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Home / Breaking News / US seizes top Bitcoin exchange as crackdown begins

US seizes top Bitcoin exchange as crackdown begins

The US Department of Homeland Security seized a payment processing account Tuesday belonging to Mt. Gox, the largest international Bitcoin trader, claiming the monetary exchange service falsified financial documents.

The American government has previously made it clear that
officials are watching Bitcoin, a decentralized economic currency
that international regulators have not yet been able to control.
Many of those who favor Bitcoin use Dwolla, an Iowa-based startup
that allows customers to transfer their dollars into
Bitcoins. 

Unfortunately for those consumers, the Department of Homeland
Security issued a warrant Tuesday effectively shutting down
Dwolla’s ability to process Bitcoin payments, as reported by CNET.
Whether because of the DHS’ charge of operating an “unlicensed
money transmitting business
,” the sudden timing of the
allegations, or another reason, Dwolla and Mt. Gox officials have
been reluctant to comment. 

In order not to compromise this ongoing investigation being
conducted by ICE Homeland Security Investigations Baltimore, we
cannot comment beyond the information in warrant, which was filed
in the District of Maryland [Tuesday
],” said Nicole Navas, a
representative for US Immigration and Customs
Enforcement. 

The warrant claims Mt. Gox CEO Mark Karpeles did not disclose he
operated a financial transfer site when he opened a new bank
account for the business. Money transmitting services, according to
Gawker, are required to register with the Department of Treasury’s
Financial Crimes Enforcement Network (FinCen). Mt. Gox, which is
involved in roughly 63 per cent of all Bitcoin purchases, has not
done so.

AFP Photo / George Frey

Despite the technicalities skeptics are wondering if Bitcoin’s
friction with the Treasury department is the cause of this recent
scrutiny. Senator Chuck Schumer (D-New York) said the anonymity
afforded by the service provided an “online form of money
laundering
” and campaigned for its downfall. 

Literally, it allows buyers and users to sell illegal drugs
online, including heroin, cocaine, and meth, and users do sell by
hiding their identity through a program that makes them virtually
untraceable
,” Schumer said during a 2011 news conference.
It’s a certifiable one-stop shop for illegal drugs that
represents the most brazen attempt to peddle drugs online that we
have ever seen. It’s more brazen than anything else by light
years
.” 

Most notably, proponents have asserted that Bitcoin would be
impermeable in instances where WikiLeaks, for example, saw its
funding evaporate as the federal government pressured PayPal to cut
off the whistleblower site’s support network. Bitcoin would be more
resistant to a crackdown of that nature. 

Jerry Brito, a scholar at the libertarian Mercatus Center at
George Mason University, told the Washington Post Bitcoin could
reduce the cost of financial services by pioneering new business
formats. 

Bitcoin has the potential to be a boon to the economy and a
boon to merchants
,” he said, adding that it could “disrupt
traditional payment networks that have not been innovative for a
very long time
.”

A blind governmental crackdown would only serve to push Bitcoin
further underground, Brito argued. 

You can’t put the genie back into the bottle,” he
continued. “I hate to say it, but the Bitcoin community needs to
start lobbying. It needs to start educating policymakers, lobbyists
and influencers about the pros of Bitcoin and the impossibility or
the difficulty in getting rid of all the bad uses
.”

This article originally appeared on : RT

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