Bitcoin Forum

http://contrariancompliance.com/2013/05/16/dwolla-account-seizure-reveals-mt-gox-on-brink-of-us-indictment/

Thank you for posting this old news and giving me the chance to increase my newbie post count ;)

Is there any discussion about this somewhere? I'm surprised that there aren't more reactions to what is happening or is it just because I didn't know where to look?

Everybody got scared yesterday and withdrew their coins
Now they have their coins they don't care anymore

Sounds like that must have affected MtGox trading and volume.

I can see why there would be speculation, but has anyone verified that MtGox volume is substantially lower than before the news about Dwolla?

From the graph available on mtgox.com (http://mtgox.com) (just click on the orange graph icon at the top), it would seem that the USD/BTC exchange rate suffered a drop corresponding roughly to May 14, 2013, or the date listed on the warrant.  There was a massive spike in volume at the beginning of the drop.

Thanks, Juan, for the analysis, and the warrant/affidavit pdf.

I'm still a little fuzzy on the details, esp. the role of Mutum Sigillum - is this the primary route used by Gox to for transfers, or the primary route for US transfers, or do other similar entities exist? Was Mutum Sigillum known to exist before the seizure?

interesting to know... have things in an exchange outside USA would be an option then?

Yes, this is old news.

Well if your in Canada, there is http://cavirtex.com/

Seems like they made it easy for them... I guess time will tell.

Thank you for the update

So still safe to trade from outside the US?

What I am finding is it is quite a learning curve for newbies to get started. Mining is simple enough, its actually BUYING coins that is the barrier.

What I don't understand, if governments are so against this currency, why can't they simply crack down on all 'exchanges' in their jurisdictions that deal with bitcoins. Can't get money in, or out, coins become useless.

Thank God  ;D

Can anyone with a legal background explain why the route through Dwolla doesn't shield Mutum Sigillum? After all, Dwolla is a licensed money transmitter and funds that go through Mutum Sigillum only ever end up at Mt Gox.

Governments have so many problems at hand and Bitcoin and other cryptocurrencies are still too small to get much attention. There will of course be some action now and then when we do something obviously stupid and illegal but until this is bigger it is not really on the radar. Growing Bitcoin economy means growing problems to deal with and increasing risk to get into trouble with governments.

no big deal imo

Bitcoin market still too small? Seems a few people have a lot of coins invested in it. Look at the 'on book' values that pop up being a barrier for the little guys. Read recently ( being new to money markets and shares ) that the smart money does not appear on the exchange books. They use API's and automated buy/sell rules to do their trading.

I had a couple of buys in place, good few percentage points below the going rates, and was surprised to see they eventually got fulfilled. It appears the trading is still going well, but what are American traders thinking now. Still in MtGox or looking elsewhere?

It looks like USA is trying to stop usage of bitcoins, at least within its borders without making it illegal (which would be bad publicity).

Bitcoin Magazine has a little more on the legal issues:

MtGox’s Dwolla Account Seized For Unlicensed Money Transmission (http://bitcoinmagazine.com/mtgoxs-dwolla-account-seized/)

No, they are not.

mtgox shouldn't have been using dwolla in the first play. wires are fine. total overraction

This is stupid. Overkill.

Thank you for up

I understand that mtgox is important to many btc users right now, but the users don't have to invest so much reliance on mtgox. I might be missing something, but why keep bitcoins at mtgox? If you had to use mtgox to convert USD to BTC, that is understandable, but after that, keep your bitcoins in your wallet or cold storage (please back them up properly). Also, if users of bitcoins would start accepting bitcoins more, they wouldn't have to rely as much on mtgox to get their bitcoins. Let's start enjoying the benefits of bitcoins more instead of trying to use them like a centralized fiat currency.

I like mtgox, but I don't like relying on them too much.

As i understand it its a conflict of definitions. The US is mad at MTGox for doing "money transfers" without doing the right paperwork and such for it. But since Bitcoin cant really be defined as "money" right now they might have to settle this in court. Basically the law is out of date and need an update to cover this particular case.

Bitcoin Magazine reports that "every other major Bitcoin exchange" has been compliant for some time now with the US federal law that tripped up MtGox, and are making progress in state licensing as well ...

BitInstant: We Have Money Transmitter Licenses in 30 States (http://bitcoinmagazine.com/bitinstant-we-have-money-transmitter-licenses-in-30-states/)

down with gox

Mutum Sigillum was MG's subsidiary in the US.  Sometimes, for fiscal and regulatory reasons a foreign corporation needs to have a local subsidiary (my company does in Mexico, for example).  The problem is that Mutum Sigillum is not (a) registered with FinCEN as a money transmitter, or (b) have money transmitter licenses where required.  This is big trouble for MG.  The case may get worse than it is, or maybe the freezing was used as a 'warning' until they get their act together.

Hmmm. May 16 news. Anything else?

I'm afraid that's not how it works.  The momeny FinCEN equated virtual currency exchangers and administrators to money transmitters, those two activities ARE money transmission in the eyes of the law.  Note what FinCEN director said last week: “[Our guidance] is more of a technical guidance on something that already exists.”

Yeah to me FinCEN is in a catch 22. They don't want to say that Bitcoin is "real money" per the original guidelines they released. Stating that virtual currencies were not money. At the same time FinCEN wants to make sure bitcoin is regulated. It seems to me that they can't regulate it without admitting that bitcoin is money.

Sense FinCEN said it was not money that means its a commodity. Which, from my understanding, means that FinCEN doesn't have juristiction over it.

Either way it seems to be a win. If FinCEN admits it's money and regulates it. It will bring legitimacy to bitcoin and people will flock in. If, on the otherhand, FinCEN doesn't admit it's money then things will continue the way they are. Mostly unregulated.

To me it seems inevitable that FinCEN will have to recognice bitcoin as money so they can draft laws for it.

This is what I've thought for a while.

I wish the newbies who say you can't have an interesting newbie discussion could see this thread, but they are too busy posting "+1" and "bump" and "this forum sux - let me in RIGHT NOW" in other newbie threads.

Pro tip: when you have to put in your four hours of reading, see what the regulars said about this Gox theme. Look in the Press section, for instance. You guys held your own in discussion just fine, imho. The newbie thing will be over before you know it.

You can look at bitcoincharts.com, it looks like the percentage of trades happening on MtGox has dropped since the news came out. They are loosing market share to places like BitStamp and CampBX.

I was surprised to see that the value didn't drop very much if at all when the whole Mt. Gox/Dwolla thing happened. I thought for sure it would cause at least a little panic.

Why would that cause panic? There are plenty of other ways to get money into or out of bitcoin.

Only way to cause panic is for big traders to start selling lower and lower and lower, to buy back later again - but overdoing it

Because it is the larger bitcoin exchanger plus the seizure of LR brought some sort of anxiety in the online community.