U.S. freezes accounts of world's leading Bitcoin exchange

[Butifldrm]

WASHINGTON • Federal officials have seized funds belonging to a website that serves as an exchange for the virtual currency Bitcoin, marking the first time the government has moved against the controversial online money system.

Immigration and Customs Enforcement confirmed that it had frozen the accounts of Mt.Gox, the world's leading Bitcoin exchange. Many people use Dwolla, a PayPal-like payment network, to send dollars to their Mt.Gox accounts. They then use those dollars to buy Bitcoins.

On Tuesday, Dwolla announced that it had frozen Mt.Gox's account based on a warrant issued by a federal judge in Baltimore.

Washington has been rumbling about the digital currency since it broke into mainstream attention in 2011, when the website Gawker explained how to use it to buy drugs.

In the wake of that story, Sen. Charles Schumer, D-N.Y., described Bitcoin as an "online form of money laundering" and called for the authorities to shutter the Bitcoin-based drug market Silk Road. Yet until recently, the federal government has taken a relatively hands-off posture. Agencies have issued guidelines and signaled that they are monitoring the situation, but none had taken active steps to force Bitcoin intermediaries to comply with federal regulations.

A new wave of attention has focused on the currency as its value has soared in recent months. One Bitcoin is currently worth about $110, up from $13.50 at the start of the year.

Federal law requires organizations that provide money transmission services to register with the Treasury Department's Financial Crimes Enforcement Network. In March, FinCEN issued guidance classifying Bitcoin exchanges as money transmitters. But according to a warrant sought by ICE and approved Tuesday, Mt.Gox had failed to register as the law requires, subjecting its funds to forfeiture.

Advocates tout the currency's potential to resist government surveillance and censorship. They point to the example of WikiLeaks, the whistleblower website whose access to funds dried up after the federal government applied informal pressure to intermediaries such as PayPal to cut off payments.

The Bitcoin network is fully decentralized, so there is no one with the ability to monitor the network and block illicit transactions. If WikiLeaks had funded itself through the Bitcoin network, the government would not have had such an easy time freezing its funds.

Supporters say that feature is a plus for people concerned with press freedom, but it looks more like a bug for government officials charged with enforcing the nation's drug, gambling, counterterrorism and money laundering laws.

The government relies heavily on financial institutions to help them monitor their customers' financial activities and flag or block potentially illegal transactions. The lack of intermediaries makes Bitcoin an attractive technology for those who want to evade government scrutiny, which has drawn the attention of federal authorities.

Jerry Brito, a scholar at the libertarian Mercatus Center at George Mason University, said federal regulators should not lose sight of the positive aspects of the technology. "Bitcoin has the potential to be a boon to the economy and a boon to merchants," he said, adding that it could "disrupt traditional payment networks that have not been innovative for a very long time," reducing the costs of financial services.

In his view, the federal government would have as much difficulty shutting down the Bitcoin network as major content companies have had in shutting down peer-to-peer file sharing. A major crackdown would merely drive the network underground, where it would continue to be used for illicit transactions but would be off-limits to ordinary consumers, he said.

Brito, a Bitcoin enthusiast, said he worried that this week's enforcement action could turn out to be the first step in a broader Bitcoin crackdown. "I hate to say it, but the Bitcoin community needs to start lobbying," he said. "It needs to start educating policymakers, lobbyists and influencers about the pros of Bitcoin and the impossibility or the difficulty in getting rid of all the bad uses."

http://www.stltoday.com/business/local/u-s-freezes-accounts-of-world-s-leading-bitcoin-exchange/article_cd5a4356-9724-541b-b129-d18aedb421ca.html

[blaineage]

"The Bitcoin network is fully decentralized, so there is no one with the ability to monitor the network and block illicit transactions. If WikiLeaks had funded itself through the Bitcoin network, the government would not have had such an easy time freezing its funds."

So I guess everyone is guilty until proven innocent!!!

[TBomb]

One world currency regulations coming, IMO

 

One world health care (all the same rules and regs)

 

One world judicial system coming too (In French legal system; you are guilty until proven innocent - they have jails full of potentially innocent people, who've been waiting for years just to get before a judge). I have a French friend who is a judicial expert writing a book on this.

 

Scary stuff.

 

Thanks Butiful!