August 25, 2013
Things keep looking worse for Mt. Gox, by far the largest company in the nearly four-year-old economy that has sprung up around the virtual currency Bitcoin. Back in May, federal agents seized $2.1 million from the company’s account with payments processor Dwolla. According to court documents uncovered by the Bitcoin-focused blog The Genesis Block, that wasn’t all. The government took an additional $2.9 million at the same time from Mt. Gox’s Wells Fargo account, including $50,000 from CEO Mark Karpeles’s personal account. That brings the known total of frozen funds to more than $5 million.
The government seized the money after a judge found probable cause to suspect that Mt. Gox was engaged in money transmitting without a license. The seizure sets a clear precedent for Bitcoin businesses that want to operate in the US; just because the money is virtual doesn’t mean it’s above the law.
JUST BECAUSE THE MONEY IS VIRTUAL DOESN’T MEAN IT’S ABOVE THE LAW
In June, Mt. Gox stopped letting users withdraw funds in US dollars, saying it had to deploy some technical changes that would speed up transactions. It now seems more likely that the company was just tapped out after the government raid and wanted to stall customers. Withdrawals from Mt. Gox are still reportedly slow, suggesting that the company is still recovering from the hit. Representatives from Mt. Gox did not immediately respond to a request for comment.
This article was posted: Sunday, August 25, 2013 at 7:36 am