31 ms·
Mt. Gox Dwolla account frozen by DHS
- dylz 13y agoTook long enough. Magic the Gathering: Online Exchange needed to be shut down long ago.
- jstanley 13y agoI realise I'm probably feeding a troll, but why do you think that?
- rrouse 13y agoIt's a play on the name of the site. Mt. Gox -> MtG: OX
- Avenger42 13y agoActually, it's the origin of the name of the site: Its name was originally an initialism of Magic: The Gathering Online Exchange when it was an exchange for Magic: The Gathering playing cards. http://en.wikipedia.org/wiki/Mtgox http://en.wikipedia.org/wiki/Mtgox
- rrouse 13y agoHad no idea. Thanks for the heads up :)
- dustyleary 13y agoNot a "play"... But a common 'talking point' related by Bitcoin naysayers attempting to discredit Bitcoin. Mtgox.com really did start off as "magic the gathering online exchange", and was a site where people could buy/sell Magic cards. Nerds being nerds, the guy who ran the site got into Bitcoin when it first came out, because Bitcoin is interesting to nerds. After Bitcoin got big, Mtgox became "just bitcoins", and was eventually purchased by the company now running it.
- rrouse 13y agoHad no idea. Thanks for the heads up :)
- narcissus 13y agoI know eh? God forbid they pivot into a Bitcoin trading site and we let them live it down. I mean, if you can't be forgiven for pivoting on HN then where can you be? I wonder if dylz still refers to LG as 'Lucky Goldstar'?
- recursive 13y agoWait, what does LG stand for now?
- narcissus 13y agoIt doesn't really stand for anything. From Wikipedia: 'In 1995, to compete better in the Western market, the Lucky-Goldstar Corporation was renamed "LG"'. So while it was named LG because of the initials of Lucky Goldstar, its name is still just LG (or I guess "LG Corporation").
- wnight 13y agoWell, pivot all you want but if the ice is cracking beneath you you're still going down. Security was an afterthought - which might have been okay on a niche hobby site but wasn't when real money started to be traded. When they get their act together and the issue stops coming up every six months it won't be as relevant. Until then, slam away - it gives potential users something real to find when searching for info about a service.
- dylz 13y agoI was one of the earlier adopters. I made a LARGE amount of money cashing out. MtG:OX is terribly insecure, still using a shit codebase patched together for bitcoins, emphasising centralisation of BTC, which is dangerous. At one point they controlled and hosted (and had access to the database) of the largest bitcoin forum, largest bitcoin exchange, which makes for a terrible monopoly. It is dangerous to BTC ecosystem, it is dangerous to users' personal information being leaked repeatedly, getting hacked repeatedly, etc.
- Devilboy 13y agoIt's a Japanese company though
- yid 13y agoI'm guessing there are some sweaty brows at Coinbase today...
- sdoowpilihp 13y agoI am hoping that this will pan out well for them. This may be a blessing in disguise. I suppose time will tell though!
- deleted 13y ago[deleted]
- dangrossman 13y agoIncidentally, I transferred some BTC from MtGox to Coinbase when I heard this news. It might be safer to have it in my own wallet somewhere, but if there's no way to get BTC back into USD, it doesn't matter where the BTC is to me; I'd consider it written off.
- Devilboy 13y agoYou can always sell to individuals on localbitcoins or whatever
- dsimmons 13y agoAlready a thread going on here: https://news.ycombinator.com/item?id=5707537 https://news.ycombinator.com/item?id=5707537
- jonathanmarcus 13y agoAccording to Aaron Greenspan in his recent lawsuit "a vast sum, if not the majority, of Dwolla’s transaction volume is the result of Bitcoin speculation." So it should be interesting to see what impact this has on Dwolla's business.
- sachingulaya 13y agoConsidering it cost me exactly $0.25 to send $30,000 to mtgox through Dwolla I imagine the impact is minimal. Although, now that I have a Dwolla account I am more likely to use it in the future.
- joezydeco 13y agoAnd how many FinCEN forms did you need to send that 30K? That's mostly likely why DHS has shut them down.
- pmorici 13y agoWouldn't it be the responsibility of Mt.Gox and Dwolla to submit the required forms? Unless you are saying you think having money in Mt.Gox qualifies as a foreign account and he should have filed an FBAR.
- WhyAmIDead 13y agoThat's what he's saying. Dwolla / Mt.Gox didn't do their part and now they're paying the price.
- joezydeco 13y agoIsn't Mt. Gox a japanese entity? I'm not a financial expert by any means but it's pretty clear when you're moving cash to Mt. Gox, you're moving it out of the country. And I think the paperwork is a joint responsibility.
- wiredfool 13y agoI can't believe Dwolla took a 30k risk for $0.25. Their risk management just isn't priced into their fees.
- mindcrime 13y agoSomebody should freeze the DHS.
- base698 13y agoI think that was what Libertarian-Socialists thought bitcoin would accomplish :)
- mindcrime 13y agoWell, strictly speaking, I suppose that the combination of Tor and Bitcoin is still a bit subversive from an anti-government perspective. But the problem is, obviously, not everything can be done in Bitcoin at the moment. And as long as we need to exchange between USD and BTC, this kind of thing is going to be a problem. If BTC ever gains enough acceptance to (largely) eliminate the need to convert in and out of USD, it could be a real problem for governments who want to control all financial transactions. Whether or not that will happen is anybody's guess. It's something of a chicken or egg problem, as BTC is less likely to gain mainstream acceptance if you can't easily convert to/from other currencies (USD probably being one of the more important ones). If BTC remains relegated to only black-market transactions on sites like The Silk Road... well... that makes it a bit less useful. :-(
- bredren 13y agoI'd add that this isn't just a problem around getting USD into Bitcoin, but the challenge of making it easy for people to pass BTC to other people as casually and safely as they do cash. It would be great if someone released a solution like this.
- deleted 13y ago[deleted]
- vijayboyapati 13y agoWithout an exchange, price discovery is dead and bitcoin as a monetary phenomena essentially is too. The one thing that could save bitcoin is a distributed exchange, or something like Ripple taking off. Then shutting it down becomes essentially impossible
- quackerhacker 13y agoGuess it was only a matter of time before "the man," got involved in bitcoin somehow. Side Note: if we think we actually own the dollars in our wallets...remember that it's illegal to deface government property (like writing on it)...so no we don't.
- dangrossman 13y agoDefacing paper money is not illegal, only defacing it with intent to render it unfit for circulation is. Those "where has this bill been?" websites where people write/stamp the address onto the dollar are completely legal. Those machines at tourist cities that smash your pennies into local images are legal too; it's only illegal to destroy coinage for fraudulent purposes or to melt it down for the raw metals.
- quackerhacker 13y agoGreat point on the pennies, that totally skipped my mind. In regards to melting, this is funny to admit, when I was young, I used to believe that coins should be worth more than dollars, because if they ever lost their value, I'm pretty sure I'd have more use for the metal than paper.
- Domenic_S 13y ago> it's only illegal to destroy coinage for fraudulent purposes or to melt it down for the raw metals. It's more nuanced than that. Back in 1965, the Treasury prohibited exporting or melting of silver coins, but that prohibition has long since been rescinded. Currently it's unlawful to melt pennies or nickels, but not silver coins. Although silver coins (talking pre-1965 stuff here) trade for somewhere around and above spot value anyway, so melting is pointless.
- qdog 13y agoSeems likely this has to do with money laundering. Even if bitcoins themselves aren't regulated, the exchange of them for illicit goods is. While the Silk Road or whatever to buy drugs is something I can see being frowned upon, profits from sex slavery and other human trafficking or mob activities would be the real problem. Also taxation. I suspect the exchange of bitcoins for goods in the US isn't going to be as easy as some people thought.
- wiredfool 13y agoSince it's DHS, I'd bet it's Customs related, and from there, Silk Road. If it was money laundering/ofac, you'd see Treasury or Secret Service involved. Widespread fraud would add the FBI and AGs.
- declan 13y agoActually DHS takes the lead on money laundering investigations. That would be ICE, part of DHS. And remember that the Secret Service is also part of DHS. But DHS/ICE/HSI's mandate is so broad it's difficult to know what they're targeting here. Could be money laundering, could be something else. Their mandate also includes drug smuggling and computer crime, for instance.
- wiredfool 13y agoHuh, I didn't realize the Secret Service been removed from the Treasury.
- declan 13y agoYep, part of the 2002 law creating the Department of Homeland Security. (I still forget on occasion myself.)
- qdog 13y agoInteresting, I'm just guessing. Since Dwolla operates in the US, from the recent regulatory announcement targeted at bitcoin(or any online currency), I'm just thinking that Mtg.OX not registering itself in the US, it won't be able to do business directly with US entities. The Ars article http://arstechnica.com/tech-policy/2013/03/us-regulator-bitcoin-exchanges-must-comply-with-money-laundering-laws/ http://arstechnica.com/tech-policy/2013/03/us-regulator-bitc... would lead me to believe the money laundering is the most likely aspect to run afoul of regulation at the moment. However, I have little insight, it just seems the most likely reason to me.
- minimax 13y agoUsing bitcoin as a way to launder dollars requires the ability to turn USD into bitcoin and back again, which, incidentally, is exactly what Mt Gox does. dirty money -> mt gox -> bitcoin -> mt gox -> clean money I'm obviously speculating here, but this seems like a logical reason for the DHS to come in and shut things down.
- eurleif 13y agoWouldn't you still have to explain who was paying you BitCoin, and why?
- jlgreco 13y ago"I do freelance [whatever] over the internet in exchange for bitcoins." Where "[whatever]" is something relatively unverifiable. Programming, essay writing, whatever. Declare it properly as income and you probably won't have issues unless somebody actually decides to look closer. Not all that different from "selling" heavily marked up drinks at your bar in exchange for cash, then pouring said drinks down the drain. It will work for a while so long as you avoid suspicion.
- kanzure 13y ago> Where "[whatever]" is something relatively unverifiable. Programming Yep. And that may sound inefficient, but it's actually really great at decreasing information about the source of money. For example, you might have a legitimate software business where you're selling custom software to a customer, but meanwhile you're financing the creation of those bits through dirty e-goldcashcoin. Later, you transfer the bits through Tor to yourself, with very little record of the origin of those bits. The only problem is that the worker that was paid in dirtcoin might be able to recognize their work in the future (in the wild), breaking the anonymity of that value-creating transaction. So you can focus on content creation work that is less unique, but you can't always charge customers that much for that sort of work anyway.. I think it's an interesting problem to think about. I am sure there's a solution where you don't end up with a stray existential threat like the worker stumbling upon his beautiful artwork in the future. Assassination market? That's really extreme, surely there's a better way.
- jpdoctor 13y agoWith the various shutdowns of US-based exchanges (and US purchase mechanisms for foreign exchanges), it is driving the bitcoin biz offshore from the US. I don't think it takes too much of a crystal ball to figure out this strategy is a bad idea. Conversely, I hope all of our foreign friends remember to send a few bitcoins our way for putting this generous gift of a multi-billion dollar finance industry into their laps.
- jlgreco 13y agoAre we sure that bitcoin originated in America? Maybe they gave us this gift, and we promptly mishandled it and lost it.
- jpdoctor 13y ago> Are we sure that bitcoin originated in America? Maybe they gave us this gift, and we promptly mishandled it and lost it. Yep we mishandled it certainly... When there is a new technology which is about to change the face of the planet, the usual response is to bring as much of the industry for that tech into your own country. The US response has been the opposite. I suspect later generations are going to regret it.
- betterunix 13y agoI suspect that you are being overly optimistic about Bitcoin's likelihood to change the face of the planet. There are so many economic and technical problems with Bitcoin that it is nothing short of a miracle that it became as popular as it is now -- and that popularity is not even a blip on the radar of global finance.
- sonoffett 13y ago%s/{Bitcoin,finance}/{Internet,communication}/g . Not to say you're wrong, but the same rhetoric is used for every "game" changing technology.
- godgod 13y agoDHS (US govt) is deathly afraid of bitcoin.
- wmf 13y agoDiscussion from a few months back on "how Bitcoin dies": https://news.ycombinator.com/item?id=5109961 https://news.ycombinator.com/item?id=5109961
- vijayboyapati 13y agoSo the outcome looks something like this: 1. holders of dollars at MtGox will buy as many btc as possible and remove them from MtGox, because there's no other escape for their dollars 2. holders of btc at MtGox will presumably send them elsewhere because selling them for dollars doesn't make sense if you can't get the dollars (although perhaps it still makes sense for euros/pounds/yen etc) 3. There is a loss of liquidity at Gox from all the btc being pulled from there 4. The dollar price at other exchanges starts falling because they are still exit points for dollars Most of the trading volume is in dollars at Gox if I'm not mistaken, so this might be the death blow for them. Although given their history of incompetence, it was kind of sad the network effect was protecting them. Perhaps a phoenix will rise from the ashes.
- chadzawistowski 13y agoInteresting analysis. I've heard a lot of pontificating about how MtGox's utter dominance of USD-BTX exchange was bad for the Bitcoin ecosystem as a whole; I'd like to see how the Bitcoin community reacts to this change over the next coming months.
- 3pt14159 13y agoHere is the actual outcome: 1. Holders of dollars at MtGox that live outside the US and have already had successful withdraws to their home-country banks withdraw now. (Source: I just did) 2. Then we sell a large portion of our bitcoins (essentially just leaving the, "if I'm wrong" fund of bitcoins, about 20% of what we bought way back when it was $1 or $5 or whatever). 3. Then we withdraw that amount to our home country bank. 4. Then we wait for the next 2 months as speculation of DHS swings the price down then up then down until DHS stikes against MtGox and the price collapses to about $20 or $30. 5. Then we figure out a way to buy back in. 6. We wait 2 years and start selling out at $1000 / BTC while people scream "currency of the future".
- changdizzle 13y agoIf we have money in MtGox what are our options for cashing out now?
- fnordfnordfnord 13y agoBTC transfer to CampBX and then out through Dwolla or any other method they offer. BTC trade for services or goods. BTC trade with private party. BTC to another exchange with different banking arrangements.
- zanny 13y agoThis, you can still transfer bitcoins between any exchange service offering transactions. Though I have to fear for both campbx and coinbase - they are the next two biggest ways to convert USD to BTC.
- fnordfnordfnord 13y ago>Though I have to fear for both campbx and coinbase Me too, I feel a little better for coinbase since Andreessen Horowitz got involved. CBX seems like they are all above board too, but gosh I wish they'd fix their web interface.
- marshray 13y ago> you can still transfer bitcoins So would one rather be holding BTC or USD right now?
- fnordfnordfnord 13y agoSome of each, I'd like to be a little heavy on USD, to take advantage of any buying opportunities that may arise in the near term.
- changdizzle 13y agothanks! that's what I ended up doing - I looked at creating an OKPAY account, which MtGox can transfer between but I would have to wait the X days to get my account verified and re-submit all my personal documents. bought the BTC on mtgox, transferred to campbx, broke even, and started my dwolla transfers i'm not pulling my cash out because i don't believe in BTC, but with the uncertainty and volatility at the moment I'm going to take a wait and see approach
- declan 13y agoA Department of Homeland Security representative confirmed the investigation a few minutes ago and told me this: "In order not to compromise this ongoing investigation being conducted by ICE Homeland Security Investigations Baltimore, we cannot comment beyond the information in the warrant, which was filed in the District of Maryland earlier today." More: http://news.cnet.com/8301-13578_3-57584511-38/homeland-security-cuts-off-dwolla-bitcoin-transfers/ http://news.cnet.com/8301-13578_3-57584511-38/homeland-secur...
- nullc 13y agoThanks, Mr. McCullagh, for doing some actual journalism and not just repeating a rumor.
- downandout 13y agoThe US government dislikes Bitcoin, and they figure that they can hurt it most effectively by targeting Mt Gox. Whether or not they have a case is almost a moot point. Vague allegations of money laundering will be enough to take a serious bite out of Mt. Gox's business. The feds will accomplish it in the exact same way that they destroyed Megaupload: by seizing their domain. As part of the case apparently filed against MtGox in Maryland, they will likely soon confiscate the domain (since it is a .com and the US has declared itself the emperor of all .com's). Then, it won't matter whether they actually win the case. Having the domain gone for a long period of time will make a serious dent in their business. It probably won't be the death knell, since Bitcoin users tend to be more sophisticated and used to complications like this, but the filing of this case is probably a sign that Mt Gox will be headed out as the market leader.
- tptacek 13y agoit in the exact same way that they destroyed Megaupload You mean by filing a case against them and then, in the discovery process, locating the emails in which the founders of Mt. Gox openly admit that the whole enterprise is built on deliberate cultivation of commercial copyright infringement, so much so that the operators of Mt. Gox actually pay their users to upload pirated movies? That sounds far fetched. If the US is going to try to take down Mt. Gox, I think they'll do it a different way than how they went after Mega.
- sdoowpilihp 13y agoI think the point is that implicating MtGox in a money laundering scheme and showing the possibility of willful negligence on their part will likely be enough to tie them up in a legal process long enough to suffocate the site in terms of finances/operations.
- downandout 13y agoNo, it's the same way that they go after any online business. Take away their domain, and the business is dead. Within days, any hope of the domain returning to life is gone and people are onto the next site. Even if the business ultimately wins the case and gets the domain back, the government will have long since achieved its goal of destroying the business. A domain seizure is equivalent to a death sentence for an internet company.
- jstalin 13y agoAnother reason to buy at https://localbitcoins.com/ https://localbitcoins.com/
- tocomment 13y agoWhy isn't this causing the price of bitcoin to drop?
- iso8859-1 13y agobecause not everyone is a US citizen ?
- carbocation 13y agoIn the past 6 hourse, the price of a bitcoin in USD on MtGox went from a (previously stable) ~$119 to $105.
- tomelders 13y agoBefore governments start clamouring (in vain) to shut down Bitcoin exchanges on spurious claims that they're money laundering havens, I thought I'd remind everyone that neither HSBC, Barclays, Credit Suisse, Standard Chartered or ING were shut down when they were caught laundering money. http://dealbook.nytimes.com/2012/12/10/hsbc-said-to-near-1-9-billion-settlement-over-money-laundering/ http://dealbook.nytimes.com/2012/12/10/hsbc-said-to-near-1-9... "Give me control over a nations currency, and I care not who makes its laws.” Baron M.A. Rothschild
- beedogs 13y agoSort of hoping and praying for the collapse of the US government. This shit is getting out of hand.
- camus 13y ago"... this is what you get, when you mess with us..."
- Uchikoma 13y agoHaha, we have no accounts to trace, bitcoin works differently! DHS: Shut everything down.
- hisabness 13y agothis is great, freeze a company's bank account without even serving them: https://mtgox.com/pdf/20130515_statement_regarding_dhs_court_order.pdf https://mtgox.com/pdf/20130515_statement_regarding_dhs_court...
- chris_gogreen 13y agoSeriously, why not just answer the questions on the form truthfully? I hope that was an oversight. Fibbing to the feds will get you in big trouble.