Breaking: DHS Stops Dwolla From Servicing Mt. Gox Accounts

  16 Flares Twitter 0   "”> Facebook 15   Google+ 0   LinkedIn 1   Email   Email” friend< a>”> 16 Flares ×

Dowlla is a payment system used by many bitcoin enthusiasts to transfer funds into and out of the largest bitcoin exchange, Mt. Gox. Dwolla just sent out the following email to users attempting to transfer funds to or from Mt. Gox:

As of 12:13 PM on 5/14/2013:

You’re receiving this notice because our systems have indicated that you’ve processed and completed a real-time Dwolla-to-Dwolla payment to Mutum Sigillum LLC (“Mt. Gox”) within the last 24 hours.

Due to recent court orders received from the Department of Homeland Security and U.S. District Court for the District of Maryland, Dwolla is no longer legally able to service Mutum Sigillum LLC’s account.

This is a courtesy email encouraging you to follow up on any uncompleted orders with Mutum Sigillum LLC as Dwolla is now unable to move money to and from Mutum Sigillum LLC’s Dwolla account.

Dwolla is not party to this matter nor does it have any information or further insight into the situation. We strongly encourages those with questions to contact Mutum Sigillum LLC

Note: Dwolla requires a court order before honoring requests such as seizing funds or revoking access to an account.

On behalf of Dwolla, we apologize for this inconvenience.

The Department of Homeland Security (DHS) has issued a Seizure Warrant for the funds in Mt. Gox’s accounts. As a result users will no longer be able to send or withdraw funds from Mt. Gox using Dwolla. It is still unknown whether the violation was due to non-compliance from Mt. Gox or from Dwolla. If it is Mt. Gox’s fault, we will likely see a significant impact since they account for 80% of exchange volume. One thing seems certain though, bitcoin’s increased exposure has brought more scrutiny onto the legal status of bitcoin exchanges.

The real question is whether people will begin buying or selling on Mt. Gox as a result of this news. If this matter will be self-contained to Mt. Gox, it makes the most sense to buy bitcoins and transfer them to other exchanges. If this in the first in a series of legal battles against exchanges, a sell-off seems more likely.

  16 Flares Twitter 0   "”> Facebook 15   Google+ 0   LinkedIn 1   Email   Email” friend< a>”> 16 Flares ×

About the author  ⁄ Phillip Archer

15 Comments

  • Reply
    mike
    May 14, 2013

    I think i just caught a massive selloff early

  • Reply
    ken
    May 16, 2013

    It would be great to read the actual basis for the orders…..the statutes cited, the specific harm claimed. Stopping bit coin like things is impossible. Even through violence, which is what federal court papers can feel like.

    I’m hoping the charges are the usual MO where lawyers pile on, hoping to slip things through. In time the battle settles and the US Treasury makes sure that it gets its piece.

    Cutting out the Fed invites a big foe. It (Goldman) owns the world’s largest private network and has friends with cryo-bunkers. It stands a great chance of breaking the bit coin balance of power if it can hammer the value for a sustained period.

    Like a weed, 10 more such currencies will grow while authority marshals its resources around a hand full of cases for the “long haul” precedent. By the time they get to SCOTUS, they will be paying in bit coin like media for a ride to the proceeding :-)

    It seems obvious that an alternative global currency would be considered as part of tax reform. If such currencies are in a10 year fight for basic legitimacy, and if the Fed/IRS does not find a way to get its piece, we (as a nation) will not begin to figure out how to get a piece until the present fight is over. A 1-2 decade tax reform policy that does not recognize digital currency will build-in limits to growth.

Leave a Comment

74 Flares Twitter 47 Facebook 17 Google+ 8 LinkedIn 2 Email -- 74 Flares ×