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Author Topic: Department of Homeland Security Shuts Down Dwolla Payments to and From Mt. Gox  (Read 3651 times)
Dalkore
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May 14, 2013, 09:54:24 PM
 #1

Direct Quote:

"The DHS issued a "seizure warrant" for the funds associated with Mt. Gox's Dwolla account.

The Department of Homeland Security appears to have shut down the ability to use Dwolla, a mobile payment service, to withdraw and deposit money into Mt. Gox, a Bitcoin trading platform. A Dwolla representative confirmed the move to Betabeat. Chris Coyne, cofounder of OKCupid, posted a screenshot(url: https://twitter.com/malgorithms/status/334395559366520832) of an email he received from Dwolla, stating that due to recent orders from the Department of Homeland Security, Dwolla cannot complete the bank transfer to Mt. Gox.
"


Click Here for full article:

http://betabeat.com/2013/05/department-of-homeland-security-shuts-down-dwolla-payments-to-and-from-mt-gox/

Is this the first shot across the bow of Bitcoin?   Many commentators have speculated that if there was regulation of Bitcoin, they would go after the exchanges first.  Another unfortunate event after the Coinlab lawsuit.  

What do you think?


Cheers,
Dalkore

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May 14, 2013, 10:40:26 PM
 #2

There will be a war between government and Bitcoin, and Bitcoin will win. In any case, this is just the beginning. Brace for impact.
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May 15, 2013, 01:21:15 AM
 #3

Direct Quote:

"The DHS issued a "seizure warrant" for the funds associated with Mt. Gox's Dwolla account.

The Department of Homeland Security appears to have shut down the ability to use Dwolla, a mobile payment service, to withdraw and deposit money into Mt. Gox, a Bitcoin trading platform. A Dwolla representative confirmed the move to Betabeat. Chris Coyne, cofounder of OKCupid, posted a screenshot(url: https://twitter.com/malgorithms/status/334395559366520832) of an email he received from Dwolla, stating that due to recent orders from the Department of Homeland Security, Dwolla cannot complete the bank transfer to Mt. Gox.
"

I would love to see the original order and the reasons for it too.

In general, court documents are public, so anyone should be able to review the documents that have been filed with the court, unless parts of it are sealed. But if so, the press could and should challenge the sealing order.


     
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May 15, 2013, 02:26:39 AM
 #4

Is this the first shot across the bow of Bitcoin?   Many commentators have speculated that if there was regulation of Bitcoin, they would go after the exchanges first.  Another unfortunate event after the Coinlab lawsuit.  

What do you think?

a) This is an action against a domestic delaware shell company, Mutum Silligum LLC (sp), which Mt. Gox uses to pass through funds from Dwolla. It exists solely for a bank account

b) It is possible that LLC is not compliant with all regulations. It is also more possible that a single person was the target of DHS where they needed to freeze funds possibly in transit.

c) This does not affect Mt. Gox. Their international wire system was always faster than Dwolla and doesn't touch their pass through LLC (wires from east coast to mt gox funds available for trading take 13 hours for me). Since this costs a flat rate of $55, it only affects people that do not have enough capital to make this fee less than 4.99% of their deposit, so any deposit less than $1,123. (other numerous and quicker methods carry a 4.99% fee, the assumption being that people will do a cost/benefit analysis in choosing fees). Although this kind of market participant may be many, it is not possible for any potential losses from this freeze to affect the bitcoin economy, since obviously only the little guy is affected.
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May 15, 2013, 02:29:44 AM
 #5

I heard dwolla has also stopped working with campbx?

relm9
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May 15, 2013, 02:58:01 AM
 #6

I heard dwolla has also stopped working with campbx?


Wrong, just issued a withdrawl and it went through instantly.
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May 15, 2013, 03:54:14 AM
 #7

I heard dwolla has also stopped working with campbx?


Wrong, just issued a withdrawl and it went through instantly.

Sweet, thanks for the update.

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May 15, 2013, 04:54:38 AM
 #8

Up until now I was keeping meticulous records of my botcoin transactions and was planning on declaring all gains as short-term capital gains on them.

Now that I see how the US govt is intent on fucking over law abiding citizens of it's country, I am less likely to go out of my way to pay extra taxes.

yeah, whatever. bitcoin will win in the end.
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May 15, 2013, 05:58:13 AM
 #9

Up until now I was keeping meticulous records of my botcoin transactions and was planning on declaring all gains as short-term capital gains on them.

Now that I see how the US govt is intent on fucking over law abiding citizens of it's country, I am less likely to go out of my way to pay extra taxes.

yeah, whatever. bitcoin will win in the end.

SSSSSHHHHHH! They are watching EVERYTHING.

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May 15, 2013, 05:04:24 PM
 #10

I would love to see the original order and the reasons for it too.
Here

Mark Karpelles signed something which was correct in 2010, but isn't as of Q2 2013.

Sjå https://bitmynt.no for veksling av bitcoin mot norske kroner.  Trygt, billig, raskt og enkelt sidan 2010.
I buy with EUR and other currencies at a fair market price when you want to sell.  See http://bitmynt.no/eurprice.pl
Warning: "Bitcoin" XT, Classic, Unlimited and the likes are scams. Don't use them, and don't listen to their shills.
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May 15, 2013, 05:21:47 PM
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I don't think there will be a war.  Believe me - a war is the last thing we want, anyway. 

We want careful, competent, coherent regulation.

Marco Santori is a lawyer, but not your lawyer, and this is not legal advice.  If you do have specific questions, though, please don't hesitate to PM me.  We've learned this forum isn't 100% secure, so you might prefer to email me.  Maybe I can help!  Depending upon your jurisdiction, this post might be construed as attorney advertising, so: attorney advertising Smiley
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May 16, 2013, 02:23:26 AM
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Question is, why is this DHS's remit? Doesn't the FTC usually handle this kind of case? Or are these rumors distorted, somehow?

BTC:1Ca1YU6rCqCHniNj6BvypHbaHYp32t2ubp XRP: rpVbjBotUFCoi9xPu3BqYXZhTLpgZbQpoZ
LTC:LRNTGhyymtNQ7uWeMQXdoEfP5Mryx2c62i :FC: 6qzaJCrowtyepN5LgdpQaTy94JuxmKmdF7
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May 16, 2013, 08:50:38 AM
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is better to trade with an exchange outside the US, the Fed and their agencies are busy bodies, good for nothing. Gox is smart that they
never go through the agreement with CoinLab to set up a mt.gox US branch.. otherwise all their funds will be frozen, like what is happening to dwolla... Here is part of the story article :

"The Department of Homeland Security is investigating Mt. Gox, the largest Bitcoin exchange, for violating laws on US money exchange and money transfers—and it's grabbing the exchange's money in the process.

DHS officials refused to comment on the ongoing investigation, but they did provide a copy of the warrant that was used yesterday to seize funds that Mt. Gox had in Dwolla, a money transfer service. Dwolla is a Des Moines, Iowa company that provides one of the most popular ways to move US dollars to Mt. Gox, where they can be used to buy bitcoins.

In the warrant, a special agent with Homeland Security Investigations (HSI), states that there's probable cause to believe Mt. Gox is engaging in "money transmitting" without a license, a crime punishable by a fine or up to five years in prison. The warrant goes on to demand that Dwolla hand over the keys to account number 812-649-1010, which is owned by Mt. Gox subsidiary Mutum Sigillum LLC, and held in the custody of Veridian Credit Union.

The funds in that account "are those of Mt. Gox customers that withdraw said funds from Mt. Gox and direct their transfer to Dwolla."

Homeland Security used a confidential informant, based in Maryland, to conduct the investigation. The informant simply created accounts with Dwolla and Mt. Gox, bought bitcoins, and then changed them back into dollars. Tracing that money, HSI was able to see that the money passed through a Wells Fargo account, number 7657841313, which was created by a single authorized signer: Mark Karpeles, the president and CEO of Mt. Gox. The Dwolla account shows transfers to Dwolla going back to at least December 2011, according to the warrant.

The special agent then explains what appears to be the smoking gun: Karpeles specifically denied he was going to get into the currency exchange business. The warrant reads:

    As part of the account opening process, Wells Fargo required Karpeles and Mutum Sigillum LLC to complete a "Money Services Business (MSB) Accounts, Identification of an MSB Customer" form. That document was completed on May 20, 2011 and identified Mutum Sigillum LLC as a business not engaged in money services. The application asks several questions; to include, "Do you deal in or exchange currency for your customer?" and "Does your business accept funds from customers and send the funds based on customers' instructions (Money Transmitter)?" Karpeles answered these questions "no," indicating that Mutum Sigillum LLC does not deal in or exchange money, and that it does not send funds based on customer instructions.

    Money transmitting businesses are required by 31 USC section 5330 to register as such with FinCEN. According to FinCEN records on May 6, 2013, neither Mt. Gox nor the subsidiary, Mutum Sigillum LLC, is registered as a Money Service Business.

The agent then gives a brief description of how Mt. Gox deals in the "crypto-currency" of Bitcoin:

    Mt. Gox acts as a digital currency exchange where customers open accounts and fund the respective accounts with fiat currency, which is then exchanged into crypto-currency by Mt. Gox; the crypto-currency is known as bitcoin. Fiat currency simply refers to any money that a government has declared to be legal tender. The exchange is bidirectional and allows customers to also exchange bitcoins back into fiat currency, and then withdraw those funds. The exchange of fiat currency and bitcoins incurs a floating rate fee charged by Mt. Gox and is determined by the customer's aggregate amount of funds exchanged on a monthly basis. "
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May 19, 2013, 04:13:42 PM
 #14


The special agent then explains what appears to be the smoking gun: Karpeles specifically denied he was going to get into the currency exchange business. The warrant reads:

    As part of the account opening process, Wells Fargo required Karpeles and Mutum Sigillum LLC to complete a "Money Services Business (MSB) Accounts, Identification of an MSB Customer" form. That document was completed on May 20, 2011 and identified Mutum Sigillum LLC as a business not engaged in money services. The application asks several questions; to include, "Do you deal in or exchange currency for your customer?" and "Does your business accept funds from customers and send the funds based on customers' instructions (Money Transmitter)?" Karpeles answered these questions "no," indicating that Mutum Sigillum LLC does not deal in or exchange money, and that it does not send funds based on customer instructions.

    Money transmitting businesses are required by 31 USC section 5330 to register as such with FinCEN. According to FinCEN records on May 6, 2013, neither Mt. Gox nor the subsidiary, Mutum Sigillum LLC, is registered as a Money Service Business.

The agent then gives a brief description of how Mt. Gox deals in the "crypto-currency" of Bitcoin:

    Mt. Gox acts as a digital currency exchange where customers open accounts and fund the respective accounts with fiat currency, which is then exchanged into crypto-currency by Mt. Gox; the crypto-currency is known as bitcoin. Fiat currency simply refers to any money that a government has declared to be legal tender. The exchange is bidirectional and allows customers to also exchange bitcoins back into fiat currency, and then withdraw those funds. The exchange of fiat currency and bitcoins incurs a floating rate fee charged by Mt. Gox and is determined by the customer's aggregate amount of funds exchanged on a monthly basis. "

Legally, Mt Gox is a (deregulated) Over The Counter Derivative-Token Marketplace, it cannot be rightly regarded as a (regulated) "trading exchange".

The case-law flaw here is in falsely mis-identifying a Bitcoin Over the Counter Credit-Swap Derivative token as the "currency" of a national-socialist "economy".

So the second paragraph must (lawfully) read:

"Mt. Gox acts as a digital Over the Counter Credit Swap Derivative Token trading marketplace where customers open accounts and fund their respective accounts with fiat currency, or with Over the Counter Credit Swap Derivative Tokens they have obtained elsewhere, which they may trade there, primarily to obtain Over the Counter Credit Swap Derivative Tokens through the Mt. Gox derivative token trading marketplace; the Over the Counter Credit Swap Derivative Token is known as a bitcoin. Fiat currency simply refers to any nation's currency that a government has declared to be it's nation's current legal tender (money). The un-regulatable, international Over the Counter Derivative Token trading marketplace is bidirectional and allows customers to also occasionally sell their bitcoins to others for their other respective fiat currencies, and then withdraw whatever new purchasers' funds they may so later deserve through the Mt Gox marketplace. The purchasing and auctioning of bitcoins incurs a floating rate auction fee charged by Mt. Gox and is determined by the customer's aggregate amount of bitcoin derivative tokens traded on a monthly basis."


A Bitcoin is not a nation's national-socialist economic legal tender, money nor an international exchange "currency" of any trading nation. It is merely the derivative-token of a (most recent) Credit Swap transaction that has occurred in it's past. It has no exchange-value until or unless it can be resold for some new value to a new owner, again.

So, where Mt Gox may be in trouble with the Tory-Bilderberg ZioNazi Waffen-SS Wehrmacht is in exchanging the currencies of foreign buyers into Private Federal Reserve Printing Company "They Owe Us" notes to pay American sellers, since "American" citizens of the Union of ZioNazi Socialist Republics (U.Z.S.R) do not buy any "currency" there, though they can sell things (that cannot be easily detected, confiscated, smelled nor felt through their underwear) there and may, possibly obtain "exchanged currency" value that may have originated from other foreign buyers, from the marketplace, arising from the resale of them by that marketplace.

Of course one would have to prove that a non-American terrorist-customer (who was not hiding in his wife's underwear at an airport) purchased a particular bitcoin derivative DIRECTLY from an American ZioNazi and his foreign terrorist-currency was then exchanged by Mt Gox into (U.Z.S.R.) ZioNazi currency for that specific foreign terrorist. But once an American ZioNazi places a "sell order" that derivative is technically sold to the "intermediary trading marketplace" who then collect from the purchaser, foreign terrorist currency-funds necessary to compensate the ZioNazi seller that they bought it from, in ZioNazi "currency". There is no way to prove nor disprove that, or if, other "American" ZioNazi's are not the buyers, from whence the ZioNazi funds came. One cannot also disprove that Mt Gox may also occasionally have to go to a "currency exchange" itself to pay it's bills to it's clients where, as or when needed, in national socialist fiat "currencies" appropriate to them.


A Bitcoin functions exactly in much the same way as a "traded" Credit Default Swap (CDS). You fund it's former owner's "loss" (defaulted costs) on it now, and the next owner (you trade it with or back to,) hopefully, then funds yours, later. It neither has, contains nor is backed by any currency-exchange value other than faith. It is legally the same as all other exchange traded derivatives which are specifically deregulated to favor the banksters who invented and use them (like loss-ping-pong instruments) to fix stock and bond "market prices" with.  The Bitcoin is however technically not about a "defaulted credit" it is about a "previously funded credit", but, that "credit" has no certain value! Therefore it is a (previously)  Funded Credit Swap Derivative. It's theoretical or imagined future "exchange value" exists solely in the faith of the mind of it's holder, and it is backed as a "currency" by no national socialist economic trading nation.

The Mt Gox Marketplace only facilitates the buying and selling of Digital Over The Counter Credit Swap Derivative Tokens, known as "Bitcoins" and or "Altcoins" etc. They do not directly or indirectly convert or exchange any "currencies", as any matter of the implicit character of their business, although thy may accept currencies that they must later exchange elsewhere, to settle the respective accounts of their clients.

A Bitcoin is a commercial "over the counter (OTC) derivative" of the most recent-past credit swap value and future possible credit swap values of itself and it's network, which are only (at best) completely deregulated Commercial Resources, and neither "commodity futures" nor "securities" as per the CFMA of 2000. nor a legal tender "money" or a "currency" of the current trade balance export valuation of any national economy.

http://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000


Either you are with The Constitution or you are with The Terrorists, Mr Bush!

For eons Gold Pharaohs enslaved us and our nations through their monopoly. Free us all from them forevermore with:
Bitcoin, the Goldslayer! - Welcome to the digitally portable, untraceable, perfectly lawful "BTC securitized OTC Credit Swap derivative" money that is OURS, ALONE! So you got your TARP, eh? Guess what?
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May 20, 2013, 07:36:32 PM
 #15

I don't think there will be a war.  Believe me - a war is the last thing we want, anyway. 

We want careful, competent, coherent regulation.

What I fear is this could deliver bitcoin into the hands of politicians, opening the door wide open to incompetent regulation, or regulation meant to weaken bitcoin.

Special interests in Washington could easily kneecap bitcoin into being so difficult to use, that it remains fringe. Therefore it would be little threat to the dollar or euro.
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May 20, 2013, 07:39:36 PM
 #16

The Streisand Effect

More publicity is better, even negative publicity.

You are in a maze of twisty little passages, all alike.
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May 20, 2013, 09:05:26 PM
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I don't think there will be a war.  Believe me - a war is the last thing we want, anyway. 

We want careful, competent, coherent regulation.

What I fear is this could deliver bitcoin into the hands of politicians, opening the door wide open to incompetent regulation, or regulation meant to weaken bitcoin.

Special interests in Washington could easily kneecap bitcoin into being so difficult to use, that it remains fringe. Therefore it would be little threat to the dollar or euro.

But, at stake is the irony that the FinCen analysis points out. Any attempt to regulate these special (over the counter) OCD "swap" derivatives would kneecap the Fed and all the TBTF bank monopolies abilities to fix market and bond prices by insider trading "off their books" all day long, every day and twice on holidays.

If they even open the door a quarter inch to the CFTC to regulate OCD Swaps they will have the full vengeance of the financial industry gunning them down.

https://en.wikipedia.org/wiki/Commodity_Futures_Trading_Commission#Over-the-counter_derivatives

The problem with Bitcoin is the idiotic market trading exchange nonsense, which might create an opening for them to allow the CFTC to regulate this one form of a swap precisely because it is publicly "traded" in a stupid market.

For eons Gold Pharaohs enslaved us and our nations through their monopoly. Free us all from them forevermore with:
Bitcoin, the Goldslayer! - Welcome to the digitally portable, untraceable, perfectly lawful "BTC securitized OTC Credit Swap derivative" money that is OURS, ALONE! So you got your TARP, eh? Guess what?
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