Blog > Law & Regulation

The Right to Privacy

By Craig Wright | 07 Jun 2019 | Alternative Coins & Systems

Bitcoin is a system that works within the majority of legal frameworks — all of the ones in the free world. An important aspect of how Bitcoin works is privacy. Privacy differs greatly from anonymity. Anonymity is something that people seek when they want to commit crimes, hide illicit activities, and do things that are generally wrong. Privacy is a right, anonymity is not.

One of the worst things to have developed with social media is the misapplied belief that people are owed an explanation. Irresponsible reporting and illegitimate dump sites like WikiLeaks caused the start of such a problem. Poor journalism allowed people to start believing the documents dropped online by a bunch of anonymous trolls calling themselves muckrakers and freedom fighters that are quite often 30 to 50% fake news which have dulled people and made them insensate to the bombardment of fake information.

Libel and defamation are not rights. Free speech does not give you the right to commit fraud, to mislead people, or to lie. It doesn’t give you the right to make up alternative facts that have no basis in reality. Free speech does not allow defamation and slander.

If you choose to abuse people and say that they must respond to you, you are using force. When you lie and slander others, it is a form of force. It is an illegitimate force and one generally used by criminals. We have a system that has been developed over many decades and centuries. The process of deciding on evidence in a court is well and truly founded and based on reality. Bitcoin is not about changing reality, as some seem to think. You don’t prove anything with the signing of a key. And you don’t do so publicly. If you think so, you have no idea what Bitcoin is about. Then again, the majority of people listen to Core-coin (BTC) developers and are misled by the lies about anonymity. That is, the lies they used to create a system that is friendly to crime. It’s that simple: the same developers are creating a system that is designed in a manner that will allow ransomware to run and pay the developers through an automated system. It is designed to allow untraceable drug sales. It’s designed to provide terrorist funding.

If you want to prove something, because other people have decided to force your hand, you don’t need to do things the way they want. In a court, you can limit evidence from being disclosed, yet it can remain evidence. Privacy is important, but so is security.

If you don’t understand it, you haven’t taken the time to understand Bitcoin.

Tax and Gains

What people don’t realise is that you are liable for tax as it applies in your country in any asset, and Bitcoin is no different. More anonymous systems have existed, and all of them led to people being arrested for tax evasion when they tried to bypass regulation. With Bitcoin, you need to explain the source of wealth. It’s very simple, you cannot just send a bitcoin to yourself and say such was the price. When you get a bitcoin, it doesn’t matter how many times you flip it around your own addresses; you pay tax on the value that you have gained. So, if you procured a bitcoin at US$10 and it is now worth US$1000, then you pay tax on the US$990 gain. That simple.

If you lie about the source of your bitcoin, you pay more tax.

If you have an asset and you cannot say where it came from, you pay tax on the full value. There is a lot of case law in taxation that can be applied to bitcoin and other cryptocurrencies, which means that the tax office can simply tax you on gains as you spend bitcoin. If you don’t keep records, they will eventually find out. Bitcoin is pseudonymous, and leaves an audit trail. In other words, it’s private, but it is subject to taxation.

I know people like to think that Bitcoin helps them evade tax; it doesn’t.

I have provided sworn testimony in court listing a number of my addresses. People think you might want to lie in doing so. You won’t. Especially not on early addresses that were mined. The reason is, you need to explain both the existence of assets and where they go. If I claim to have the first 800,000 bitcoin, for instance, and the respective addresses are known by a court, when they move, I become liable. If they’re sold, I pay the capital-gains tax on them. What people don’t realise is that if you lie about Bitcoin addresses, you end up paying for it. If you provide evidence that you own an address, you pay tax on the address when it is sold at the market value of when it is sold. Source-of-wealth laws mean that you have to account for where you purchased or mined your bitcoin and where you sold it.

In other words, you need to keep records. If you receive bitcoin from someone at a local-bitcoin exchange, you better have records of the exchange and how much money you got the bitcoin for. If you don’t, you’re liable for the full value. For instance, if you buy bitcoin in the future at US$500 and it goes up to US$600, you have a taxable gain of US$100. Conversely, if you cannot prove the source of funds, you have tax on all US$600. Contrary to what people believe, it is a very simple scenario, and the tax office near you will likely come for a visit if you don’t consider it.

Privacy Is Different to Anonymity

The point here is that you do not have a right to unlimited speech. You cannot make up false accusations and innuendoes and defame other people without consequences. A few people are going to start to learn that they come under the purview of law.

Mr Maxwell was contacted to verify things that would have made Blockstream irrelevant. He likes to claim a theft of $40 million, yet as I previously pointed out, the limit on a refund in Australia is $20 million. There is no rebate over that amount. It would have simply been a tax offset in the business. But it doesn’t make a good story. What Mr Maxwell doesn’t point out is that he is associated with the creation of a number of AntiSec tools and is attempting to make a copy of Bitcoin that is more anonymous. The entire purpose for Mr Maxwell’s attacks on me has been to allow him and his colleagues to alter Bitcoin in such a way that it enables crime.

Mr Maxwell has been lying and making up false claims including submitting false evidence to cover his tracks.

Some of the things Mr Maxwell has been doing include:

  • facilitating terrorist funding;
  • aiding in the creation of a system designed to destroy evidence (including money-transfer evidence and funding sources);
  • creating systems including automated ransomware and the ability to stop tracking of payments;
  • infrastructure hacking and DDoS funding;
  • funding illegal activities including leaking data and payments from malware associated with such activity;
  • software that aids in the facilitation of cryptojacking;
  • adding in the creation of systems that are designed to enable funding that has the express purpose of evading sanctions;
  • creating systems to facilitate funding illicit groups (including child-porn rings);
  • aiding securities fraud;
  • facilitating and conspiracy to defraud; and
  • funding the illegal theft of state secrets.

Some of the systems developed by Mr Maxwell are already being used by the Islamic State. Unlike Mr Maxwell and his sock puppets, I may not always be expedient enough for some people, but I go through with my actions. I have a law degree, and I am conducting research that will lead to a doctorate in law. I have several cases that have been initiated (by myself against those shouting lies) for libel and slander, and the defamation cases will go to court. Unlike most of the Twitter rabble, I understand the nature of libel and Mr Maxwell’s involvement in the false claims and defamation that have arisen against me through his fraudulent and misleading actions.

I want to give evidence that Mr Maxwell is involved with funding sites connected to the Islamic State in Iraq and the Levant (Isil) and that following his connection in the past with AntiSec, Anonymous, and LulzSec, he (Mr Maxwell) moved on to Bitcoin because of the false belief that it could act as an anonymous system similar to how bit gold had been proposed or how e-gold had been before being shut down. He acted under the false belief that he could create a system by altering Bitcoin that would allow criminals and terrorists to exchange funds without the need to trust one another. Such was, of course, never the goal of Bitcoin.

Mr Maxwell has been attacking myself as he seeks to create systems that are designed to bypass the anti-money laundering (AML) and counter-terrorist financing (CTF) legislation. He will falsely tell you about freedom and privacy, but what he is actually talking about is the development of systems that are purposely designed to aid criminals in money laundering and terrorist funding.

When people talk about altering Bitcoin so that it can act without trust, what people like Mr Maxwell are actually promoting is a system outside of law. In creating confidential transactions and sidechains, Mr Maxwell and associates are seeking to create a system without records and logs which will enable terrorists and other criminals to purchase goods and services on the Darknet. Bitcoin doesn’t suffer from the same problems because legitimate exchanges may occur, and if individuals attempt to defraud another, the law acts to stop them. The problem is not legitimate exchanges. When I created Bitcoin, I did so expecting a system of legitimate exchange within the law. Mr Maxwell and others are seeking to alter Bitcoin in order to create a system that acts outside any legal framework or court. In doing so, they seek to create a digital currency that is anonymous but yet also reduces the risk of criminal organisations scamming or defrauding rival criminal organisations. In other words, they seek to remove trust even between criminals.

I invite Mr Maxwell to sue me. It will save me the effort of filing against him. Don’t worry, it is planned, but we have so little time and so many people to bring to justice.

Don’t worry, Mr Maxwell, I’m not hiding any more. You’ll get your day in court and, at the end of all of it, a free room, a board, and a nice new orange suit.