Econintersect: This week the Department of Homeland Security (DHS) froze funds in the Dwolla account of Mt.Gox’s U.S. unit, alleging that it had broken the law regarding money laundering. Dwolla is an online payments firm, similar to the more widely known PayPal. Mt. Gox is a Tokyo-based exchange that handles 80% of the global transactions of Bitcoins.
The specific changes that alleges the company and a subsidiary were conducting transactions “as part of an unlicensed money service business” that should have been registered with the Treasury’s Financial Crimes Enforcement Network (FinCen).
DHS said the transactions at Mt. Gox should have subjected to the same anti-money-laundering rules as banks and other transaction services such as PayPal and Western Union. For example, all transactions exceeding $10,000 should have been reported to the government.
According to The Wall Street Journal, the CFTC (Commodity Futures Trading Commission) is reviewing possible regulation of virtual currencies like Bitcoin.
There has been no word on how long the Mt. Gox accounts will be out of commission in the U.S.
- The coming political battle over Bitcoin (Timothy B. Lee, The Washington Post, 15 May 2013)
- U.S. Officials Freeze An Account Linked to Bitcoin Exchange (Jeffrey Spashott and Robin Sidel, The Wall Street Journal, 15 May 2013)
- Articles about Bitcoins (GEI News)