As a LN noob, can I ask what are the privacy implications of this?

If I run Alby Hub on Start9 and UncleJim onboard all by friends, will I be able to see all their transactions?

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Yes, you can see all their transactions. You are the custodian. There’s pros and cons of this compared to e.g. Cashu

That would make it illegal in most countries, right? As this would require a money transmitter license?

Yes, so we recommend only close friends and family for this Uncle Jim model