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The Feds Just Seized Funds from the Largest Bitcoin Exchange

The US government has shutdown a key source of dollar funding for MtGox, the largest bitcoin exchange. We can only assume that the US believes some sort of crime is being committed.

by ALEC LIU
May 15 2013, 8:21pm

The US government has shutdown a key source of dollar funding for MtGox, the largest bitcoin exchange.

Dwolla, a PayPal clone popular among bitcoin users, confirmed that the online payment network had received a seizure warrant from the Department of Homeland Security.

"The Department of Homeland Security and US District Court for the District of Maryland issued a Seizure Warrant for the funds associated with Mutum Sigillum’s Dwolla account (a.k.a. Mt. Gox)," a Dwolla spokesperson told BetaBeat. "Dwolla has ceased all account activities... for Mutum Sigillum while Dwolla’s holding partner transferred Mutum Sigillum’s balance, per the warrant."

Dwolla didn't say why the seizure happened. MtGox seems to be even more in the dark.

“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,” the company stated in a post on Facebook.

In other words, they have no idea what’s going on. “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.”

We can only assume that the US believes some sort of crime is being committed.

This fresh development comes two weeks after CoinLab, another bitcoin exchange, sued MtGox for $75 million over a breached partnership agreement announced just three months ago. According to the contract, MtGox was supposed to transition all North American customers onto CoinLab’s systems by March 22, a deadline the company missed. CoinLab founder Peter Vessenes, who is also the executive chairman and treasurer of the Bitcoin Foundation, defended the suit in a company statement.

Read the rest over at the new Motherboard.VICE.com.

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