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DHS seizes total of $5M from Bitcoin exchange Mt. Gox accounts

updated 09:42 pm EDT, Fri August 23, 2013

Money transmission licensing an issue for virtual currency exchange

The US Department of Homeland Security (DHS) has seized a total of $5 million from major Bitcoin exchange Mt. Gox. Court documents reveal that the seizures stem from the suspicion by the courts that the exchange was transmitting money without a license, with the seizure of funds a more plausible explanation for a two-week US dollar withdrawal hiatus by Mt. Gox.

Court documents picked up by GigaOM and The Genesis Block state that DHS seized $2.9 million from the exchange's Dwolla account in May and a further $2.1 million from its Wells Fargo accounts. The timing of the Wells Fargo seizure on June 19th is just one day prior to the hiatus, suggesting that the real reason for it was to stall for time until the exchange had rebuilt funds to supply to its users, rather than an upgrade of Mt. Gox systems. The exchange is still having issues with paying out Bitcoin to US Dollar exchanges, with most users having to wait for their money.

The Wells Fargo business account is the main sticking point for Mt. Gox, as it declared itself as "a business not engaged in money services," something that the DHS and the courts disagree with. It is possible that the exchange could bounce back from this, undertaking the potentially expensive money transmission licensing, but considering that the currency is becoming more legitimate in the eyes of the government, this is a setback to the company whether or not it pursues this course of action.





by MacNN Staff

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