Mt. Gox is an unlicensed money exchanger dealing in "crypto-currency."

[Kazu]

Strange how it's taken this long to discover Mt.Gox wasn't doing things by the books (according to local laws), as I am fully aware they operate out of Japan, However they do apparently have a US company, with connected US accounts.
Which also the US operations were suppose to been taken over by another company by now, which didn't happen, so they in trouble with that as well.

Their stack of cards seems to be falling apart. Ouch.

There has been a decent number of other exchanges doing the same things shutting every year, obviously not lasting very long, yet they only looked at one of the biggest out there now? Talk about odd. How expensive are the US money service licences anyway, surely Mt.Gox could of afforded them, as one of the largest exchanges out there, right?

It isn't about "affording" anything. Its about the regulations that are imposed and the requirements one must meet to get a license which essentially prevent many businesses from operating.

[MAbtc]

The real panic sells haven't even started.

Not gonna happen. If their USD accounts get frozen, nobody wants to hold USD. Expect buy-ins and transfer to other exchanges instead.

People keep saying this. I don't know about that. Bank runs happen for a reason. Most people have not picked up on the possible ramifications of this yet. But many understand what happens to the price of bitcoin it something serious happens to Gox.

Man, I had just recently been going over my fears about this... but I thought it was a ways away.

[BitPirate]

Off-topic: look how far we have fallen since 9/11. I think it's fair to say the terrorists have won.

[jamesg]

FYI:

You can use https://bitpay.com to cash out coins and have the USD sent you your bank account the next day for 0.99%.

[esse83]

According to the documents Mark could face up to 5 years in prison + fine (worst case).

[barbarousrelic]

How does Gox need a US license to transfer money when they are in Japan.

How does anybody need a license to transfer money period. At this point you basically can't do business without transferring money.

They need an American license when doing business with Americans in America.

So in prosecuting MtGox for not having a money changing license, is there a legal precedent being set here that Bitcoin fits the government's definition of "money" ?

[fitty]

How does Gox need a US license to transfer money when they are in Japan.

How does anybody need a license to transfer money period. At this point you basically can't do business without transferring money.

They need an American license when doing business with Americans in America.

So in prosecuting MtGox for not having a money changing license, is there a legal precedent being set here that Bitcoin fits the government's definition of "money" ?

It has nothing to do with Bitcoin. He was exchanging SOMETHING for USD. CampBX by all reports is properly licensed. Their Dwolla is working just fine.

As usual, MtGox is incompetent. It could have been easily avoided, and this is yet another example why people should focus on moving to a different exchange that's actually run by people with a clue.

[Invictus]

Babysitter government. You need a license for everything. Just GTFO and let the customers decide if they want to do business with a company.

[DeathAndTaxes]

It has nothing to do with Bitcoin. He was exchanging SOMETHING for USD. CampBX by all reports is properly licensed. Their Dwolla is working just fine.

Of course it has to do with Bitcoins.

Amazon accepts USD for DVD.  They also pay USD for DVDs.  Is amazon (and every retail business in the world) a MSB?  I mean commerce by very definition is the acceptance of money for goods & services.

However FinCEN provided guidance in March, 2013 indicating that virtual currencies* are subject to MSB regulation:
http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

Thus it isn't that MtGox exchange "something" for real currency but that they exchanged "something which is regulated by FinCEN" for real currency.

Prior to March, 2013 there was no real reason for MtGox to register, post March, 2013 I am not sure how/why (as the worlds largest Bitcoin exchange) they thought they would remain under the radar.



* Only entities which buy/sell/trade/exchange virtual currencies for real currencies fall under MSB regulation.  FinCEN does indicate that buying or selling goods & services for virtual currency is not a MSB.

[samson]

How does Gox need a US license to transfer money when they are in Japan.

How does anybody need a license to transfer money period. At this point you basically can't do business without transferring money.

They need an American license when doing business with Americans in America.

So in prosecuting MtGox for not having a money changing license, is there a legal precedent being set here that Bitcoin fits the government's definition of "money" ?

As far as I can see the money exchanging takes place in Japan, this is merely a funding method.

[yokosan]

The real panic sells haven't even started.

Oh you are soooo right.

Compared to Gox the other exchanges have such small volume. When people flock to sell on the other exchanges single digits will occur.

Just one twitchy finger is all it takes.

Think about that for a moment.

One twitchy finger.

[dbanga85]

The real panic sells haven't even started.

Oh you are soooo right.

Compared to Gox the other exchanges have such small volume. When people flock to sell on the other exchanges single digits will occur.

Just one twitchy finger is all it takes.

Think about that for a moment.

One twitchy finger.

Keep dreaming bro

[Quantum_Negatum]

http://www.fincen.gov/financial_institutions/msb/msbstateselector.html

Are ANY exchanges registered with FinCEN? Mt. Gox might be the first of many targets.

[dandirk]

http://www.fincen.gov/financial_institutions/msb/msbstateselector.html

Are ANY exchanges registered with FinCEN? Mt. Gox might be the first of many targets.

I thought Bitfloor was... look what that got us... lol

[Quantum_Negatum]

http://www.fincen.gov/financial_institutions/msb/msbstateselector.html

Are ANY exchanges registered with FinCEN? Mt. Gox might be the first of many targets.

I thought Bitfloor was... look what that got us... lol

You are right. Bitfloor was registered.

I can't find CampBX...

I did find Coinbase and Coinlab.

[Lethos]

Strange how it's taken this long to discover Mt.Gox wasn't doing things by the books (according to local laws), as I am fully aware they operate out of Japan, However they do apparently have a US company, with connected US accounts.
Which also the US operations were suppose to been taken over by another company by now, which didn't happen, so they in trouble with that as well.

Their stack of cards seems to be falling apart. Ouch.

There has been a decent number of other exchanges doing the same things shutting every year, obviously not lasting very long, yet they only looked at one of the biggest out there now? Talk about odd. How expensive are the US money service licences anyway, surely Mt.Gox could of afforded them, as one of the largest exchanges out there, right?

It isn't about "affording" anything. Its about the regulations that are imposed and the requirements one must meet to get a license which essentially prevent many businesses from operating.

I've studied what is needed in the UK and apparently we are well known for being strict in this area. However since I have no intentions of operating in the USA, I don't know it's requirements or costs.

Mt.Gox when I used it (last year) was annoying with all the verification of your details, so it easily did all of what was necessary for the requirements. So does it really all come down to the fact it wasn't declaring that account was being used to move money around?

[BitPirate]

Strange how it's taken this long to discover Mt.Gox wasn't doing things by the books (according to local laws), as I am fully aware they operate out of Japan, However they do apparently have a US company, with connected US accounts.
Which also the US operations were suppose to been taken over by another company by now, which didn't happen, so they in trouble with that as well.

Their stack of cards seems to be falling apart. Ouch.

There has been a decent number of other exchanges doing the same things shutting every year, obviously not lasting very long, yet they only looked at one of the biggest out there now? Talk about odd. How expensive are the US money service licences anyway, surely Mt.Gox could of afforded them, as one of the largest exchanges out there, right?

It isn't about "affording" anything. Its about the regulations that are imposed and the requirements one must meet to get a license which essentially prevent many businesses from operating.

I've studied what is needed in the UK and apparently we are well known for being strict in this area. However since I have no intentions of operating in the USA, I don't know it's requirements or costs.

Mt.Gox when I used it (last year) was annoying with all the verification of your details, so it easily did all of what was necessary for the requirements. So does it really all come down to the fact it wasn't declaring that account was being used to move money around?

Exactly -- it looks to me like they were generally acting in good faith in terms of the regulations. They were quite strict, and just for a minority of payment flows at that. As it's not that easy for a foreign company to open a bank account in the US, it looks like they just did what they could for Dwolla.

I wouldn't be surprised if Coinbase were behind this.

[mgio]

"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 singer: 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:"

He probably was too naive to understand his middleman role as a currency exchange. They seem to have a solid case against Mark.

Except the government didn't, and still doesn't consider Bitcoin to be a "currency". It's digital property, and MtGox lets you buy and sell it. MtGox broke no laws here.

[esse83]

"The Department of Homeland Security (DHS) executed a seizure warrant to shut down the world’s largest bitcoin exchange for operating an unlicensed money transmitting service, according to documents filed in a Maryland court on Tuesday."

http://thehill.com/blogs/hillicon-valley/technology/299921-feds-crack-down-on-bitcoin-exchange

That seems incorrect according to what the warrant actually says - but I guess the next logical step. The tentacles of the US goverment reach around the world. Volumes are near zero @ gox atm.

[Fiyasko]

i hope they get a really good lawyer rather than think "bah we know the law, we can do this without hiring a lawyer"