US goverment attacks bitcoin

[maxime_vhw]

Source: http://pandodaily.com/2013/05/15/us-authorities-launch-their-first-attack-on-bitcoin/

 

 

Yesterday the Department of Homeland Security served the Dwolla mobile payment service with a court order requiring it to immediately cease all account activities with the Mt. Gox bitcoin exchange. Today it appears that Mt. Gox, based in Japan, has been cut off from Internet. If you try to get tohttp://mtgox.com you get a “502 Bad Gateway” message or a blank screen. It may be a coordinated effort among governments as people from Holland, Israel, the United Kingdom, Italy, India, Canada, Egypt, Brazil, Australia, and elsewhere report the same lack of access to the site.

In the warrant (Ars Technica has posted it) Mt. Gox’s subsidiary “Mutum Sigillum LLC,” which is incorporated in Delaware, set up an account at Wells Fargo under the name of Mt. Gox’s founder, Mark Karpeles. According to the warrant, when Karpeles, or someone acting on his behalf, filled out the required paperwork he answered “no” to at least two key questions:  ”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)?”

It was only a matter of time before the US government took action against bitcoin, the completely digital, crypto-based currency that offers its users far greater anonymity in transactions. A completely decentralized currency that’s minted – or in bitcoin parlance “mined” – by its users outside the reach of US regulators, and nearly impossible for law enforcement to track, was bound to ruffle feathers in Washington. In fact, it already had.

If history is any guide, the government will act aggressively against Karpeles. In 2007, prosecutors shut down e-Gold, which had created a currency redeemable for gold. It based its case on the fact that users didn’t need to produce identification – transactions were anonymous. e-Gold, the government argued, was abetting money laundering and child pornography. The site’s owners were convicted of operating an unlicensed money-transmitting business. The business shut down, and the CEO was sentenced to house arrest.

Then there was Bernard von Nothaus, the “monetary architect” of the “Liberty Dollar.” His currency’s value was derived from precious metals, and he managed to inject some $60 million worth of Liberty Dollars into circulation before the government put the kibosh on him. There was a lot of heated rhetoric: A government prosecutor accused him of “domestic terrorism.” After the trial – von Nothaus was found guilty – the FBI pointed out, “It is a violation of federal law for individuals…to create private coin or currency systems to compete with the official coinage and currency of the United States.”

This is correct. There is a law on the books, 18 U.S.C. § 1960: Prohibition of unlicensed money transmitting businesses. It states: “Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both.” It defines “money transmitting business” in the broadest terms, as any business that transfers funds on behalf of the public, “affects interstate or foreign commerce in any manner or degree” and “is operated without a license.”

Proponents of bitcoin have long claimed that because of the decentralized nature of bitcoin, which is disseminated peer-to-peer with no central authority, the authorities would have trouble stamping it out, since the exchanges are largely located overseas. But law enforcement can prevent Internet users from accessing the exchanges just like US authorities did with online gambling sites more than a decade ago by simply by targeting the Internet service providers.

There is no word on the fate of Mt. Gox founder, Mark Karpeles. His blog is still up, with the last post dated May 8. We have reached out to him and will let you know if we hear anything.

[joelthezombie15]

the mt.gox link worked for me. and im in the U.S

 

it actually seemed like the gov. was actually doing what was right for once. i dont think bitcoin is bad but it seemed like they made some mistakes and they need to fix it. maybe im wrong but thats what it seemed like to me.

[everything count to life]

Works for me and I'm in Australia

[Godlygamer23]

Personally, I find bitcoin mining a waste of time.

[Jozi]

Works in Finland too.

[Rhotis]

the mt.gox link worked for me. and im in the U.S

 

it actually seemed like the gov. was actually doing what was right for once. i dont think bitcoin is bad but it seemed like they made some mistakes and they need to fix it. maybe im wrong but thats what it seemed like to me.

 

Yep they screwed up on their paperwork.  If you are going to act as a currency exchange and trading system you gotta do it properly.  Im sure everything will get settled if it is not already settled.  

[tabuburn]

Bitcoin is another bubble waiting to pop for me. Anyone remembers AIG?

[Lukiose]

Lucky i have and don't plan to have anything to do with bitcoins, online currency is risky stuff

[afa7336]

Personally, I find bitcoin mining a waste of time.

 

Back in the day it wasn't, but the nature of bitcoin, while cool just won't be around forever. It will go bust. I've actually had long talks with people who have Accounting Degrees and they all said the same thing. It can't last, and soon we will run to the point that to mine for bitcoins you'll just break even when factoring in parts + bills + time.

[pants18]

I made about $1850 in bitcoin from buying when they were about 50 bucks a piece. I'm very skeptical as to whether I should get back into it or not with rumors of government regulation flying around.

[ajoy39]

Bitcoin is another bubble waiting to pop for me. Anyone remembers AIG?

AIG was a billion times more stable than bitcoin too.

 

Also, great attention grabbing title but it's hardly true. This isn't an attack on bitcoin, it's an attack on an exchange. If the government shut down an illegal money changing house that did dollars to euros, you wouldn't say they were attacking the Euro or the dollar would you?

[IdeaStormer]

Better off trading merchandise for merchandise or services, or vice versa or a combo of, the real old fashion way, no paper transaction, of course has to be done in person. Everything else is pretty much illegal, no matter how much spinning you may do, it will still be illegal if you're under cutting the government, don't kid yourselves.