

[karlos]

2 minutes ago, lucky said:

It's not about the 40c. Its about all other transactions that will happen on that account, which are now linked to your identity, for the lifetime of RCL, and for which you may one day be asked to provide an explanation.

So RCL users should only send funds to people they have personally confirmed with ID?

[Guest]

Just now, karlos said:

So RCL users should only send funds to people they have personally confirmed with ID?

Suit yourself, but be warned that Ripple is a public blockchain, and you can be held accountable for your transactions. If Gatehub is indeed activating wallets themselves, any request from a stranger on this forum to activate his account, can only be for the reason that he wishes to have an account that is not linked to his own identity. That should raise a flag. I would not do it. Just saying.

[Guest]

6 hours ago, lucky said:

Suit yourself, but be warned that Ripple is a public blockchain, and you can be held accountable for your transactions. If Gatehub is indeed activating wallets themselves, any request from a stranger on this forum to activate his account, can only be for the reason that he wishes to have an account that is not linked to his own identity. That should raise a flag. I would not do it. Just saying.

@lucky, I think you are right that it is good to be cautious about this kind of thing. I think it might be good to have more discussion about it. (In fact, it would be great to hear from a regulator or lawyer about how these laws apply to public blockchains.)

However, I don't think we should worry too much about activating a user's wallet. From what I know, in the US, the laws in the BSA generally apply to financial institutions and for transactions over $10000. Also, money laundering laws require intent to conceal, and I think there is a pretty good record here and on the official Ripple forum that the intent of wallet activation from one user to another is simply to activate a wallet and get people able to use the network and nothing else.

Now, I don't think there are technically minimums that apply to money laundering, but given the small amount for activation and reasonable good intent on behalf of the activator, I personally feel OK with activating other users' wallets. I think there's more good than bad that will come of it. But, as always, caveat emptor, and if we see suspicious activity on the network, it's good to report it to the community. (BTW, I think there's a really good record of calling attention to shady activities here and to Ripple -- GCB, various MLM schemes, "market manipulation," Jed.)

Edited November 21, 2016 by Guest
edit

[Guest]

Now just imagine the following letter in your mailbox, from the IRS, in 2018:
 

Quote

Dear Mr. Nice Guy,

It has come to our attention that you have activated five cryptocurrency wallets in 2016, which now contain a total amount of 6 million US dollar, and which are still actively used. Yet you only have declared one wallet to the IRS, with a total amount of 2 million US Dollar. According to the “2017 Trump Cryptocurrency Act”, which was enacted to stop tax evasion using cryptocurrency, the burden of proof that you are not in possession of the funds that are linked to your cryptocurrency accounts, is upon you, the origin of these five accounts. Unless you provide us with proof that you are not the current owner of these funds, we will either charge you for tax evasion, punishable by up to 10 years in jail, or settle for 50% of the undeclared amount, see attached invoice of 2 million dollar.

If you have plans to get rich, I'd be very cautious, needlessly exposing yourself to the above risk. There will be new legislation trying to curb tax evasion, that's not a matter of if, but when. We don't know how draconic that legislation will be. Activating wallets for total strangers on the Internet: not the smartest thing to do right now.

Edited November 21, 2016 by Guest

[karlos]

47 minutes ago, lucky said:

Now just imagine the following letter in your mailbox, from the IRS, in 2018:
 

If you have plans to get rich, I'd be very cautious, needlessly exposing yourself to the above risk. There will be new legislation trying to curb tax evasion, that's not a matter of if, but when. We don't know how draconic that legislation will be. Activating wallets for total strangers on the Internet: not the smartest thing to do right now.

If I got that letter I'd be more worried how Trump got elected to parliament in Australia 

[cmbartley]

If you give a dollar to a homeless person are you then responsible for all future monetary activities they engage in?

[Guest]

3 hours ago, cmbartley said:

If you give a dollar to a homeless person are you then responsible for all future monetary activities they engage in?

Activating a wallet is not equivalent to giving someone a dollar. It is the equivalent of allowing someone to use your passport to open a bankaccount. If you're fine with that, sure, go ahead, I just tried to explain that activating an account for someone you do not know is not as innocent as it seems.

Edited November 22, 2016 by Guest

[karlos]

This is a topic for new members to request wallet activation, not a discussion thread about hypothetical legal issues.  Can I please request any activation meta discussion be opened in a seperate thread. I don’t want any new members to feel dissuaded from posting their requests here.

[cmbartley]

@lucky I'd add that the passport analogy doesnt hold because a passport  is a document that validates identity and allowing someone to borrow it is does not confer ownership. XRP does not confer identity and gifting it to someone is just that, a gift. If I gift someone a hammer I'm not  for the murder the commit with it unless they specifically asked for the hammer so for the purpose of committing murder.

 

Okay Karlos, I'm done.

[thinlyspread]

Very interesting topic!

[kanaas]

On 22-11-2016 at 1:17 AM, lucky said:

Activating a wallet is not equivalent to giving someone a dollar. It is the equivalent of allowing someone to use your passport to open a bankaccount. If you're fine with that, sure, go ahead, I just tried to explain that activating an account for someone you do not know is not as innocent as it seems.

Your wallet is NOT your passport. Helping with those 50 starting XRP IS as legal as like giving someone a dollar - and as innocent as to give your wife a kiss.
Everybody can help serving other people - paid or for free. Unless you KNOW it's a guy with evil plans. Compare it with a taxidriver who happened to bring, completely unaware, terrorists, like those from 9/11, to the airport. Even in the US they will not put him in jail for such "professional" service as his car, neither his license are his passport. But if that taxidriver noticed something strange during the ride..... than it's another story and you might have expect him to warn the police.

[Guest]

2 hours ago, kanaas said:

Your wallet is NOT your passport. Helping with those 50 starting XRP IS as legal as like giving someone a dollar - and as innocent as to give your wife a kiss.
Everybody can help serving other people - paid or for free. Unless you KNOW it's a guy with evil plans. Compare it with a taxidriver who happened to bring, completely unaware, terrorists, like those from 9/11, to the airport. Even in the US they will not put him in jail for such "professional" service as his car, neither his license are his passport. But if that taxidriver noticed something strange during the ride..... than it's another story and you might have expect him to warn the police.

If you have gone through the KYC procedure either on Gatehub, or RippleTrade, or any other exchange, your wallet is attached to your real passport. And by extension, ANY payment you do on the ripple network, and ANY wallet that you activate, is also linked to your real passport. For eternity.

You don't know how legislation will work out concerning cryptocurrencies. It seems to me that "a wallet belongs to the person that activated it, unless he can provide proof otherwise" is quite likely to be adopted. That means: pay taxes on the money in "your wallets".

But even if you forget about the taxes and legal stuff. If crypto succeeds as the primary method for exchanging digital value, algorithms will be developed to extract a reputation from your wallet (or passport) by measuring the reputation of entities you are economically linked with on the blockchain. Doing on-chain business with bad entities could negatively impact your reputation, and harm your chances to get a loan, a mortgage, insurance or job, without any way to undo that. "Computer says no".

I am very surprised even seasoned xrpchat members do not see the difference between giving someone a dollar in person and activating a Ripple wallet from anonymous stranger on the forum. Going even as far as stating "activating a wallet is as innocent and harmless as giving your wife a kiss".

Just as you should be VERY cautious what you post on facebook, because the Internet never forgets, you should also be very cautious with transactions on a network that is designed to never forget. In particular: activating a wallet.

Wallet activation should (and IS, afaik) not the business of generous forum members, that's the business of exchanges and account providers. Having said that, I'm also done with this topic. Whoever wants to take my advise, take it, if you don't, really fine by me.

Edited November 23, 2016 by Guest