At the end of May I sent a $100 transfer from Dwolla to MtGox and after 5 days of the deposit not showing up, contacted them. I was unaware that MtGox had changed their policy and now require photo ID verification for Dwolla transfers. I was never notified about this by mail or any other method and so my funds were frozen until I verified.

I sent them a utility bill and a driver's license with the DL number edited out and stated that I simply cannot trust them to hold my license on their servers with my DL number exposed like that. I asked for them to cancel the transaction and send the money back to Dwolla. They say they cannot do that until I upload photo ID with no edited of the DL number.

This is plain and simple, extortion...but with a bizarre twist, they are holding my money hostage for personal information. But it is still considered extortion under US consumer law. My next step is to file a former complaint with my State Attorney General's office so if they make a pattern of this abuse, a case can be made for other companies to sever ties with them. If their behavior gets worse than my mere $100 and they steal a hell of a lot more, a civil case will be much easier to pursue with a trail of formal complaints at the state level.

Anyone have any advice for a situation like this other than what I've done? Is there another method to get MtGox to release funds to which they have no right?

Lastly, what are the best exchange alternatives right now?

Thanks for any input!