Silk Road forums

Discussion => Security => Topic started by: astor on May 14, 2013, 09:11 pm

Title: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: astor on May 14, 2013, 09:11 pm
Another bitcoin purchasing method bites the dust:

https://bitcointalk.org/index.php?topic=205396.0

I know most people here don't use the Dwolla -> MtGox method, but I'm sure some people did. You should be aware that there's a very good chance that some or all of the transactions via that method are now being investigated.


Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: Jack N Hoff on May 14, 2013, 09:16 pm
Very very curious I am.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: Squirrel on May 14, 2013, 09:19 pm
As I posted in the other similar thread:

And so, the noose tightens around the cybercurrency Bitcoin.  Soon, it will be in the hands of those who control such things and it's anonymity will be gone.  Mark my words.  :(
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: SelfSovereignty on May 14, 2013, 09:26 pm
As I posted in the other similar thread:

And so, the noose tightens around the cybercurrency Bitcoin.  Soon, it will be in the hands of those who control such things and it's anonymity will be gone.  Mark my words.  :(

The government doesn't possess that power, fortunately.  They're able to freeze USD accounts, perform warrantless searches and wiretaps, assassinate American citizens (technically a citizen) on foreign soil without trial, ship off suspected terrorists to a legally neutral locale where they're held essentially without rights or due process of any sort indefinitely, take everything we own at will, kick our dogs, skin our cats, pillage our women and rape our fields -- and fuck us over in just about every other semi-conceivable way they can come up with.

But, they do not possess the power to take or freeze the bitcoins in your wallet.  They possess plenty of power to get you to GIVE them up... but it's difficult to control what you can't even access without the owner's assistance.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: CHROOT on May 14, 2013, 09:27 pm

And so, the noose tightens around the cybercurrency Bitcoin. 

It does seem like with each passing year the US government gets less and less comfortable with the existence of bitcoins.

I expect this sort of onslaught to continue, and if we ever get a Republican in the White House again, expect a full-on, fully-branded War on Bitcoin. For the good of the people of course.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: astor on May 14, 2013, 09:36 pm
The Dwolla -> MtGox method had the most stringent verification requirements of any bitcoin purchasing method. If it got shut down, what hope is there for the rest of them?
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: Candyman on May 14, 2013, 09:51 pm
what astor said is very much true, you have to be verified to use dwolla as a transfer method....really quite strange (seems that way to me at least) that they went after this payment option.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: CHROOT on May 14, 2013, 09:51 pm
The Dwolla -> MtGox method had the most stringent verification requirements of any bitcoin purchasing method. If it got shut down, what hope is there for the rest of them?

The only hope as I see it is probably a major ecommerce site like Amazon accepting bitcoins. That would renew major interest in dollar-based exchanges and force a change in thinking. Slim to no chance on that though :(
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: s1llyn355 on May 14, 2013, 09:57 pm
FinCen pursued both e-Gold and PayPal.
e-Gold was struck a mortal blow and is no more.
PayPal escaped by being bought by Ebay and doing exactly what finCen told them.
Which is why you have to bend over backwards in proving your identity to get a paypal account.

I expect something like that will happen to bitcoin... they'll threaten to shut down the exchanges unless the exchanges agree to onerous identity checks on their members.

The easiest tactic to avoid this...
..is to exit the USA bitcoin exchanges,
... perhaps try Intersango in Europe instead... or ones located in asia.

From the perspective of the exchanges themselves,
a prudent move might be to re-locate to countries where the USA has the least power:
China, Russia, Iran, Ecuador, ... possibly North Korea...
... perhaps even Israel. 

Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: xpat on May 14, 2013, 11:47 pm
Definitely appears to be the government's way of "outlawing" bitcoins. They don't have to make coins outright illegal themselves, but if they make it damn near impossible to impossible to get them, it's pretty close to the same thing. Similar way they've gone about making substances illegal. That or a ridiculous, unpayable tax
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: offbeatadam on May 15, 2013, 02:50 am
I don't know that I see this as an outright attack on bitcoins. MtGox hasn't had the greatest press recently with the CoinLab lawsuit. Add in that its a foreign company, I could see a few other potential avenues on behalf of the DHS to become a little interested in whats going on behind those curtains.

I'm still skeptical of exchanges that have birthed purely out of the bitcoin environment, which I suppose stems from my general distrust of the standard web lately. The exchanges are nice for their ability to do what was previously complicated... converting to usd. That being said, recently the G8s came to an agreement that tax evasion/tax haven usage needs to be unilaterally fought... I wouldn't be surprised if bitcoins get thought of as a haven too. Dwolla was a US based company yes? Could this have to do with that very concept? MtGox was Japanese, is it possible they figure some people were using Dwolla->MtGox as an avoidance tactic for income reporting?
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: CHROOT on May 15, 2013, 03:54 am
is it possible they figure some people were using Dwolla->MtGox as an avoidance tactic for income reporting?

Possibly, but the numbers are so small by government tax evasion standards that it's almost an accounting error. I mean, the entire bitcoin float is what, a billion dollars? Even if every bitcoin in existence was "hidden assets" it still amounts to less than some single individuals are hiding in offshore accounts.

I think the government is just making their plans known that they have a monopoly on the currency business and they're not ready to give that up just yet.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: Squirrel on May 15, 2013, 04:01 am
Quote
is it possible they figure some people were using Dwolla->MtGox as an avoidance tactic for income reporting?

There is no official press release about this as of about an hour ago.  Just the text of some guy's email and some BS response from a Dwolla rep telling anyone who wants to know anything to contact MtGox.  To me, the DHS involvement speaks to some type of paper trail (real or invented) to 'terrorism'.  What this really turns out to be is anyone's guess but they'll use that label as it works great to take away more of our rights.  the washing of currency through the various laundering mechanisms has always been a large priority with the american gov't.  They want their share and will get it one way or another.  The other issue at work here is the failed Coinlab venture.  Something stinks about that whole deal and when it fell through, it makes me believe that american intel was behind the venture to begin with.  When that didn't work, they resort to cutting off all american avenues to fund the market.  Since they couldn't get in, they'll keep everybody else (in america) out.  Am I stretching plausibility?  I don't think so.

Edit-now MtGox says they don't know what it's all about either:

TOKYO - JAPAN - Mai 15, 2013
      
      MtGox has read on the Internet that the United States Department of Homeland Security had a court order and/or warrant issued from the United States District Court in Maryland which it served upon the Dwolla mobile payment service with respect to accounts used for trading with MtGox. MtGox takes this information seriously. However, as of this time MtGox has not been provided with a copy of the court order and/or warrant and does not know its scope and/or the reasons for its issuance. MtGox is investigating and will provide further reports when additional information becomes known.
      
Regards
Mt.Gox Co. Ltd Team.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: pine on May 15, 2013, 05:17 am
Give me an O!

Gimme a T!

Get me a C

That's right!

OTC! OTC! OTC! Woot!

Now on with the game.

We'd like to thank our promotional sponsor, the Department of Homeland Security this year :)

"If You See Something, Say Something" :))
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: Chip Douglas on May 15, 2013, 08:18 am

And so, the noose tightens around the cybercurrency Bitcoin. 

It does seem like with each passing year the US government gets less and less comfortable with the existence of bitcoins.

I expect this sort of onslaught to continue, and if we ever get a Republican in the White House again, expect a full-on, fully-branded War on Bitcoin. For the good of the people of course.

Oh yeah, thank God we don't have a Republican in there. Are you serious?

This is happening under a Democrat in the White House. A Socialist Marxist Revolutionary to be more specific. Anti-Business, Anti-Capitalism, Anti-Entrepreneur, Anti-Freedom, Anti-Constitution, Anti-Liberty, Anti-Family, and basically Anti anything that made this country great.

Up until recently, the most secretive administration, in stark contrast to campaign promises about "transparency"

Finally the truth is coming out about this tyrannical administration.

1. Using the IRS to target political opponents, and members of any group that were against Obama and his ilk of leftist radicals, or even belonged to groups that were Conservative.

2. Illegal wiretapping of AP Journalists phones, not just their office phones, their cell phones, and home phones.
This one is really odd, because the AP has always been one of Obama's cheerleaders, and had lost all credibility as a trusted news source, joining the majority of previously respected news agencies in turning a blind eye to Obama's sordid past, and slamming anyone who dared to criticize him. Basically joining the ranks of the modern day Pravda our mainstream media has become.

3. Obama's Benghazi coverup, and blatant lies. In particular the one where he claims to have initially called it "an act of terrorism", when the whole coverup is about just that. How they tried to spin the Benghazi Embassy attack, and murder of a US Ambassador.

Just to see Obama lying on national television talking about "Getting to the bottom of this" and holding those responsible, accountable, etc etc.

How does the Godfather of the mafia, investigate the operations he presided over?

Hopefully there will be independent investigations, followed by hearings, and ultimately impeachment, and imprisonment of Barack Hussein Obama, Atty Gen Eric Holder, Janet Napolitano, Susan Rice, Samantha Brown, and the other enemies of America.

I'm finally feeling positive about the future, for the first time in over 5 years! - I actually have Hope for a real Change!  ;)

The best part of this, is that they pissed off the very press responsible for the metastases this administration has caused in the US.

Attacking the "Freedom of the Press"! - Watch the backlash! - It's happening right now! I just listened to an attorney for the AP on a live call in to the "Red Eye" radio show. Along with many other private citizens who have been harassed, even audited by the IRS, simply for making their Conservative views known.

Led the heads roll! ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D ;D 
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: NotACop on May 15, 2013, 09:47 am
Mtgox bank transfer.

If you're in europe it takes 2 days from when you click withdraw to when the funds reach your bank :) FUCKING AWESOME.

And only 1% fee. So 10$ off every 1000$ you transfer, not bad.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: Jack N Hoff on May 15, 2013, 11:44 am
Give me an O!

Gimme a T!

Get me a C

That's right!

OTC! OTC! OTC! Woot!

Now on with the game.

We'd like to thank our promotional sponsor, the Department of Homeland Security this year :)

"If You See Something, Say Something" :))

All the scammers from bitcointalk were also the highest rated people on OTC.  That said, OTC not for me, I don't like scammers you see.  The feedback is easily skewed and faked and the system is just broken.

Give me an S!
 Give me a  C!
 Give me a  A!
Give me an M!

What's that spell?  Bad news!
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: JumboMonkeyBiscuit on May 15, 2013, 12:27 pm
I have been following this story for about a week now. IMO there will not be an "official" per say press release. The G _ O _ V does not want us to know we are facing a bottleneck to the funds. There however are options as long as you don't need direct U _ S _ D to live. The G can not control the bit coin itself but they can control how their money interacts with it. New A - M - L being enforced by the F _ I _ N _ E_ C_ D_ is apart of what we are seeing here. Dwol is the first to feel the pressure any U _ S money backed banking institute is going to have the same issues. The new coin exchange based out of Atlanta (cant remember the name off hand) says right on the funding page Dwol funds are suspended for 30 days.

There are ways around it but it is going to cost more to get our money. FYI be careful how you type things about this subject your keywords can be found in google searches. do not think for one min they aren't watching what is said
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: PerPETualMOtion on May 15, 2013, 12:40 pm
Well, they got nothing on me.

$$--> Mt. Gox --> SR

Authorities: "You use SR?"

How did you come by that knowledge?

Authorities: "So you admit you use SR?"

No, I haven't admitted anything.

Authorities: "We have proof you use SR."

OK.

....

SR has many legitimate items for sale. If you get busted for simply USING SR, then the only problems you really have are possession and--if you use false IDs--maybe mail fraud. Realistically, THEY don't know what you ordered, unless THEY open your packages or have hacked TOR/SR. While this is unlikely, it is not impossible. You will find out in trial of the investigation techniques--and have the opportunity to make it public!!!

Anyway, the only real problem you have, besides possession of controlled substances (if you even do drugs... but who does, right?), is tax evasion. If you are self-reporting on profits, then there is no problem. Other than that, there are state sales taxes... which Amazon has avoided--and so can you, unless your state is anti-Amazon... which is unlikely since they contribute more political contributions than most political donors....

Enjoy.

Remember, it is not a crime to deny allegations or remain silent. You don't have to answer any questions--and responding to them can be very strong evidence AGAINST YOU in the court of law, as the investigators will likely be testifying.

SAY NOTHING. Remain calm--i.e. IGNORANT. This is the one time in your life when your stupidity will save you...

"Duh... what are you talking about?"

If they have evidence... maintain a blank stare... maybe a shoulder shrug... Remain SILENT.

Good luck.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: ronswanson77 on May 15, 2013, 01:02 pm
I've been using this system of getting coins for a little while.  Probably only about $1,500-$2,000 total spent though.  After I buy my coins from Mt Gox I always transfer them through an anonymous blockchain wallet and then through bitcoinfog before transferring them to SR.  I've always thought that was a sufficient buffer between my verified mtgox account and SR.  Now that is has happened of course I'm not feeling as sure....
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: astor on May 15, 2013, 02:05 pm
Give me an O!

Gimme a T!

Get me a C

That's right!

OTC! OTC! OTC! Woot!


Until they start doing stings to bust both buyers and sellers of BTC.

It wouldn't stop everyone, but it would have a chilling effect on that market.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: astor on May 15, 2013, 05:24 pm
Looks like this is part of a FinCEN violations investigation, which probably means the feds don't care about your drug purchases of a couple hundred bucks.

===================

http://arstechnica.com/tech-policy/2013/05/feds-reveal-the-search-warrant-that-seized-mt-gox-account/

Feds reveal the search warrant used to seize Mt. Gox account


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.

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:

Quote
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:

Quote
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.

We've reached out to Mark Karpeles and will update the story if we hear back.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: Jack N Hoff on May 15, 2013, 05:30 pm
Does this mean people with coins and/or USD on gox should be worried or should move them asap?
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: kmfkewm on May 15, 2013, 05:48 pm
FinCen pursued both e-Gold and PayPal.
e-Gold was struck a mortal blow and is no more.
PayPal escaped by being bought by Ebay and doing exactly what finCen told them.
Which is why you have to bend over backwards in proving your identity to get a paypal account.

I expect something like that will happen to bitcoin... they'll threaten to shut down the exchanges unless the exchanges agree to onerous identity checks on their members.

The easiest tactic to avoid this...
..is to exit the USA bitcoin exchanges,
... perhaps try Intersango in Europe instead... or ones located in asia.

From the perspective of the exchanges themselves,
a prudent move might be to re-locate to countries where the USA has the least power:
China, Russia, Iran, Ecuador, ... possibly North Korea...
... perhaps even Israel.

This is why Bitcoin absolutely must implement Zerocoin. Then you can send a DNA sample to get coins and it doesn't matter, because they are anonymized AFTER you get them, electronically, in such a way that no identity verification process is even possible. Then the only issue is having an excuse for having so much currency. With Zerocoin the anonymity of Bitcoin is essentially ensured, regardless of the verification steps required to get coins.

As far as hiding the fact that you are cashing in or cashing out a lot of money into Bitcoin, there need to be exchanges between people. I know a lot of vendors cash out Bitcoin simply by finding other vendors who they trust who need Bitcoin to buy drugs. So you sell $10,000 of LSD and get X bitcoin, then you sell them to one of your friends who wants to buy $10,000 of heroin, at 1:1 price for cash in the mail. This seems to be a very common way of cashing out, as it avoids exchange fees on both ends and hides the fact that you sold $10,000 worth of Bitcoins. Of course it has the disadvantage of needing to trust people, and needing to know people who want to buy large amounts of Bitcoin.

Customers who spend legitimate money, or who are only buying personal use amounts, they don't even need to worry about how much money they cash in or out. And for them they simply need to use Zerocoin to break the tie between their authenticated identity and the Bitcoins that they spend. 

Somebody should set up a general Bitcoin exchange site in Russia or somewhere. You get an account and advertise that you want to buy or sell Bitcoins and the amount you are willing to pay or accept.Then you are matched up with other people, and can carry out the deal for cash in the mail or something. Sort of like a Silk Road but for Bitcoins. Silk Road doesn't actually sell drugs, it just lets people who sell drugs get together and carry out their deals. Bitcoin needs a site like that, a site that doesn't actually buy or sell Bitcoins but lets people get together to carry out Bitcoin trades for CIM.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: polyphemusperception on May 15, 2013, 06:49 pm
MtGox is down as we speak :o
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: Jack N Hoff on May 15, 2013, 07:03 pm
MtGox is down as we speak :o

inb4 price lowers.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: PerPETualMOtion on May 15, 2013, 07:13 pm
MtGox is down as we speak :o

Confirmed.

Recommendation for the mean time: Bitinstant --> SR Acct...

I highly doubt that Japan is going to bend to US political pressures. After all, it is a currency that is more secure than any banking method known to man.

EDIT: Back online.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: astor on May 15, 2013, 07:18 pm
Re: OTC / localbitcoins.com, the FinCEN rules say that anyone who buys / sells more than $1000 in BTC a day is an MT/MSB and subject to their rules.

So I wouldn't trade more than that on the OTC market, as those are the people they are likely to set up stings against at some point.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: PerPETualMOtion on May 15, 2013, 07:20 pm
From The Register

Quote from: Jasper Hamill


The Department of Homeland Security has frozen an online trade route between US citizens and MtGox - the world's largest exchange of crypto-currency Bitcoin.

The move will be interpreted as an opening skirmish in a battle to control the electronic cash, which has exploded in popularity and so far avoided regulation by governments.

The feds confirmed an investigation is underway after it emerged a "seizure warrant" was filed against Dwolla, a US-only mobile payments service used by Bitcoin traders.

Netizens can exchange dollars and bitcoins on MtGox via a Dwolla account held by Mutum Sigillum LLC. The warrant against the Mutum account effectively halted transfers of money between the popular bitcoin exchange and Dwolla users.

Iowa startup Dwolla admitted yesterday it can no longer process cash payments to MtGox's intermediary Mutum Sigillum. Any cash awaiting transfer between Dwolla and bitcoin converter MtGox will be refunded.

This morning Mt Gox released this statement:

    Like many who have contacted us, MtGox has read on the Internet that the United States Department of Homeland Security had a court order and/or warrant issued from the United States District Court in Maryland which it served upon the Dwolla mobile payment service with respect to accounts used for trading with MtGox. We take this information seriously. However, as of this time we have not been provided with a copy of the court order and/or warrant, and do not know its scope and/or the reasons for its issuance. MtGox is investigating and will provide further reports when additional information becomes known.

Nicole Navas, a spokesperson for the US Immigration and Customs Enforcement (ICE) department, today told CNET: "In order not to compromise this ongoing investigation being conducted by ICE Homeland Security Investigations Baltimore, we cannot comment beyond the information in the warrant, which was filed in the District of Maryland earlier today."

The implications of this action are not yet clear, but it could indicate the beginning of a long battle to bring Bitcoin under the rule of US law. Just last week, America's Commodity Futures Trading Commission confirmed it was looking into Bitcoin and deciding whether regulating the e-cash was possible - or necessary.

In March, the US Treasury said any firms dealing in the virtual currency would be considered "money services businesses" just like any other, which means they must hand over transaction information to the government and work to prevent money laundering.

A denial-of-service attack on MtGox in April followed a spectacular crash in the currency's value which saw over $100 wiped off the value of each crypto-coin.

More than $1bn worth of Bitcoin is currently in circulation, with well over half of all transactions passing through MtGox. ®

From Business Insider
http://www.businessinsider.com/mt-gox-bitcoin-exchange-shut-down-2013-5
Quote from: Dylan Love

Ars Technica reports on the finer details of how the government was able to seize a bunch of cash from Mt. Gox, the world's largest Bitcoin exchange.

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.

By using a confidential informant to move Bitcoins through Mt. Gox to Dwolla, one of the most popular ways to turn the digital currency into physical currency, authorities were able to trace the money and find it to be a violation.

This is an interesting (and major) way for the government to acknowledge Bitcoin.

We reached out to Dwolla, but it was unable to provide us with any additional information.

Gawker has the full seizure warrant, which we've embedded below:

Read more: http://www.businessinsider.com/mt-gox-bitcoin-exchange-shut-down-2013-5#ixzz2TOIeAEMt
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: goblin on May 15, 2013, 07:33 pm

And so, the noose tightens around the cybercurrency Bitcoin. 

It does seem like with each passing year the US government gets less and less comfortable with the existence of bitcoins.

I expect this sort of onslaught to continue, and if we ever get a Republican in the White House again, expect a full-on, fully-branded War on Bitcoin. For the good of the people of course.
As if a demoCRAP is any better! Come on. You think Eric Holder, as dumb as a rock as he is, is a great defender of freedom? No, he's a fuckin holy terror. They will do anything, say anything, to make people think they're in the greatest country in the world (that's a laugh).

Fuck, these jokers from BOTH sides of the proverbial aisle are dismantling the constitution and the bill of rights, and whether you get to keep your precious bitcoins isn't the point, it's whether you will be able to buy bread and keep a roof over you and your family. (Here on in Guantanamo...)

goblin
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: astor on May 15, 2013, 07:34 pm
Somebody should set up a general Bitcoin exchange site in Russia or somewhere. You get an account and advertise that you want to buy or sell Bitcoins and the amount you are willing to pay or accept.Then you are matched up with other people, and can carry out the deal for cash in the mail or something.

Yeah, it's called localbitcoins.com and Freenode #bitcoin-otc.  :)

The most popular way to exchange on localbitcoins.com is personal meeting with cash, when you hand it over, the other guy has a computer and hits "send" on his bitcoin client to your address. However, there are people who will do cash in mail, MoneyPaks, all kinds of things.

What I fear is stings on those people, at least for large trades.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: astor on May 15, 2013, 07:37 pm
You know, it's entirely possible that MtGox will be shut down now for FinCEN violations. This would be devastating to the bitcoin market for a while, but from it's ashes many smaller, distributed exchanges could flourish, along with alternative F2F methods of getting bitcoins, which would be more robust to these kinds of shut downs.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: PerPETualMOtion on May 15, 2013, 07:37 pm
In Soviet Russia, bitcoins aren't for sale, but government jobs are.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: goblin on May 15, 2013, 07:42 pm
https://mtgox.com:

502 Bad Gateway
nginx/1.4.0
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: Veetano on May 15, 2013, 08:55 pm
Just think though, haven't you guys learned anything from prohibition over the years, it doesn't work. If there's something people want they will find a way to get it, period........... Just take the existence of SR for an example.....

Prohibition has never worked, and it never will, as long as their are people who want something. MtGox may not have dwolla but rest assured they will find other methods for people to use.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: CHROOT on May 15, 2013, 09:42 pm
You know, it's entirely possible that MtGox will be shut down now for FinCEN violations.

People say that because it's not an American company operating on American soil, they can't touch it. Those same people thought all the tax-haven-based online poker sites would be safe for the same reason. Then the US Gov shut them down and washed away an entire multi-billion dollar industry overnight. Not a single one was based in the United States.

It's like the ancient Greek saying, "Big countries do what they wish. Small countries accept what they must."
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: summer on May 15, 2013, 10:43 pm
This is why we need:
https://github.com/FellowTraveler/Open-Transactions#readme
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: astor on May 15, 2013, 10:46 pm
People say that because it's not an American company operating on American soil, they can't touch it. Those same people thought all the tax-haven-based online poker sites would be safe for the same reason. Then the US Gov shut them down and washed away an entire multi-billion dollar industry overnight. Not a single one was based in the United States.

Yep. I thought Karpeles was a US citizen. Maybe I'm wrong about that, but even if he isn't, he opened US bank accounts and broke US laws (according to FinCEN), which means he can be extradited.

If anything you do happens on American soil, even if you are never physically on American soil, you can be prosecuted by the US government. Do you think they would have gone as far as to seize the Dwolla account with potentially millions of dollars in it if they weren't planning to prosecute?

I think this is very bad for MtGox.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: pine on May 16, 2013, 01:27 am
We should welcome the collapse of the exchanges and practical criminalization of bitcoin.

In the short term, this shall hurt us. Nooblets shall dry up for a while.

In the long term this shall dramatically improve the situation because it will make BTC the Internets black market dollar. It shall improve people's tradecraft for a while and help develop a more robust eco-system which makes using sophisticated tradecraft less necessary (becuz monies).

Once systems like Zerocoin and Open transactions are fully formed a firm foundation shall be laid down for the coming industrial revolution.

People buying direct from exchanges and sending money to SR were being idiots anyway. And people selling to exchanges...! Don't get me started.

Like I've said before, growing too fast is as much as threat to the black market as growing too slowly.

Closures of exchanges: bad for freedom, good for us. It's not like we were the ones lobbying the US government to close them after all.

Also, that ICE is involved is a very obvious sign this is all about SR and controlling markets.

--

To Bitcoin people:

You guys had better get your shit together re: anonymity, because once the government takes a byte, it tends to keep coming. I hope you were treating your bitcoin talk accounts as cautiously as you would SR ones, because otherwise you guys need to get your house in order pronto. i.e. if you are a miner or exchange, you had better get ready for &v or a program of intimidation. Some of you are good with tradecraft but others are too relaxed. You can't depend on the government to make sense.

I know a lot of BTC people don't like SR, but the fact is that the Darknet and cryptocurrency are inextricably linked whatever you do. This isn't logical or fair on some levels, but it is the perspective of the guy with the hammer you need to be worrying about. Nobody on SR is a threat to your physical safety, but you guys are taking the risk of getting the E-Gold guest of the state experience deluxe unless you're anonymous.

tldr; Take a leaf out of Satoshi's book. He was a smart fellow, no?
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: fantastiqfox on May 16, 2013, 05:32 am
sub
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: Baraka on May 16, 2013, 09:45 am
Completely right. I've long thought that Mt. Gox is a ripe, irresistible target for governments and banks to take down. Bitcoin is a completely decentralized, distributed currency and protocol. Yet, 80% of all Bitcoin trades are placed on Mt. Gox. Can anyone say "paradox"?

For Bitcoin's long term survival, Mt. Gox needs to fail and be replaced by the small, distributed changes in multiple jurisdictions that astor mentions below. Because if people put all their BTC eggs in the Mt. Gox basket, they'll soon find out how quickly they can all be crushed by the iron hand of government. Remember, government can only take, redistribute, or destroy. It cannot create. Over the next few months, that will be clear to all who believe that Bitcoin will be somehow be accepted by a government somewhere.

You know, it's entirely possible that MtGox will be shut down now for FinCEN violations. This would be devastating to the bitcoin market for a while, but from it's ashes many smaller, distributed exchanges could flourish, along with alternative F2F methods of getting bitcoins, which would be more robust to these kinds of shut downs.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: PerPETualMOtion on May 16, 2013, 12:39 pm
Completely right. I've long thought that Mt. Gox is a ripe, irresistible target for governments and banks to take down. Bitcoin is a completely decentralized, distributed currency and protocol. Yet, 80% of all Bitcoin trades are placed on Mt. Gox. Can anyone say "paradox"?

For Bitcoin's long term survival, Mt. Gox needs to fail and be replaced by the small, distributed changes in multiple jurisdictions that astor mentions below. Because if people put all their BTC eggs in the Mt. Gox basket, they'll soon find out how quickly they can all be crushed by the iron hand of government. Remember, government can only take, redistribute, or destroy. It cannot create. Over the next few months, that will be clear to all who believe that Bitcoin will be somehow be accepted by a government somewhere.

You know, it's entirely possible that MtGox will be shut down now for FinCEN violations. This would be devastating to the bitcoin market for a while, but from it's ashes many smaller, distributed exchanges could flourish, along with alternative F2F methods of getting bitcoins, which would be more robust to these kinds of shut downs.

There's too much money and too much security tied up in BTC. It's not going anywhere. Computer and IT professionals now have the upper hand and can choose to serve corporations and governments and corporate-governments--or they can choose to protect privacy and freedom.

Long live Dread Pirate Roberts.

Quote from: Silk Road Charter

Silk Road is a global enterprise whose purpose is to empower people to live as free individuals. We provide systems and platforms that allow our customers to defend their basic human rights and pursue their own ends, provided those ends do not infringe on the rights of others.

Our mission is to have voluntary interaction between individuals be the foundation of human civilization.

We conduct ourselves and our enterprise from the following fundamental values that are at the heart of who we are:

Self-ownership
Individuals own their bodies, thoughts and will. Anything they create with their property or obtain without coercion is also theirs.

Responsibility
People are responsible for their actions. If one infringes on another's rights, they should be held accountable.

Equality
Property rights apply to all individuals equally, without exception.

Integrity
Honoring one's word as one's self. Word, thought, and action are aligned.

Virtue
Striving to improve one's self and the lives of others in all actions. To create value.

We promise to be true to our purpose, to accomplish our mission, to operate consistent with our values, and to run our enterprise in service of our customers.

This is who we are.

This is what you can count on.
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: Mister7102 on May 30, 2013, 07:10 pm
Is it a general consensus that anyone who used this method will/could be subject to their door getting kicked in by ICE?
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: Jack N Hoff on May 30, 2013, 07:36 pm
Is it a general consensus that anyone who used this method will/could be subject to their door getting kicked in by ICE?

LOL!  no, what the fuck made you think that!?  Never heard of egold or Liberty Dollar?  The same thing happened with them...  People lost the funds in their accounts. ::)
Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: workforit69 on May 31, 2013, 03:16 am

after doing some reading and thinking on this i came to the conclusion that this is entirely a FinCEN violations investigation on mt.gox and is being used as a way for the govt a put a little choke hold on the btc market wherever it can. if it were anything bigger then why is cambx.com, another smaller btc exchange still accepting and doing business directly through dwolala still ? guess these guys had the foresight to file the proper paperwork unlike the fools at mt.gox.0

so for those that still want to use the dwolla  -> exchange -> sr route open an account. only slight negative is that you have to wait 30 days after your first deposit into campbx before being able to do real time withdrawals. since this is just a one time thing it's not all that bad - i opened an acct. and deposited a dollar into campx from dwolla so it will be up and running when i need it.

so after all this i felt a sigh of relief. unfortunately though this did not last because i thought of way they can be using this seizure on a bank technicality to go after sr users. now that they have some names they can just break the list down by which po the possible buyer gets his mail through and have their mail scrutinized especially hard.

Title: Re: MtGox's Dwolla account frozen by Dept of Homeland Security
Post by: offbeatadam on June 04, 2013, 04:45 am

after doing some reading and thinking on this i came to the conclusion that this is entirely a FinCEN violations investigation on mt.gox and is being used as a way for the govt a put a little choke hold on the btc market wherever it can. if it were anything bigger then why is cambx.com, another smaller btc exchange still accepting and doing business directly through dwolala still ? guess these guys had the foresight to file the proper paperwork unlike the fools at mt.gox.0

so for those that still want to use the dwolla  -> exchange -> sr route open an account. only slight negative is that you have to wait 30 days after your first deposit into campbx before being able to do real time withdrawals. since this is just a one time thing it's not all that bad - i opened an acct. and deposited a dollar into campx from dwolla so it will be up and running when i need it.

so after all this i felt a sigh of relief. unfortunately though this did not last because i thought of way they can be using this seizure on a bank technicality to go after sr users. now that they have some names they can just break the list down by which po the possible buyer gets his mail through and have their mail scrutinized especially hard.

mtgox had US accounts and was doing business there. It doesn't take a conspiracy theory to think about the reprecussions of this. This attack does not harm bitcoin at all, except for people that started behaving like bitcoin required these exchanges to exist. They don't. This attack on mtgox was based on its US dollars - NOT its bitcoin holdings. You can't hold bitcoins in a US bank account. While it is not particularly hard to "seize" bitcoins that are potentially stored on servers, as far as I can see, this was not the case. If this were the case, mtgox would have stopped operating completely by now. mtgox is not a US company, its a japanese company, and as far as I could tell their operations are all IN japan. To a certain degree, the value of mtgox dropped BECAUSE their US bank accounts now hold zero value - and the US accounts for a reasonable portion of their trading value. If they can't serve their purpose for USD<->BTC conversions, then the US traders won't use them. Simple as that.

I don't think its good to drive misconceptions into this. The US is after money - not after the illicit purposes BTC can "possibly" be used for. BTC is equally used for legal purposes now - and a reasonably large portion of its value is derived from the legitimate deals that are being done THROUGH bitcoin transactions. It is entirely possible that mtgox value dropping could in turn devalue BTC some, but that would have already happened. The BTC market is too easily volatile still, it wouldn't weather it this long.

The US, and the international partners that went after LR, made it no secret that they did so to cut off illicit laundering. If mtgox was a target for this purpose, they would have not hesitated in the least to do the same. Publicity for the "war on drugs" is the only thing left that keeps it valuable in the public eye. The rest is the smoke & mirrors they have by financing themselves through seizures.

That being said, by moving to another exchange, you are just setting yourself up for the same issue. Once an exchange gets large enough, if they are not abiding by SEC regulations for trading practices, which includes appropriate vetting of customer information and validation of individual legality as well as retained information pertaining to the trader, then they WILL be investigated. Thats all there is to it. This is not the first exchange to have this happen, and EVERY other exchange that has been "raided" like this has had to implement the SAME features. This is SEC securities law, and it has to be done everywhere from E*Trade to TD Ameritrade. Thats it.