Feds Seize Assets From Mt. Gox’s Dwolla Acount, Accuse It Of Violating Money Transfer Regulations

Posted: May 16, 2013 in GT, Startup
Tags: , ,

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Bitcoin exchange service Mt. Gox is experiencing
some issues with U.S. authorities. The Department of
Homeland Security issued a seizure warrant to Dwolla
for the money in Mt. Gox’s Dwolla account. Mt. Gox
users can’t use Dwolla as a funding option anymore
even though it was one of the most popular options. The Japanese startup failed to register in the U.S. as
a money transmitting company — president and CEO
Mark Karpeles now faces up to five years in prison. Dwolla had no choice but to proceed with the request.
IDG News obtained a copy of the warrant through the
U.S. Immigration and Customs Enforcement (ICE),
the investigation team of the Department of Homeland
Security. In order to accept funds in dollars, Mt. Gox opened a
Wells Fargo business account for Mutum Sigillum
LLC (Mt. Gox’s American subsidiary). The company
had to complete a document that states whether it
provides money services or not. The warrant reads:
“That document was completed on May 20, 2011, and identified Mutum Sigillum LLC as a business not
engaged in money services.” In particular, Karpeles answered no to two important
questions: “Do you deal in or exchange currency for
your customer?” and “Does your business accept
funds from customers and send the funds based on
customers’ instructions (Money Transmitter)?” If the
ICE feels the need to emphasize those questions, it means that the DHS probably believes that Mt. Gox
is both a money transmitter and a currency exchange
service. Mt. Gox should have registered with FinCEN to limit
fraudulent activity — it is a requirement for money
services in the U.S. As Bitcoin is an independent and
anonymous currency, many observers believe that it
is used for money laundering and paying for illegal
drugs. It could be the DHS’s main concern. The exchange service is still working fine. So far, Mt.
Gox wrote the following statement on its Facebook
page: Like many who have contacted us, 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. We take this information
seriously. However, as of this time we have not been
provided with a copy of the court order and/or warrant,
and do not know its scope and/or the reasons for its
issuance. MtGox is investigating and will provide
further reports when additional information becomes known.

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Comments
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  2. […] Feds Seize Assets From Mt. Gox’s Dwolla Acount, Accuse It Of Violating Money Transfer Regulati… […]

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