Date: Sat, 18 May 2013 18:10:12 +0200
- Pokerati | Texas hold'em blog
Mt Gox, can you spare a Dwolla? - US government targets Mt Gox for being an unlicensed money transmitting business
Yesterday, it emerged that Dwolla, a US payment network, has stopped accepting transfers to and from Mt. Gox, the world’s largest bitcoin exchange, because of a seizure warrant issued by the US Department of Homeland Security. Here’s Chris Coyne‘s tweet with a copy of the message he received from Dwolla. Today, I received a copy of the seizure warrant dated yesterday and signed by US magistrate Susan K. Gauvey in Maryland. A copy of the warrant is here.
The warrant specifically targets the contents of Mutum Sigillum LLC’s (incorporated in Delaware and apparently a Mt. Gox subsidiary or sibling entity) Dwolla account held in the custody of Veridian Credit Union. Mutum Sigillum is alleged by the US to be an unlicensed money transmitting business within the meaning of 18 U.S.C. § 1960(b). For more on this definition, take a look at the warrant itself and at FinCEN’s guidance in respect of money services businesses and money transmitting businesses issued in March (here). The unlicensed nature of the MSB is the basis for the seizure order.
A confidential informant established new accounts with both Mt. Gox and Dwolla, funded his Mt. Gox account with US funds, exchanged currency in his Dwolla account for bitcoins, and then exchanged bitcoins back to dollars, directing Mt. Gox to transfer those dollars to his Dwolla account.
Based on the warrant, it appears that Mutum Sigillum was targeted solely because it is an unlicensed business, not because of any broader claims that (for example) bitcoin itself undermines the greenback. This is consistent with FinCEN’s March guidance. (Patrick Murck, General Counsel to the Bitcoin Foundation, wrote a great piece setting out his view that the guidance is an overreach. Worth reading if you haven’t yet.)
Apparently you can still remit to other exchanges through Dwolla to purchase bitcoins, and you can still remit to Mt. Gox to buy bitcoins (just not through Dwolla).