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

[Ultraviolet]

That's some shithouse journalism to say the least. The warrant doesn't shut down Gox. It just seizes their US Dwolla account.

[BitChick]

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

Or hopefully this weekend all of these problems with exchanges will be at the forefront of the conference.  We are in desperate need of exchanges that are professional and can handle the large load of new incoming traffic as well as the ability to be compliant with the laws of all nations to truly succeed long term.  Seems obvious, but with small companies there are growing pains and Mt. Gox is really a small company trying to act bigger than they are. 

[Nemesis]

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.

I agree... DHS has a solid case against MtGox.

There is no way around it. If you guys didnt pay attention re-read this :

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

Also check Paypal Acceptable Use Policy, buying a selling checks are also considered as money service business. This is nothing special, its clear as night and day.

This also help Coinlab to have a solid case against Mt.Gox.

I would withdraw all the cash out b4 the case proceed any further. Bank wiring still works and its gonna be for a little while.

[esse83]

502 Bad Gateway - I get this on and off from mtgox.com atm.

[Dalib]

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.

I also think, that Bitcoin is a digital commodity, not currency.

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

it is too much of bad news about MtGox, since Coinbase wants to run this business in the USA ...

[wopwop]

50$ goes into bank account from person A
50$ goes out bank account to person B

= money transmitter = need license

doesn't really matter if something happens with play money in between.

[Kluge]

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?

Don't quote me, but I'm pretty sure if you operate in the US as a whole, you'd need a MSB license from every single state (unless the particular state doesn't regulate it). The logistical, legal, and straight-up cash requirements are probably upward of $5m and probably in excess of $300k annually after all the lawyer and accountant fees... just to do business in the US.

[esse83]

Seems convenient that mtgox is down atm - no transfering of btc out or selling. Other exchanges are going down.

[dasein]

This is good, we want the biggest bitcoin exchanges to have the proper MSB licenses.

[EuroTrash]

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

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

One would wonder why the other longest operating major exchanges (in order of volume) operate outside of the land of the free - like Russia, Slovenia and China.

Sarcasm aside - moving the money through a US Wells Fargo account registered to himself, seriously? So amateur of Mr Karpeles. Hope this serves him a lesson if he still needs one. There's a guy who did the same in Germany (bitcoin-24) and got both his funds frozen and a court case pretty fast.
Correction: the note says "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". So the account is likely on the company name - he's the only authorized signer.

[Frozenlock]

Yeah, how dares he provide a service used by thousands, while not knowing every single laws in a country in which he wasn't born, nor living in.

'Murica!

[EuroTrash]

Seems convenient that mtgox is down atm - no transfering of btc out or selling. Other exchanges are going down.

Trading's working for now.
BitStamp's up.

[DeathAndTaxes]

Sarcasm aside - moving the money through a US Wells Fargo account registered to himself, seriously?

Where do you see that?  The account is in the name of the LLC however last time I checked fictional legal entities (corporations and limited liability companies) don't have physical form and thus can't sign their own name so any corporate account will have real humans which are given (usually by corporate resolution) permission to sign in the name of the company.  No bank in the US will allow you to open an account in the name of a company, trust, or foundation with at least one "real person" signatory on the account.

[Lethos]

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?

Don't quote me, but I'm pretty sure if you operate in the US as a whole, you'd need a MSB license from every single state (unless the particular state doesn't regulate it). The logistical, legal, and straight-up cash requirements are probably upward of $5m and probably in excess of $300k annually after all the lawyer and accountant fees... just to do business in the US.

Glad I only wanted to operate in the UK then. That does sound logistically complex and expensive as you said.

[EuroTrash]

Sarcasm aside - moving the money through a US Wells Fargo account registered to himself, seriously?

Where do you see that?  The account is in the name of the LLC however last time I checked fictional legal entities (corporations and limited liability companies) don't have physical form and thus can't sign their own name so any corporate account will have real humans which are given (usually by corporate resolution) permission to sign in the name of the company.  No bank in the US will allow you to open an account in the name of a company, trust, or foundation with at least one "real person" signatory on the account.

I see - I read it wrong. Editing. Thanks

[dasein]

Yeah, how dares he provide a service used by thousands, while not knowing every single laws in a country in which he wasn't born, nor living in.

'Murica!

Or the laws pertaining to his type of business in a country where he opened a bank account and conducts substantial volumes of transactions?

[dexX7]

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" ?

Sending USD to Dwolla and receiving USD from Dwolla is considered as money transfer.

[DeathAndTaxes]

Sending USD to Dwolla and receiving USD from Dwolla is considered as money transfer.

Have you thought that logic through?  If that was the standard then YOU would need a MSB registration as would every single one of Dwolla customers.

[dexX7]

Sending USD to Dwolla and receiving USD from Dwolla is considered as money transfer.

Have you thought that logic through?  If that was the standard then YOU would need a MSB registration as would every single one of Dwolla customers.

I'm no business => no money transfer business rule appyled.

[DeathAndTaxes]

Sending USD to Dwolla and receiving USD from Dwolla is considered as money transfer.

Have you thought that logic through?  If that was the standard then YOU would need a MSB registration as would every single one of Dwolla customers.

I'm no business => no money transfer business rule appyled.

Actually FinCEN doesn't care if you are a "business" or not.  Luckily that isn't why they had their account frozen.