Feds stamp on cash pipeline to Mt Gox, Bitcoin's Wall Street

Warrant served on account used to transfer crypto-dosh


The Department of Homeland Security has frozen an online trade route between US citizens and Mt. Gox - the world's largest exchange of crypto-currency Bitcoin.

The move will be interpreted as an opening skirmish in a battle to control the electronic cash, which has exploded in popularity and so far avoided regulation by governments.

The feds confirmed an investigation is underway after it emerged a "seizure warrant" was filed against Dwolla, a US-only mobile payments service used by Bitcoin traders.

Netizens can exchange dollars and bitcoins on Mt. Gox via a Dwolla account held by Mutum Sigillum LLC. The warrant against the Mutum account effectively halted transfers of money between the popular bitcoin exchange and Dwolla users.

Iowa startup Dwolla admitted yesterday it can no longer process cash payments to Mt. Gox's intermediary Mutum Sigillum. Any cash awaiting transfer between Dwolla and bitcoin converter Mt. Gox will be refunded.

This morning Mt Gox released this statement:

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.

Nicole Navas, a spokesperson for the US Immigration and Customs Enforcement (ICE) department, today told CNET: "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."

The implications of this action are not yet clear, but it could indicate the beginning of a long battle to bring Bitcoin under the rule of US law. Just last week, America's Commodity Futures Trading Commission confirmed it was looking into Bitcoin and deciding whether regulating the e-cash was possible - or necessary.

In March, the US Treasury said any firms dealing in the virtual currency would be considered "money services businesses" just like any other, which means they must hand over transaction information to the government and work to prevent money laundering.

A denial-of-service attack on Mt. Gox in April followed a spectacular crash in the currency's value which saw over $100 wiped off the value of each crypto-coin.

More than $1bn worth of Bitcoin is currently in circulation, with well over half of all transactions passing through Mt. Gox. ®

Similar topics


Other stories you might like

  • Uncle Sam to clip wings of Pegasus-like spyware – sorry, 'intrusion software' – with proposed export controls

    Surveillance tech faces trade limits as America syncs policy with treaty obligations

    More than six years after proposing export restrictions on "intrusion software," the US Commerce Department's Bureau of Industry and Security (BIS) has formulated a rule that it believes balances the latitude required to investigate cyber threats with the need to limit dangerous code.

    The BIS on Wednesday announced an interim final rule that defines when an export license will be required to distribute what is basically commercial spyware, in order to align US policy with the 1996 Wassenaar Arrangement, an international arms control regime.

    The rule [PDF] – which spans 65 pages – aims to prevent the distribution of surveillance tools, like NSO Group's Pegasus, to countries subject to arms controls, like China and Russia, while allowing legitimate security research and transactions to continue. Made available for public comment over the next 45 days, the rule is scheduled to be finalized in 90 days.

    Continue reading
  • Global IT spending to hit $4.5 trillion in 2022, says Gartner

    The future's bright, and expensive

    Corporate technology soothsayer Gartner is forecasting worldwide IT spending will hit $4.5tr in 2022, up 5.5 per cent from 2021.

    The strongest growth is set to come from enterprise software, which the analyst firm expects to increase by 11.5 per cent in 2022 to reach a global spending level of £670bn. Growth has fallen slightly, though. In 2021 it was 13.6 per cent for this market segment. The increase was driven by infrastructure software spending, which outpaced application software spending.

    The largest chunk of IT spending is set to remain communication services, which will reach £1.48tr next year, after modest growth of 2.1 per cent. The next largest category is IT services, which is set to grow by 8.9 per cent to reach $1.29tr over the next year, according to the analysts.

    Continue reading
  • Memory maker Micron moots $150bn mega manufacturing moneybag

    AI and 5G to fuel demand for new plants and R&D

    Chip giant Micron has announced a $150bn global investment plan designed to support manufacturing and research over the next decade.

    The memory maker said it would include expansion of its fabrication facilities to help meet demand.

    As well as chip shortages due to COVID-19 disruption, the $21bn-revenue company said it wanted to take advantage of the fact memory and storage accounts for around 30 per cent of the global semiconductor industry today.

    Continue reading

Biting the hand that feeds IT © 1998–2021