Bitcoin Forum

http://cdn.arstechnica.net/wp-content/uploads/2013/05/Mt-Gox-Dwolla-Warrant-5-14-13.pdf

The target is clearly Mtgox.

It doesn't say the amount of funds in the account. Anyone know?

So a Bitcoin is money now and not a commodity anymore?

The warrant is drafted before a seizure,maybe Gox can enlighten us..The link is taken from this news:

http://arstechnica.com/tech-policy/2013/05/feds-reveal-the-search-warrant-that-seized-mt-gox-account/

This is acting on the new guidelines set forth by FinSEC. These guidelines are not law and therefore this is not a legal proceeding.

There wasn't bitcoin in that Dwolla acct...it was about deposting and withdrawing fiat.

Yes, but all trading is in paying with money, where is the difference between buying DVDs then?
It reads like they see Bitcoins as currency now.

Really, dude? A Court Order signed by a US District Court Judge and executed by DHS isn't a legal proceeding?

FinCen Guidelines? You didn't even read the warrant, did you?

Before anybody goes and says that Gox is immune because they are in Japan, I just want to state that Japan would actually be very quick to react. In the past they have been more than happy to get rid of a foreign company if there is even a slight whiff of something dodgy going on. They don't want bullshit from foreign companies.

I expect Gox will be expelled from their office in Shibuya before June.

Based on their track record I wouldn't be surprised for a monumental fuckup, Mark has proven to be criminally negligent on multiple occasions not least of all the reaction to the 2011 hack, not to mention the pirate fiasco.

This is your last warning mark, flee the country and go somewhere safe now or you will find yourself in prison very soon. You don't want to be the only 外国人 in a Japanese prison now, do you? At least you will loose that belly of yours on one bowl of white rice and a glass of water every day.

At the very least this is grounds for him to have his visa revoked making him unable to continue working in Japan. Then it's just a case of what happens to the company and it's assets.

This was pretty shocking to read. They're calling Bitcoin a currency, now... same rules as the dollar (except it isn't legal tender, obv), and I guess we can now say it's recognized by the government... Hm.

Gox isn't immune because they deal with US customers and USD. Further, Mark's Mutum Sigillum LLC is based in Delaware. If Mark is charged, and they do single him out in the warrant, he's likely to be extradited before he can even research and get a passport to a place which might not extradite him.

This is pretty much THE test case which will determine Bitcoin's future. If Gox loses, the various gov't departments will have precedent to go after EVERYTHING BTC businesses are at risk for when Bitcoin's considered a currency.

https://i.imgur.com/OwF81Ug.png

Who is the Maryland Snitch?

There are two sad realities here.

1) I have absolutely zero confidence in the MtGox legal defense team

2) If MtGox goes down, it will be a loooong time before bitcoin can recover

Hopefully someone can provide some relief

Here is how i see things in Gox's defence,

"Do you deal in or exchange currency for your customer?"
If Mutum Sigillum LLC was setup to merely hold deposits in a US bank account, then the LLC was not directly dealing with currency exchange.
Any exchange was done by MtGox which is based in Japan and not required to be bound by US rules/regulations.

"Does your business accept funds from customers and send the funds based on customers' instructions (Money Transmitter)?"
Again if the customer funds remained in the Wells Fargo account in US and never moved from that bank account to Japan, he rightfully answered no.

TLDR: the Feds found out Mt-Gox lied when setting up a bank account in the USA.  And So they just took all the money in said account.

its unknowable if this is a isolated event or part of a larger move to crack down on Bitcoin.

Mt.Gox is going to have to prove no USD actually moved from USA to Japan when a customer put money in / took money out. If this is not the case or they can't prove it they are in trouble.
The other issue is bitcoin and if the govt is going to try to call it currency.

I'll bet the leadership is kicking themselves right now they didn't follow through selling North American Ops to coinlab... Could have avoided the US govt's nonsense and saved $50 million +

Beginning of the end for Gox?

Oh great... Fucking defend with anything you've got.
If they win, bitcoin loses.

Note that the warrant mentions STATE registration. There are 50 states. Something like 49 of them, plus or minus, require registration at the STATE level for this kinda biz. Think about the absurdity of this. Let's say every jurisdiction in the world had similar requirements to in the US (and to be fair, many do, though the effectiveness of enforcement is not uniform). It is thus financially impossible to run an international currency exchange without an enormous legal and compliance budget. Basically you have to be a large financial institution to do this. If you're a well-capitalized startup, then you must focus on a single market (e.g. US only, or Japan only) and pray that you can build partnerships with well-capitalized players in other markets, or else are acquired by a big financial institution that already has a presence in multiple markets.

EDIT: if you're not a well-capitalized startup, but just a software engineer playing with new technology and ideas... better stick to monopoly money or something that has no value.

That's what I was thinking. This could have been a non-issue if the deal had not fallen apart.  I don't get it. They saw the FinCen thing stating that they had to become a money transmitter or they will be in violation of the law. Did they think that was a joke?

50$ comes in bank account from person X
... nothing happens with money ...
50$ goes out bank account to person Y


= money transmitter

This is bogus. Mutum Silligum does not transfer money, Dowalla does. Mutum is a vendor, they are only transferring the money to the parent company.

This would be the same as busting a Google subsidiary in Germany for not registering as a "Money transmitting business" because they sent profit back to the U.S. parent company.

The agent went Full Retard. Either that or it's a real attack.

Love it. Money in banks allowed, money moving out bad  :D

Perhaps CoinLab suggested to the Feds that they may be interested in investigating this issue.

Na, that sounds too plausible.

Bullshit.

It is impossible to transmit every single order by Mutum Sigillum to Mtgox in Japan on behalf of their clients, because wire costs would kill the buisness. The two companies were merly reducing funds imbalance from time to time - it cannot be called transmitting money on behalf of their clients. And Mtgox is out of U.S jurisdiction, so unlicenced money exchange part does not apply as well.

I think we are dealing with political attack.

And so the shitstorm begins!

Why?  That doesn't make any sense.  The only reason they have a case at all is because Mark did not register as a money transfer business.  Both CampBX and Coinbase are registered, so they would have no case. 

It looks like it is the transfer of the money from the Iowa bank account to Dwolla, in order to facilitate a customer transaction, that will really get them in trouble here. That transfer is denominated in USD, and appears to be based on customer requests.

The application made by M. Karpeles for the bank account which stated they were not in the money transmitting business is also going to hurt. Perhaps he can argue that the account was originally intended for a different use. It will sort of depend on when it was linked to Dwolla.

Overall, this seems like more trouble for Mt. Gox arising from their unprofessional practices.

CampBX had better start gearing up for an increase in volume.

I am trying to figure out a way that you could argue that Mt. Gox is not involved in the transfer of USD, only BTC.

Yes, we do know the people behind the Coinlab lawsuit has deep pockets, also with political connections. So they could pull this off.

Looks like the price of coin is still rising, lol.

Well, looks like this is the result of yet more Gox incompetence. Is it time yet to get out of that exchange yet? How many more of these incidents are Gox users willing to endure?

That is exactly what the value of an un-seizable asset should do in the presence of seizures.

Buying bitcoin is illegal or something??????

Well, how to kill US based bitcoin businesses 1-2-3:

1. Issue guidance (Fincen) that they need to have money transmitting licenses.
2. Attack existing companies in the bitcoin industry without giving them a chance to get a license first.
3. Profit


A more fair way to go about things, which should be done by sensible humans would be to say: Hey, you've got a business running, are you aware of the new requirements for licensing ? You have 6 months to comply with the licensing requirements and get a license, or you will have to close up shop.

But in reality it's all about power. Power for the ones sitting on the top of the food chain, and their friends. If they don't like you, there's essentially nothing you can do - there's always something to frame you on.

No one should have to hold their hand, it is their responsibility to ensure that their business meets regulatory requirements, and every other major exchange in the states seems to have figured it out, even before the FinCEN document. I would not feel safe keeping money or BTC in Gox right now, who knows what other requirements they may have failed to meet on the Japan side of things.

seal team 7 have captured Mark Karpeles he will be given a traditional muslim burial at sea. thats all folks.

AFAIK (and I could definitely be wrong), CampBX is only registered with FinCEN, and does not have MSB licenses for all states they operate in (IANAL, but I'd imagine that if they're going to take on, say, South Carolina customers, they'll need licensing from SC, not just FinCEN). Further, I don't think Coinbase has any MSB licensing at all, but is instead relying on a kind of pass-through from another financial institution.

I'm not intimately familiar with either, so I'd love to see evidence to the contrary.

ETA: https://bitcointalk.org/index.php?topic=200443.msg2091394#msg2091394

This should be an easy fix based on the warrant. Get a new account and don't say "no" when they ask if you run a money transfer business. But now the cat's out of the bag and I bet registering with finCEN will be less than pleasant. It would not surprise me if Mark Karpeles is pursued to the full extent of the law to serve as an example here. 
 
Speaking of, virtual currency was too new to be legislated until March 18th when finCEN released this: http://www.fincen.gov/news_room/nr/pdf/20130318.pdf
 
This document was written on 4/18/13:
 
"an administrator or exchanger [of digital currency] is an MSB under FinCEN’s regulations, specifically, a money transmitter."
 
And then this definition of a Money Service Business was applied to a bank account that was opened on 5/20/11. Essentially, the government created a law that was already being broken. 
 
Regardless, there's a big opportunity here for a new exchange to enter the North American market if you are fearless and not prone to intimidation.

Actually on the application to apply it says you must submit it within 180 days of starting your business.

Mtgox said they spent 25mil to become fully compliant, I think mtgox itself is a registered msb and has gone through great lengths to properly verify people's identity per the aml requirements.

To go after a small shell companies bank accounts which is obviously solely doing business for mtgox (who is licensed) is crazy.

Hopefully Japan shows the USA how is done and refuses to cooperate.

If Japan refuses to cooperate Drones will have a new target  :o

Actually, I'm not entirely sure. What would be the legal difference between MtGox using Dwolla (a registered money transmitter) and CoinLab (also registered)? If MtGox had a company in the US that held some of their funds in the US for conveniently transferring funds between them and CoinLab, would that company also have to register as a money transmitter? What about a cashier at Wal-Mart? After all, they are accepting money and transmitting it to Wal-Mart's bank account according to the wishes of the customer! And, OH NO! They might give refunds to people using that very same money that came into their till from another customer a few minutes ago! I'm not a lawyer, but I suspect that MtGox might have a case here, at least on the Dwolla side of things. International wire transfers I don't know about...

Maybe this is part of the reason they wanted to remain a 100 percent Japanese based company and not have a USA based division.

All things considered, all of the rumbling when it comes to MtGox does not bode well for Bitcoin in the short term since it relies way too much upon MtGox.

Long term, BTC will survive IMHO, but short term I would not be surprised to see such a scenario being worked out by authorities, only to see BTC prices collapse once more, be it temporarily.  The reason being: trust is currently far from present in the market - on the slightest hickup BTC sees heavy drops. Yes, it then rebounds, just waiting for the next "negative news". That's not a vote of confidence. I wouldn't be surprised to see double digits within a week.

The list of MSBs are public record.  You could look it up yourself rather than assume:
http://www.fincen.gov/financial_institutions/msb/msbstateselector.html

I can't find them in there, but does that conclusively mean the aren't registered?

"...spent 25 mil in the first year to become financially compliant in th us"

http://www.theverge.com/2013/4/1/4154500/mt-gox-barons-of-bitcoin

Good book that says about the same thing, Three Felonies a Day:

http://www.harveysilverglate.com/Books/ThreeFeloniesaDay.aspx

This is scary, but I believe it.

Yes.  If they aren't listed, they aren't registered.


Says nothing about MSB (virtual currency traders didn't even need MSB registration in the "first year" of MtGox).  Doesn't specify what they did to "become financially compliant".  Even if they were financially compliant in 2010 the FinCen declaration on March 2013 was a pretty huge deal, probably the biggest legal event in Bitcoin history (for US based bitcoin related companies).

the could have fixed this just by using 2 accounts to separate the money and not comingle funds.

Here's what the article actually says:

"Mt. Gox estimates it costs $25 million in the first year to become fully compliant in the US. But considering a regulator could potentially swoop in and seize funds if a violation were found, it’s worth it."

Doesn't say that they actually did it, just that it's worth it to do it.  Also, if they actually did it, they wouldn't have to estimate right? They would know exactly what it cost.

Funny that they admitted they knew exactly what the risks were, but still never followed through and actually took care of it. 

the main questionis.... did MTGOX or Dwolla customer's ever send to or receive funds DIRECTLY from the Mutim sigilum bank account(76XXXXXX13)

the requirement of a money transmission licence all depends on how the mutim sigilum LLC account was used.

if CUSTOMERS put money in or received money from the Mutim sigilum bank account(76XXXXXX13) held with the american bank Wells fargo then YES mutim siligum was involved with money transmission on behalf of customers.

paypal analogy:
if customers were given your bank account number to be used to then credit your paypal account and you repaid customers by withdrawing from paypal to then bank transfer back to customers using your BANK then yes your BANK account would need a money transmission licence.

the flip side.

if customer only funded Dwolla's own bank account with just reference numbers to ensure it reached mtgox's dwolla member ID (81x-xxx-xx10) then NO mutim siligum was not involved with money transmission on behalf of customers.

this is because as soon as it hits the Dwolla member id for mtgox, it becomes MTGOX's property and they can move their own funds through their own subsidiaries freely.

paypal analogy. someone puts money into your paypal account. you withdraw it to your actual bank account. you also deposit from your bank account back in to paypal. as soon as it hits paypal it still remains your property until you hand it to the customer.
so your BANK account is not touching customers money, just your profit/income/outgoing.

Wait- did that warrant just call bitcoin a currency? Did the US government just call bitcoin a currency?

I would imagine that they've spent millions setting this stuff up correctly.

I think the US govt is just finding ways to nit pick because they need some excuse to seize funds.

These are both solely my opinions.

And if they do a few more of these and none of them stick, the courts are going to start to refuse to do anymore. Not to mention other countries are watching. The beauty of all this, is that there are so many exchanges and they keep growing. So, essentially you have a government/banking system going after BTC (decentralized) through an essentially decentralized exchange. Ummmm, they don't have this much time.

The anti-fragile nature of Bitcoin is already flexing its muscles. The Black Swan is here fellas. See sig...

IAS

I wouldn't worry about Bitcoin here. In fact, this is where Bitcoin shows its strength. Why is the price not crashing further? Well. Let me explain that. If user X has fiat in Gox and he is afraid of the situation, what is the best way to get the money out? Bitcoin! So the user actually buys bitcoins and then transfers them out.

Bitcoin is going strong. Gox is in trouble, true. They have already been in trouble from fast usage growth, ddos and Coinlab. This is one more to add to that list. Mark has got his work cut out for him. We'll see what happens.

For now it would be nice to know how much got frozen in this. I would imagine not too much, but it would be nice to know.

You hit the nail on the head. It's all a bunch of nonsense. They can say you are or you aren't, and they're always right.

They're not "an exchange in the states," and they're not a "money transmitting business" in the states either. Those claims are beyond ridiculous. They just had a Dwolla account  - which is now apparently a federal offense.

I called it (https://bitcointalk.org/index.php?topic=79902.msg943662#msg943662) almost a year ago.

Gox saw this coming and played it at least somewhat smart.  Now you know why dwolla deposits/withdrawals were taking so long.  This was inevitable, and they planned for it.

Unfortunately it amounts to their customers playing musical chairs.  My condolences to those still standing when the music stopped.

Well if you read the warrant it seems the FBI are confessing BTC is considered currency. Although, I hardly think that this is the official stance of the United States government.
A judgment in favor of the US would be good long term for BTC under the principal of judicial estoppel.

Other that , this warrant is defective on multiple levels (like most warrants). There is no first hand knowledge . It doesn't even claim to have heard the information from someone with first hand knowledge.

Thirdly the Final rules concerning crypto-currency BTC were only just printed in the Federal Register.
The gov't is obligated to give MTGOX a notice to register their business because under he old rules they were not a money services business.

This is simply a money grab.

Interesting read on MSB regulations:

http://contrariancompliance.com/2013/04/14/is-us-regulation-the-single-biggest-threat-to-bitcoin/

Are all banks registered as money transmitters? It seems to me that a money transmitter should be transmitting money between _different_ people.

Actually you do have 6 months from when you start operating as a money transmitter to register as such with FinCEN.  The particular piece of legislation they're alleged to not have complied with doesn't just pertain to FinCEN registration, though, it also applies to the requirement to register as a MSB in individual states - which means that further investigation could find more violations.

It's going to be hard for Mark to argue he had no idea that MtGox was acting as a money transmitter when there are posts on here made by Mark last year talking about MtGox's intention to register as such in the US and how it would be a state by state process as the exact requirements varied from one state to another.  

When Dwolla sends funds from a customer account to MtGox at the customer's request, it's without question acting as a money transmitter.  It's absurd to then claim that MtGox is not transmitting money when it transfers customer funds to the customer's Dwolla account at the customer's request.  

It will be interesting to see whether MtGox is now exposed to other financial services regulations violations.  If it was operating as a money transmitter within the US, then what obligations did it have to file reports on suspicious transactions, threshold transactions, etc with FinCEN?

PayPal tried to argue for years that they weren't a money service business and they lost despite having the enormous financial resources of eBay at their disposal.


MtGox does this.  It transmits the BTC buyer's money to the seller (as PayPal does) - MtGox itself is not a party to the transaction.

It's worth remembering that there could actually be more user funds in the seized Wells Fargo account than in the seized Dwolla account.  MtGox has tended to limit the amount being transferred to Dwolla at any one time just in case Dwolla itself froze their account or reversed transactions.  Presumably, the funds which were "queued" awaiting transfer to Dwolla are in the seized Wells Fargo account.

It's a pity the media's probably not going to be able to snoop and find out the amounts which have been seized.

Comply or die.

Really well said and thanks for the information.

This is going to be a potential thorn in the side of MtGox, but it should not be the end. But hopefully what it does is get their customers going to other exchanges (to aid in decentralizing our decentralized technology!) and cause other entrepreneurs to open up more exchanges.

What we shouldn't lose sight of here is that if we play by the rules (aka regulations) we should be fine. If they wanted to attack BTC openly, that ship has mostly sailed. I liken this to other areas where the government tried to overly enforce regulations (post internet) and was just unable to keep up with the expansion of the field in question. I'm not saying they won't be able to regulate, as I think they will. But in a sense, what has just happened is like the DDOS attacks - they only made us stronger. Other exchanges now have to get everything in order. We are truly growing quickly and will experience growing pains, all the while becoming stronger.

Remember, we are a Black Swan and anti-fragile technology (per my sig). This doesn't mean we will succeed, but we have Universe on our side.

I tend to agree with you for once.  ;)

Banks are exempt from registration as a MSB.


http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=b3dbf70d55232935bba654ea6c52ba2b&rgn=div8&view=text&node=31:3.1.6.1.2.1.3.1&idno=31


Of course Banks are subject to FinCEN regulation as a "Bank" which is a superset of the requirements of an MSB.

I don't undestand people who are happy that Gox can go down. When Gox goes down and there is still nothing in to reaplace it, it will be a major blow at bitcoin infrastructure.

A loud minority notwithstanding I don't think most people want to see Gox "go down".  However Gox does need to fix their issues and it likely would be better if Gox played a smaller role among a larger network of exchanges all over the world.

This is very bad news for the US but I am sure some braniac will find a work around, they always do!

al capone got busted for tax evasion

Doyle Lonnegan: [There is a pause, and Lonnegan runs horrified to the betting booth] There's been a mistake! Gimme my money back!

 - The Sting (1973)

Is "Mutum Sigillum" a great company name when you're trying to avoid excess attention ???

Any one knows how much money is seized?  Anyone reading this has money seized?   :o

We do not have the balances of the accounts that were seized. 

I wonder if Mt. Gox knew this.   It is possible Wells Fargo simply blocked Mt. Gox from any access to their account and didn't provide info if there were an inquiry, and thus Mt. Gox wouldn't know the funds had been seized.  But if Mt. Gox was aware of the Wells Fargo account being seized it might have been nice of them to share that info with the community.

[Update: So, there were two separate account seizures.   Nobody in the media cared to discuss the May 9th Wells Fargo one?]

Everyone "transmits money" in the course of doing business. The "customer request" here is "give me my money." Gox is not sending money to other people at customer request. The customer has an account that they are either depositing into or withdrawing from.

It's understandable that people are upset.  However, there are rules.  Not only are there rules, but the rules are fairly clear.  Not only are they fairly clear, they were further clarified a couple months ago.

There is no excuse for MtGox to not have registered with Fincen.

Agreed that the recent clarification should have prompted Gox to register.  However, I can't find any info about any of the exchanges registering (CampBx, Coinbase, Tradehill, Coinlab, Coinsetter).  Has anyone found any evidence that any of the exchanges has registered?

Aren't they relatively small compared to Mt.Gox?  Seems only reasonable that the big kids get served first.

I disagree, if MTGOX is down I think BTC will be free from there grip and new exchanges will pop up everywhere, increasing Bitcoins price. Just my opinion :)

"Honorable"

FBI Is trying to bring down Bitcoin, after all, its their job they are hired to protect the federal monetary system.

Tyrannosaurus, mtgoxaurus, who cares, as long as I can fill up my gas tank with what's left of them.

MtGox removed the info about the Dwolla account seizure from their website...    hmmm.

Frankly gox has to much control over bitcoin prices. In a sence it's what makes the system a fail.  The idea that gox shits the bed and crypto falls makes it a central base of operation.  Something I thought crypto sought not to be. Further the scary fact here is the access the fed was granted to see all them dollars going out to poor sons of bitches  who wher under the impression that privacy was being held.  How deep will this eagles dick bury into the asshole of this community is my question.  

Slow down - FinCEN "guidelines" were only published a month ago, which lumped bitcoin exchanges in with other MSBs. Karpeles filled out the form in 2011. The law that DHS is invoking may not even APPLY to bitcoin - they'll have to prove that BTC is money!  Maybe the Feds chose DHS to do this because they a) have nothing to do in those air-conditioned offices, and b) are some of the slowest-moving bureaucrats on the face of the earth...

The proposed DHS budget for 2014 is 35.5 billion dollars, and the department is eager to show some bang for the buck.  Protecting us from fake bombs that DHS itself provides to the ghetto-dwelling wannabe terrorists has grown a bit ho-hum, and DHS has shown itself incapable of protecting us from real bomb threats (Boston marathon).  
I can't think of a better way to pad DHS's portfolio of epic wins than this catchy headline:
DHS Brings Shadownet Cash Coining Criminals to Justice
I'm betting this is a just a marketing test.  Unless people respond with "WTF," more news at 7.

But this isn't really a defense.  That's what all money transmitters do.  It's the reason that money transmitters are regulated.

That's it!  Betsofbitcoin:

"In 2013, bitcoin will be directly linked to 'financing terrorism' in the US mainstream media."

And I wonder who will be behind it...  it's all about job security:
http://www.cbc.ca/news/story/2013/05/01/f-q-a-trevor-aaronson.html (http://www.cbc.ca/news/story/2013/05/01/f-q-a-trevor-aaronson.html)

The MSB violations have nothing to do with them dealing in Bitcoin or with BTC being money.  It's what they're doing with USD which requires them to be registered as a MSB.  The FinCEN guidance would appear to bring services transmitting BTC only under regulatory capture, but that's not the regulation which is being used in this instance.  No "new" regulation is being used to justify the MSB offence.

Thank you for posting that warrant summary.  Not sure how easily that was found but it does outlay all the questions I had for Dwolla earlier. 

Basically to sum up, it appears Karpeles* lied on opening the account as being used for transferring money and being a money type of business.  The field agent tried testing it enough via Dwolla in a few months to connect the dots, then have a judge's order to seize the account.

Called Dwolla and they couldn't tell me more than that they'd learned about coins a lot this week (probably because half of Gox's account holders are calling them).  Just seems like it's fine to go pick a different exchange and be good to go.

I wouldn't be surprised if this, coupled with the Coinlab suit, severely impairs or closes Gox.

Dwolla brought in special conditions for Bitcoin related businesses last year.  One reason why MtGox limited the amount of transfers going through Dwolla at any one time was fear that Dwolla itself would suddenly freeze their account.

Dwolla will likely review their policy regarding servicing Bitcoin related businesses again now.

We don't know how the seizure of the Wells Fargo account is going to affect MtGox operations.  It may have held a small amount of user funds or it could have held a large amount of user funds.

Typed up a paragraph with money questions but it didn't sound right ... yeah I hear ya.  I do think Dwolla will reevaluate how they handle exchanges or any BTC business though, as you said.

Coinbase is registered (22nd April 13)
Coinlab is registered (10th April 13)
Couldn't find records for the others.

IANAL, but I think no - http://www.fincen.gov/financial_institutions/msb/definitions/msb.html
Before this regulatory change, (according to some bean-counters) bitcoin exchanges were "selling stuff", not "transferring money", now they are "exchanging currency".

Several of the wimpier exchanges folded right when the change happened.
http://www.americanbanker.com/bankthink/fincen-regulations-choking-bitcoin-entrepreneurs-1058606-1.html?zkPrintable=1&nopagination=1