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.

Based on previous discussions about this issue - including comments made by Mark himself when MtGox was looking into MSB registration last year - the FinCEN registration is relatively simple but the state level registration can be extremely expensive and difficult (and state level registration is required in the vast majority of states). 

Although the specifies failure to register with FinCEN, the code itself also makes it an offence to operate without appropriate state licences whether or not the defendant knew a licence was required.

18 USC section 1960 (b) (1) (a)

While the funds in the Wells Fargo and Dwolla accounts can only be seized once, that doesn't mean MtGox can't be fined for violations other than the failure to register with FinCEN (on that violation alone they're potentially looking at a $5000 per day fine for the period during which they should have been registered because every day they fail to register after the first 180 days of operation counts as a new violation)

I don't think anyone who's ever worked in financial services would regard compliance costs as "moderate" or the compliance process simple.  Large institutions invest millions in compliance and they still get fined massive amounts for getting it wrong.

Moneygram has already been busted in the past (they paid an 18 million dollar penalty following FTC investigations) for allowing its network to be used for fraudulent transactions and is still under investigation by FinCEN.  Apart from the enormous costs of setting up properly licensed financial services, there's also a substantial administrative burden imposed by regulatory compliance issues.  You have to recover those costs somehow and it's going to be in the form of fees.

It's less a matter of companies not being risk takers than it is a matter of them deciding that the possible rewards aren't substantial enough to justify the risk.  Their shareholders aren't going to happy about business decisions which would expose them to the possibility of even more regulatory action against them.

Has anyone dug up the warrant which was used to seize the Wells Fargo account yet.  The Dwolla warrant says that the Wells Fargo account was seized days earlier.

Also, although the specific violation that's cited in the warrant relates to MtGox not registering with FinCEN, that very same section of the code also requires money transmitters to meet state registration requirements.  MtGox would still have been vulnerable even if they were registered with FinCEN because they haven't gone ahead with their plans for register at state level (something Mark said last year they were looking into, suggesting that he knew the requirement was there).

The warrants gave DHS the power to seize the Wells Fargo and Dwolla accounts, but it's highly possible that MtGox has committed a shit-ton of other violations apart from the one needed to justify the seizure and that action will be taken against them for more than just failing to register with FinCEN.

We know from what people posted after talking to the SEC about pirate that the SEC was asking questions about MtGox.  We also know that the email sent by the SEC said that information given to them could be shared with other agencies (which is pretty standard if there's a more appropriate agency to follow something up). 

It's highly possible that there were multiple different things which put MtGox on the government radar, but it's unlikely that a recent complaint by a competitor would have resulted in such quick action.

Yes you do, but registering with FinCEN is not going to be sufficient for most MSBs - they'll also have to register at state level and the requirements for doing that can be considerable.

Can we send the OP back to Newbies please?  He needs to lurk more.

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.

You realise you can PM them.  Anyway, I'll report your post which means it will be called to the attention of the mods.

But you're not buying Bitcoin from MtGox, you're buying it from other users.  I'm not seeing any upside for MtGox in letting people use credit cards to fund their accounts.  You're just adding more risk and more fees to the process.  Why would MtGox essentially lend you the funds to trade for however long it takes for them to receive the money from your CC transaction? 

Yeah, I'm a bit skeptical.  Even if you add /r/bitcoin and Bitcointalk together, you're still not going to come up with 300,000 accounts.

I'm also finding the groupings a bit weird.  Maybe if you're going to do "Europe" as a group you could also add in general groups for Asia, Oceania, South America, etc.  It's a bit odd to name two Asian countries but not name a couple of European countries.

Why do you look here for news rather than on BFL's forums or the BFL twitter?  Any news is posted there first.

It's getting pretty damned ridiculous.

Trashcan would make a better home for reputation threads than Off-topic.

On the one hand people want exchanges set up where they are subject to little regulation.  On the other hand, people prefer exchanges to operate out of jurisdictions where they have remedies available to them if the operators simply shut up shop and take off with people's funds.

Countries which are subject to economic sanctions in place against them are a problem because it's hard to get funds in and out of financial services operating in those nations.  Bitcoin might be good for the people in those countries, but an exchange operating out of those countries could be unattractive to foreigners because of the high risk of their funds being subject to regulatory action and the lack of recourse against shady operators.

One thing I'm curious about is a company called Ator, of which Tihan is a director, being named as a creditor in the liquidator's report.  I wondered at the time it was mentioned that "Tihan was providing funds to cover the losses" whether those funds were going to be provided as a secured loan (which is what I would have done under the circumstances) and I'm very curious about whether Ator was the vehicle for providing those funds.

I am far more amused by this than I should be.

For the record, the court has basically told him to get an attorney or fuck off.

http://blakdawg.com/gov.uscourts.cand.265908.68.0.pdf

But they have hockey masks.  And I bet they can get hold of chainsaws easily.

Tide laundry detergent is used as an intermediate currency in drug sales too but nobody's going to try to shut down Proctor and Gamble because of that.

A lot of people simply don't care about end users buying drugs so Bitcoin being used for that purpose isn't going to taint its public image.  If it became the preferred currency of drug cartels, the public might care more about associations between drugs and Bitcoin but right now that association operates at a level which most people don't care about.  Either they think SR is great because is gives people expanded access to recreational drugs or they don't care that it exists because the only people being affected by its existence are "drug users" (who they don't give a damn about anyway).

There are certainly things which could happen to make the general public give more of a shit about Bitcoin being used to facilitate drug transactions, but they haven't happened yet.

Any association with Bitcoin Global, which was the "entity" behind GLBSE.