The death of Mt Gox will End Bitcoin

[Viceroy]

It's sometimes hard to find the best forum for discussions around here.  If you can contribute meaningfully to the creation of a 'Mt Gox Two Point Oh', please do so here: https://bitcointalk.org/index.php?topic=179147.0

If you'd like to philosophize about things, on the other hand, please post in this thread...  

In case you were not aware the American Government has decided to seize assets of Mt Gox.  
Here's the press:
http://www.extremetech.com/extreme/155933-homeland-security-seizes-account-of-largest-bitcoin-exchange-mt-gox
http://www.zdnet.com/us-department-of-homeland-security-issues-court-order-against-mt-gox-7000015389/

I speculate, per this thread category, that shutting down Mt Gox would be meaningless in the long run adoption of bitcoin by the common man.  Like a drug cartel leaders' death, killing gox would only lead to the strengthening of ten smaller exchanges.  Like the world wide drug war against marijuana, going after Mt Gox will NEVER destroy the "coin".


Discuss....

[1714950280]

1714950280

[1714950280]

1714950280

[1714950280]

1714950280

[1714950280]

1714950280

[smoothie]

MTGOX =/= Bitcoin simple as that. Price may be affected, but bitcoin is more than just a price.

[Ares]

I think the death of Mt Gox will usher in a new era of bitcoin success

[BitPirate]

When they shut down Napster and Kazaa, did it end filesharing?

Anyway, the analogy is irrelevant, as nothing has actually been shut down yet, and there is no evidence to suggest it will be.

[Viceroy]

Evidence is strong that the Department of Homeland Security SEIZED ASSETS through Dwolla.  I TOTALLY disagree with your assessment.  My initial assessment is that the founder of Mt Gox goes to jail for about a decade.  Didn't the Napster guy go to jail for a while?  I forget that was like twenty years ago.  These kids don't even know what Napster is Grandpa  


Edit: my later assessment is that the owner(s) of Mt Gox appear to have tried to be compliant so it is possible this will result in no charges.

[BitPirate]

Evidence is strong that the Department of Homeland Security SEIZED ASSETS through Dwolla.  I TOTALLY disagree with your assessment.  My initial assessment is that the founder of Mt Gox goes to jail for about a decade.  Didn't the Napster guy go to jail for a while?  I forget that was like twenty years ago.  These kids don't even know what Napster is Grandpa 

Goes to jail for an oversight on a subsidiary's bank account regarding regulations that are a month old?

Get a grip man.

[evilscoop]

can i get another option on the list....
bitstamp becomes new top exchange :p

[Viceroy]

Goes to jail for an oversight on a subsidiary's bank account regarding regulations that are a month old?

Get a grip man.

Dude, you don't get the significance of this AT ALL.  This is NOT a meaningless situation regarding FINCEN's statement.  This is a criminal investigation involving, as the article puts it:  "Karpeles, in other words, is in violation of some fairly serious banking laws."

What Mt Gox has done is blatantly illegal and violates American laws back to the 1930's 1960's.

[evilscoop]

viceroy, was it not mtgox's middle man (Mutum Sigillum), and not mtgox themselves at fault....
https://bitcointalk.org/index.php?topic=206308.0;topicseen

thus mtgox are actually the innocent party here, stupid...but innocent

[Viceroy]

not clear to me who the actors are at this time.  I was a little confused too as I always thought Mt Gox to be Japanese and this [] is clearly (certainly appears to be) from Delaware.  If he is their "banker", they are all on the line.  The dude straight lied on the form:

"The warrant that DHS used to seize the funds in Mt. Gox’s Dwolla account has just been published, and it points to a significant problem with the service. As Ars Technica details, when Mt. Gox owner Mark Karpeles opened the Mutum Sigilum account with Wells Fargo, he was asked if Mutum Sigilum LLC was a business engaged in monetary services. From the warrant:

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 Sigilum 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 Sigilum LLC, is registered as a Money Service Business.

Whoops."

http://www.extremetech.com/extreme/155933-homeland-security-seizes-account-of-largest-bitcoin-exchange-mt-gox


Great link there, Evil, thanks!

Edit: I had to stop reading here because I am NOT a conspiracy theorist.  the link reads: "I do believe that the US Government [] is frightened of bitcoin"

[evilscoop]

the question is, is this Mutum Sigillum employed by mtgox to act as us rep and to allow trade in the us....
or is Mutum Sigillum an independent sub contractor that failed to meet us banking laws....

If hes a sub contractor....his business is finished....
If hes employed by mtgox they could be in for trouble....but since their not a us company, there aint a lot us can do...

I hate the us thinking they can enforce their laws on everyone....other places work v. differently...youd think ppl would learn after all the pirate bay crap

anyway...i doubt mtgox are stressing it, they will just get another middle man

[notme]

the question is, is this Mutum Sigillum employed by mtgox to act as us rep and to allow trade in the us....
or is Mutum Sigillum an independent sub contractor that failed to meet us banking laws....

If hes a sub contractor....his business is finished....
If hes employed by mtgox they could be in for trouble....but since their not a us company, there aint a lot us can do...

I hate the us thinking they can enforce their laws on everyone....other places work v. differently...youd think ppl would learn after all the pirate bay crap

anyway...i doubt mtgox are stressing it, they will just get another middle man

The same man owns both Mutum Sigillum and the Japanese company that operates MtGox.

[evilscoop]

ahh well then, guess its time for him to make a new llc in us and get banking stuff sorted this time....
still no biggy...

[Viceroy]

I hate the us thinking they can enforce their laws on everyone...

It's not that, it is a step to Protect Americans.  All the banking laws of the USA are designed to protect the citizens.  Mt Gox is violating our law by acting as an exchange/money transmitter without a license.   I bet they probably need a license in Japan and Europe too.  

If they don't want the license, that's fine, but then they cannot take American's money... else this.  FWIW I think he is facing serious jail time.  He appears to be an American based on a Delaware address.  Combine this with the $75 million lawsuit from coinlab Mt Gox is in deep trouble.  

[myrkul]

It's not that, it is a step to Protect Americans.  All the banking laws of the USA are designed to protect the citizens.

*government

[frozen]

What Mt Gox has done is blatantly illegal and violates American laws back to the 1930's.

Exactly which American laws has Mt Gox violated, and how?

[Viceroy]

We have yet to see, all we have at this time is an accusation and a seizure.

https://bitcointalk.org/index.php?topic=206749.msg2164340#msg2164340

[smoothie]

Evidence is strong that the Department of Homeland Security SEIZED ASSETS through Dwolla.  I TOTALLY disagree with your assessment.  My initial assessment is that the founder of Mt Gox goes to jail for about a decade.  Didn't the Napster guy go to jail for a while?  I forget that was like twenty years ago.  These kids don't even know what Napster is Grandpa 

I am curious what LAW did Mark break?

Link? Site? Cite?

[myrkul]

What Mt Gox has done is blatantly illegal and violates American laws back to the 1930's.

Exactly which American laws has Mt Gox violated, and how?

MtGox has violated none. Mutum Sigillum, LLC, in the person of one Mark Karpeles, has violated 18 USC Section 1960.

http://cdn.arstechnica.net/wp-content/uploads/2013/05/Mt-Gox-Dwolla-Warrant-5-14-13.pdf

[Viceroy]

MtGox has violated none.

We do not know that.  And it would appear that Mark IS Mt Gox, so it's kindof all the same thing, no?

[myrkul]

MtGox has violated none.

We do not know that.  

Guilty until proven innocent, huh?

[mgio]

ahh well then, guess its time for him to make a new llc in us and get banking stuff sorted this time....
still no biggy...

Except it is a HUGE deal to become a money transmitter.

You need to apply for separate licenses for ALL states that you do business in (all 50 states).

You need to hold insurance for all the money you transmit.

You need to comply with KYC regulations for every person you deal with.

And it costs about $25 million.

It is very difficult to become a money transmitter. MtGox might not be able to afford it.

[Viceroy]

MtGox might not be able to afford it.

Then they should not allow Americans to trade on the site, unfortunately ignorance of the law is no excuse.

[smoothie]

ahh well then, guess its time for him to make a new llc in us and get banking stuff sorted this time....
still no biggy...

Except it is a HUGE deal to become a money transmitter.

You need to apply for separate licenses for ALL states that you do business in (all 50 states).

You need to hold insurance for all the money you transmit.

You need to comply with KYC regulations for every person you deal with.

And it costs about $25 million.

It is very difficult to become a money transmitter. MtGox might not be able to afford it.

Here it talks about how MTGOX are looking to spend about $25million to get compliant with the US laws: http://www.theverge.com/2013/4/1/4154500/mt-gox-barons-of-bitcoin

[Viceroy]

The article is misleading as it implies it IS POSSIBLE to become completely compliant with US law regarding bitcoin to fiat and fiat to bitcoin which is an impossibility since there are no state laws that govern such.  It certainly does look like they are/were trying to become compliant and that will CERTAINLY bode well for them.  Perhaps, with good counsel, they get off with a slap on the wrist.

Remember that it's easy to end up facing years in prison like this guy: http://www.wired.com/threatlevel/2009/06/e-gold/

[BitPirate]

The article is misleading as it implies it IS POSSIBLE to become completely compliant with US law regarding bitcoin to fiat and fiat to bitcoin which is an impossibility since there are no state laws that govern such.  It certainly does look like they are/were trying to become compliant and that will CERTAINLY bode well for them.  Perhaps, with good counsel, they get off with a slap on the wrist.

Remember that it's easy to end up facing years in prison like this guy: http://www.wired.com/threatlevel/2009/06/e-gold/

This seems to be closer to reality.

But bear in mind he doesn't NEED counsel right now, as he hasn't been indicted or charged with anything.

[Nemesis]

Holyshit the amount of dumb comments on here give me headache.


Btw, its Coinlab NOT Coinbase thats suing MtGox.

I feel like giving someone a quarter to buy a fcking clue 

[chufchuf]

MtGox might not be able to afford it.

Then they should not allow Americans to trade on the site, unfortunately ignorance of the law is no excuse.

Such ''ignorance'' needed ''clarifying'' just two months ago from the FINCEN. Up until then, everyone, and not just Karpeles, had interpreted that U.S. BTC exchanges didn't need to be MSB. And to be coherent, when the govt interpreted BTC to be currency, they'd have to stop taxing profits on BTC because they couldn't consider it a commodity.

[gogxmagog]

just a load of FUD

[Hawker]

Evidence is strong that the Department of Homeland Security SEIZED ASSETS through Dwolla.  I TOTALLY disagree with your assessment.  My initial assessment is that the founder of Mt Gox goes to jail for about a decade.  Didn't the Napster guy go to jail for a while?  I forget that was like twenty years ago.  These kids don't even know what Napster is Grandpa  

Founder of Napster made a few hundred million as a VC on projects like Facebook.  No jail time for him.

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

[pwi]

I never cared for gox anyhow.  The theft of gox's fiat only solidifies Bitcoin's value IMO. The US/other exchange price vs Gox spread only gives Bitcoin validity as a means of trade via p2p trade.

I said it yesterday; but anyone with the ability and guts stands to make a lot of money playing the imaginary gap between gox price and other exchange's price. Homeland security just made a lot of non-Americans a shit-ton of money. I envy those in a less tyrannical economical environment.

Selling on gox and buying on any other exchange is money in the bank if you have a bank not under the DHS/US microscope. Personally, I'm a fan of the recent shenanigans. I am not a fan of government intervention in realm of consenting adults' trade.

[Nemesis]

Evidence is strong that the Department of Homeland Security SEIZED ASSETS through Dwolla.  I TOTALLY disagree with your assessment.  My initial assessment is that the founder of Mt Gox goes to jail for about a decade.  Didn't the Napster guy go to jail for a while?  I forget that was like twenty years ago.  These kids don't even know what Napster is Grandpa 

Founder of Napster made a few hundred billion as a VC on projects like Facebook.  No jail time for him.

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

few hundred billion?

REALLY? REALLY REALLY?

Sometimes i like to kick ppl in their nuts for being such a retard.

[superkawaii]

i dont understand what going on here :S

i had my btc on mt.gox wallet ever since i purchased them should i take them out of the gox wallet ?

wtf is going on here :S

[BitPirate]

i dont understand what going on here :S

i had my btc on mt.gox wallet ever since i purchased them should i take them out of the gox wallet ?

wtf is going on here :S

The news does not affect BTC -- but either way, keeping your BTC in an exchange wallet was never the best of ideas.

[Hawker]

Evidence is strong that the Department of Homeland Security SEIZED ASSETS through Dwolla.  I TOTALLY disagree with your assessment.  My initial assessment is that the founder of Mt Gox goes to jail for about a decade.  Didn't the Napster guy go to jail for a while?  I forget that was like twenty years ago.  These kids don't even know what Napster is Grandpa 

Founder of Napster made a few hundred billion as a VC on projects like Facebook.  No jail time for him.

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

few hundred billion?

REALLY? REALLY REALLY?

Sometimes i like to kick ppl in their nuts for being such a retard.

Hmmm - I envy you.  It must be great to have so few problems in life that a typing error is all you can find to get upset about. 

[Coinseeker]

If Bitcoin can survive the swings that will come with these attacks on MtGox, Bitcoin will be better off without them.  Or at least removing the 80% dominance that Gox has.  That is bad for Bitcoin, which is no secret.  There are plenty of other options.  Do Bitcoin a favor and use them.

[WackyWilly]

If Bitcoin can survive the swings that will come with these attacks on MtGox, Bitcoin will be better off without them.  Or at least removing the 80% dominance that Gox has.  That is bad for Bitcoin, which is no secret.  There are plenty of other options.  Do Bitcoin a favor and use them.

I second that. If BTC is EVER going to be a currency (instead of a commodity that it is right now) we are in desperate need of TRUE spreading amoung a vast amount of exchanges. I'd like to see  more than 50 exchanges (at least) in order to be able to talk about an independent price formation.

YET...

For the time being, a Mt.Gox assault by either / and US/Japanese authorities WILL pose a major setback to BTC. As long as it lasts, I know, but IT WILL. There is NO way ordinary people are going to adopt BTC when exchanges are either unreliable, filing fraudulent bank enrollment forms, closing after some months, etc. etc.

Bitcoin deserves better than what we've seen over the past weeks. But let's be honest: it will fail in an epic way if the problems don't get addressed. And let's be honest once more: that is a problem when having such a decentralized currency... All we can hope for is enterpreneurs willing to setup competing exchanges, and to conduct their business in a moral & lawful way. I just can HOPE for the better. Meanwhile, I would not be surprised to pick up BTC at a WAY lower price before the dust settles... And meanwhile, I am partially positioning myself into Ripple as well (now don't laugh - it IS legitimate, and it is a BUSINESS, contrary to the fukcing-up by Mt.Gox)

[HeliKopterBen]

So they got a couple of the questions wrong on one of the thousand documents they had to fill out for compliance with the US government.  Big deal.  Anybody else would have to just resubmit the forms at worst and nothing would come of it.  Anyway, maybe ripple or some other decentralized, peer-to-peer based exchange can solve this problem.

[Viceroy]

I am curious what LAW did Mark break?
Link? Site? Cite?

"Homeland Security says it had probable cause to believe that Mt. Gox is guilty of money transmitting without a license. Companies like PayPal and Western Union have this license, but Mt. Gox does not.  Punishment for money transmitting without a license is a fine or a maximum of five years in jail."

Read more: http://www.businessinsider.com/mt-gox-bitcoin-exchange-shut-down-2013-5#ixzz2TSrLPKGZ


The article you pointed us to, Smoothie, said that MtGox spent $25 million to be compliant, but the article is dated April 1, 2013.  If Business insider is correct then Mt Gox has NOT YET completed their filing process and so, while shady, that means DHS might be right.  In fact it appears that the reason FINCEN sent out the clarification last month was in response to DHS's request.  FINCEN released their guidance at THE REQUEST OF LAW ENFORCEMENT.

I've come back to "Mark is going to jail for 5 years..."

[BitcoinAshley]

MtGox dying a slow, painful death at the hands of U.S. and Japanese regulators would be the best possible thing that could happen to Bitcoin at this point in time.

[darkmule]

MtGox dying a slow, painful death at the hands of U.S. and Japanese regulators would be the best possible thing that could happen to Bitcoin at this point in time.

If Gox is unfit to compete, I'd agree, except I'd think a quick and decisive death would be better so we can get to the moving on part.  If it can restructure to comply and remain in business, that would be better.

[deadweasel]

MtGox dying a slow, painful death at the hands of U.S. and Japanese regulators would be the best possible thing that could happen to Bitcoin at this point in time.

+1

Unprofessional BTC businesses will evolve or die.  It's beautiful.

[Pzi4nk]

Evidence is strong that the Department of Homeland Security SEIZED ASSETS through Dwolla.  I TOTALLY disagree with your assessment.  My initial assessment is that the founder of Mt Gox goes to jail for about a decade.  Didn't the Napster guy go to jail for a while?  I forget that was like twenty years ago.  These kids don't even know what Napster is Grandpa 

Goes to jail for an oversight on a subsidiary's bank account regarding regulations that are a month old?

Get a grip man.

+1

Voice of reason, man.

[Viceroy]

I wish the government were reasonable.

[bitcoincraps]

New small exchanges like bitcoin-exchange.info are started every week. I don't think mtgox has such a big influence over the price of bitcoin. If mtgox goes down, a crash will follow, that's for sure. But a crash will make bitcoin STRONGER not weaker.

I think the best thing that happened in the past was the 2011 big crash followed by the recovery. It proved that bitcoin is here for the long term.

[Terpie]

New small exchanges like bitcoin-exchange.info are started every week. I don't think mtgox has such a big influence over the price of bitcoin. If mtgox goes down, a crash will follow, that's for sure. But a crash will make bitcoin STRONGER not weaker.

I think the best thing that happened in the past was the 2011 big crash followed by the recovery. It proved that bitcoin is here for the long term.

It's good that bitcoin has one exchange large enough to weather these storms. Any smaller exchanges just close shop when things get tough.

[Chainsaw]

For awhile, I think the fear was this news event would cause the sudden, violent end of MtGox.  All the known data now seems to contradict this. As time passes, this news looks more and more like getting the news - MtGox, you've got terminal cancer. It's time to start making your final plans. In the medium and long term, this will be good for Bitcoin.

I blather on about this in more detail over here:
https://bitcointalk.org/index.php?topic=181037.20

It was a good kick in the butt for me. I've been complacent for far too long, rationalizing "the security is adequate, I'll wait til a clear winner comes along".  I never want to be caught unprepared and as risk-exposed again.

Long-term, I see this as compelling many more users like me to start seeking out alternative exchanges.  I read the government's posturing to date as a clear signal - they said they'll regulate, and they will.  Finding an exchange willing to play by the rules is paramount to greater security.  I could see Gox retaining some market share - say 10-25% of the exchange, while other exchanges pop up. This is all healthy and good for Bitcoin.

[BitcoinAshley]

And meanwhile, I am partially positioning myself into Ripple as well (now don't laugh - it IS legitimate, and it is a BUSINESS, contrary to the fukcing-up by Mt.Gox)

LOL

Big difference there, buddy -
Mt. Gox isn't completely in control of Bitcoin.

OpenCoin, though, is control of Ripple. It's not open source OR decentralized, "yet" they say (lol)

I say: I'll believe it when I see it.

Asking me to believe that OpenCoin will turn Ripple into a truly decentralized, P2P platform with no central authority keeping a closed source protocol or holding 50% of the coins - well, that's like asking me to trust a screenshot of an offline, not-yet-broadcast tx from a random stranger on the internets.

[marcus_of_augustus]

Anti-fragile ...

... this will actually serve to make bitcoin more quickly stronger as the hostile elements in its environment reveal their tactics. It is learning right now, dissecting the legal rulings, watching the reactions, listening to talking-heads who wield influence, looking for weakness in their arguments, openings to exploit, ways to route around. This is how technology networks grow, it is somewhat incidental that it deals with value transfer and storage, but adds some serious oomph and incentivisation to innovate rapidly.

Innovate. Evaluate. Iterate.

The more they engage with it and show their hand, the faster Bitcoin can learn ... they are damned if they do and damned if they don't now.

[farlack]

Goes to jail for an oversight on a subsidiary's bank account regarding regulations that are a month old?

Get a grip man.

Dude, you don't get the significance of this AT ALL.  This is NOT a meaningless situation regarding FINCEN's statement.  This is a criminal investigation involving, as the article puts it:  "Karpeles, in other words, is in violation of some fairly serious banking laws."

What Mt Gox has done is blatantly illegal and violates American laws back to the 1930's 1960's.

... gox isn't located in America. Why would they care?

[myrkul]

... gox isn't located in America. Why would they care?

They do business with Americans. Plus, World police.

[viboracecata]

Sure we will find another way to keep the trades.

[bitsalame]

So they got a couple of the questions wrong on one of the thousand documents they had to fill out for compliance with the US government.  Big deal.  Anybody else would have to just resubmit the forms at worst and nothing would come of it.  Anyway, maybe ripple or some other decentralized, peer-to-peer based exchange can solve this problem.

Actually, technically Mark might have filled it out correctly.

If under US regulations Bitcoins are treated as commodities, it is not a money transmitting activity. It is simply a purchase of a digital good, just like buying mp3s.
So that's the first problem based on definition of what Bitcoins are.
So if they go ahead with this, it is an implicit acknowledgement that Bitcoins ARE money.

Even if that's so, Mutum Sigillum LLC in the US is a separate entity from MtGox in Japan.
Even if it is owned by the same person, the money transmitting is never happening. It is just a deposit of funds on a US company, period.
The exchange and transmitting is happening only in Japan.

The DHS should eat it.

[myrkul]

No, you see, here's how it works:
I send dollars to Dwolla, via my bank account.
They send dollars to Mutum Sigillum.
Mutum Sigillum sends those dollars to MtGox.
MtGox deposits those dollars in my account.

I've bolded where Mark fucked up. Mutum Sigillum sends dollars overseas per the request of it's customers (MtGox, and myself). Hey, guess what? That makes them a money transmitter.

[dandirk]

So they got a couple of the questions wrong on one of the thousand documents they had to fill out for compliance with the US government.  Big deal.  Anybody else would have to just resubmit the forms at worst and nothing would come of it.  Anyway, maybe ripple or some other decentralized, peer-to-peer based exchange can solve this problem.

Actually, technically Mark might have filled it out correctly.

If under US regulations Bitcoins are treated as commodities, it is not a money transmitting activity. It is simply a purchase of a digital good, just like buying mp3s.
So that's the first problem based on definition of what Bitcoins are.
So if they go ahead with this, it is an implicit acknowledgement that Bitcoins ARE money.

Even if that's so, Mutum Sigillum LLC in the US is a separate entity from MtGox in Japan.
Even if it is owned by the same person, the money transmitting is never happening. It is just a deposit of funds on a US company, period.
The exchange and transmitting is happening only in Japan.

The DHS should eat it.

As was states... This has almost nothing to do with BTC, so whether it is considered currency or commodity doesn't really matter.

The account was used purely to transmit customer funds from one account (dwolla) to another (MtGox) and vice versa.  The account was probably setup specifically to handle dwolla transfers and had to be stateside... thus the US regulation.

I would guess he set up the account quickly while they were smaller, either not knowing what he was doing or thinking the account would be too small to get attention.... Then he/gox just plum forgot.  Either that or they are idiots like everyone says... which wouldn't surprise me.

[bitsalame]

So they got a couple of the questions wrong on one of the thousand documents they had to fill out for compliance with the US government.  Big deal.  Anybody else would have to just resubmit the forms at worst and nothing would come of it.  Anyway, maybe ripple or some other decentralized, peer-to-peer based exchange can solve this problem.

Actually, technically Mark might have filled it out correctly.

If under US regulations Bitcoins are treated as commodities, it is not a money transmitting activity. It is simply a purchase of a digital good, just like buying mp3s.
So that's the first problem based on definition of what Bitcoins are.
So if they go ahead with this, it is an implicit acknowledgement that Bitcoins ARE money.

Even if that's so, Mutum Sigillum LLC in the US is a separate entity from MtGox in Japan.
Even if it is owned by the same person, the money transmitting is never happening. It is just a deposit of funds on a US company, period.
The exchange and transmitting is happening only in Japan.

The DHS should eat it.

As was states... This has almost nothing to do with BTC, so whether it is considered currency or commodity doesn't really matter.

The account was used purely to transmit customer funds from one account (dwolla) to another (MtGox) and vice versa.  The account was probably setup specifically to handle dwolla transfers and had to be stateside... thus the US regulation.

I would guess he set up the account quickly while they were smaller, either not knowing what he was doing or thinking the account would be too small to get attention.... Then he/gox just plum forgot.  Either that or they are idiots like everyone says... which wouldn't surprise me.

No, they don't send the money to MtGox, because Mutum Sigillum IS MtGox.
From Mutum Sigillum's account they didn't have to transfer it anywhere but to their bank account in Wells Fargo.
And it has everything to do with BTC, you fail to understand what's going on between the lines.

No, you see, here's how it works:
I send dollars to Dwolla, via my bank account.
They send dollars to Mutum Sigillum.
Mutum Sigillum sends those dollars to MtGox.
MtGox deposits those dollars in my account.

I've bolded where Mark fucked up. Mutum Sigillum sends dollars overseas per the request of it's customers (MtGox, and myself). Hey, guess what? That makes them a money transmitter.

That bolded step simply doesn't exist.
It is actually like this:
I send dollars to Dwolla, via my bank account.
They send dollars to Mutum Sigillum's Dwolla account.
MtGox uses Dwolla's API to automatically check the deposit and then it shows credited in your MtGox account.

You withdraw money from MtGox through Dwolla.
MtGox uses the API again to program a withdrawal from Mutum Sigillum to your Dwolla account.

There is no such thing as "sending money from mutum sigillum to mtgox", mutum sigillum IS mtgox.
All the actual fiat money ends up in Mutum Sigillum only and never leaves the US.

[myrkul]

No, they don't send the money to MtGox, because Mutum Sigillum IS MtGox.

Technically, no.
MtGox is Tibanne Ltd.
Mutum Sigillum is a US-based subsidiary.

[bitsalame]

No, they don't send the money to MtGox, because Mutum Sigillum IS MtGox.

Technically, no.
MtGox is Tibanne Ltd.
Mutum Sigillum is a US-based subsidiary.

Exactly, but you missed my point.
I was trying to explain what is going on in practice.
Mutum Sigillum was solely incorporated to have a legal presence in the US to process MtGox's Dwolla processing, and it fully belongs to Mark. And because it is a separate entity ON PAPER (as you pointed it out) it doesn't really fit DHS' accusations, and technically Mark didn't fill out the forms incorrectly.

Mutum Sigillum is not transmitting money, it is collecting payments only.
The money transmitter and exchange is Tibanne, and it is in Japan.

[Razick]

I would expect a large price crash, but the death of Bitcoin? No.

[myrkul]

Mutum Sigillum is not transmitting money, it is collecting payments only.

Nope, when it sends the money to Tibane LTD's Wells Fargo account, they are transmitting money. It doesn't matter if it's all Mark. The paper is all that matters.