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<\/p>\nThe 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.<\/p>\n
The American government has previously made it clear that
\nofficials are watching Bitcoin, a decentralized economic currency
\nthat international regulators have not yet been able to control.
\nMany of those who favor Bitcoin use Dwolla, an Iowa-based startup
\nthat allows customers to transfer their dollars into
\nBitcoins.\u00a0<\/p>\n
Unfortunately for those consumers, the Department of Homeland
\nSecurity issued a warrant Tuesday effectively shutting down
\nDwolla\u2019s ability to process Bitcoin payments, as reported by CNET.
\nWhether because of the DHS\u2019 charge of operating an \u201cunlicensed
\nmoney transmitting business<\/i>,\u201d the sudden timing of the
\nallegations, or another reason, Dwolla and Mt. Gox officials have
\nbeen reluctant to comment.\u00a0<\/p>\n
\u201cIn order not to compromise this ongoing investigation being
\nconducted by ICE Homeland Security Investigations Baltimore, we
\ncannot comment beyond the information in warrant, which was filed
\nin the District of Maryland [Tuesday<\/i>],\u201d said Nicole Navas, a
\nrepresentative for US Immigration and Customs
\nEnforcement.\u00a0<\/p>\n
The warrant claims Mt. Gox CEO Mark Karpeles did not disclose he
\noperated a financial transfer site when he opened a new bank
\naccount for the business. Money transmitting services, according to
\nGawker, are required to register with the Department of Treasury\u2019s
\nFinancial Crimes Enforcement Network (FinCen). Mt. Gox, which is
\ninvolved in roughly 63 per cent of all Bitcoin purchases, has not
\ndone so.<\/p>\n
<\/p>\n
Despite the technicalities skeptics are wondering if Bitcoin\u2019s
\nfriction with the Treasury department is the cause of this recent
\nscrutiny. Senator Chuck Schumer (D-New York) said the anonymity
\nafforded by the service provided an \u201conline form of money
\nlaundering<\/i>\u201d and campaigned for its downfall.\u00a0<\/p>\n
\u201cLiterally, it allows buyers and users to sell illegal drugs
\nonline, including heroin, cocaine, and meth, and users do sell by
\nhiding their identity through a program that makes them virtually
\nuntraceable<\/i>,\u201d Schumer said during a 2011 news conference.
\n\u201cIt\u2019s a certifiable one-stop shop for illegal drugs that
\nrepresents the most brazen attempt to peddle drugs online that we
\nhave ever seen. It\u2019s more brazen than anything else by light
\nyears<\/i>.\u201d\u00a0<\/p>\n
Most notably, proponents have asserted that Bitcoin would be
\nimpermeable in instances where WikiLeaks, for example, saw its
\nfunding evaporate as the federal government pressured PayPal to cut
\noff the whistleblower site\u2019s support network. Bitcoin would be more
\nresistant to a crackdown of that nature.\u00a0<\/p>\n
Jerry Brito, a scholar at the libertarian Mercatus Center at
\nGeorge Mason University, told the Washington Post Bitcoin could
\nreduce the cost of financial services by pioneering new business
\nformats.\u00a0<\/p>\n
\u201cBitcoin has the potential to be a boon to the economy and a
\nboon to merchants<\/i>,\u201d he said, adding that it could \u201cdisrupt
\ntraditional payment networks that have not been innovative for a
\nvery long time<\/i>.\u201d<\/p>\n
A blind governmental crackdown would only serve to push Bitcoin
\nfurther underground, Brito argued.\u00a0<\/p>\n
\u201cYou can\u2019t put the genie back into the bottle<\/i>,\u201d he
\ncontinued. \u201cI hate to say it, but the Bitcoin community needs to
\nstart lobbying. It needs to start educating policymakers, lobbyists
\nand influencers about the pros of Bitcoin and the impossibility or
\nthe difficulty in getting rid of all the bad uses<\/i>.\u201d<\/p>\n