MtGox, the largest Bitcoin exchange in the world, has had some of its funds confiscated by the US Department of Homeland Security (DHS) which claims the Tokyo-based business has violated US laws governing currency exchange and transfer.
On Tuesday, e-commerce company Dwolla, which handles some Bitcoin transactions in the US, told customers it would no longer transfer funds to MtGox accounts, after receiving a seizure warrant from a federal court. According to the warrant, the exchange was transmitting money without a licence, a crime which could result in a fine or even a prison term.
The loss of these funds is not the only problem for MtGox – earlier this month, it was sued by CoinLab, US-based exchange which claimed MtGox failed to transfer ownership of its US assets as per November agreement, and demanded $75 million (£48m) in damages.
Interestingly enough, the news had little impact on the Bitcoin price, with virtual currency continuing to trade around $115 mark.
MtGox was established in 2010 as Magic: The Gathering Online Exchange – a platform for trading collectible game cards, but its focus soon shifted to transactions in alternative online currency. It turns out that both the company and its subsidiary Mutum Sigillum, created specifically for business purposes, have been under investigation by the DHS for a while.
The DHS agents established that the accounts used by the US business have been opened by Mark Karpeles, the president and CEO of MtGox. The problem is, in 2011 Karpeles signed a document which stated he and Mutum Sigillum were “not engaged in money services”.
According to the warrant published by Ars Technica, in his initial Money Services Business application Karpeles answered “no” when asked whether he and his company would exchange currency for its customers. He also said he would not transfer money according to customer instructions.
As a cherry on top, the company failed to register with FinCEN (Financial Crimes Enforcement Network), part of the Department of the US Treasury that collects and analyses information about financial transactions in order to combat money laundering and other financial crimes.
Another interesting fact: CoinLab, the company which was supposed to take over the Mt. Gox business in the US and is now suing it, had previously stated that it is fully compliant with US law and registered with FinCEN.
After receiving the warrant, Dwolla transferred the funds belonging to Mutum Sigillum to the authorities and stopped all interaction with the currency exchange. The exact amount wasn’t specified; however MtGox doesn’t seem all that worried.
“MtGox has read on the Internet that the United States Department of Homeland Security had a court order and/or warrant issued from the United States District Court in Maryland which it served upon the Dwolla mobile payment service with respect to accounts used for trading with MtGox.
“However, as of this time MtGox has not been provided with a copy of the court order and/or warrant and does not know its scope and/or the reasons for its issuance. MtGox is investigating and will provide further reports when additional information becomes known,” said the company in a statement on its website.
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Bitcoin is by no means a 100% secure currency right now. In general, people should be very vigilant when confirming the genuiness of financial transactions over the web. That being said, I find it curious to say the least that the main stream media goes to great lengths to discredit the digital currecy. The more people that subscribe to the bitcoin idea, the less wealth that will exist in the other currencies at any given time. The partisan tone of this article is pretty blatant.
The ZOG establishment are panicking because they can not longer control our funds on a global scale as they have the past century. Wake up people, this is a new century and the govt. and World Banks petty attempts to keep funds under the control of the elites will no longer be accepted by the masses. Keep in mind, Bitcoins are just the first, there are also Litecoins and multiple more digital currencies popping up, the skies the limit! They will attempt to attack trade organizations and decentralized en masse (especially the largest MTgox and Bitcoin). But guess what? The bitcoin economy now rivals the US greenback and growing rapidly. Last I checked, the Bitcoin has risen in the last 2 days from just over 72 to $78.48 USD (current). Want to be rich, invest in bitcoins people. It will topple econimies and governments, that's why they're all running scared. :D