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DHS Shuts Down Dwolla Payments To and From Mt. Gox 302

Posted by Soulskill
from the plot-thickens dept.
An anonymous reader sends this excerpt from BetaBeat: "The Department of Homeland Security appears to have shut down the ability to use Dwolla, a mobile payment service, to withdraw and deposit money into Mt. Gox, a Bitcoin trading platform. ... A representative for Dwolla told Betabeat that the company is 'not party' to this matter and encourages those with questions to reach out to Mt. Gox or the DHS. 'The Department of Homeland Security and U.S. District Court for the District of Maryland issued a 'Seizure Warrant' for the funds associated with Mutum Sigillium's Dwolla account (a.k.a. Mt. Gox),' he said. 'In light of the court order, procured by the Department of Homeland Security, Dwolla has ceased all account activities associated with Dwolla services for Mutum Sigillum while Dwolla's holding partner transferred Mutum Sigillium's balance, per the warrant.'"
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DHS Shuts Down Dwolla Payments To and From Mt. Gox

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  • It's started... (Score:5, Insightful)

    by curunir (98273) * on Tuesday May 14, 2013 @06:30PM (#43726003) Homepage Journal

    The government finally decided to care and used the one achilles heel of BitCoin...conversion to and from dollars. If BitCoin had some innate value, it wouldn't be a problem, but since it's primary use is as an exchange currency for dodging taxes and selling goods on the black market, this change is going to seriously impact the value of the currency.The government can't control BitCoin, but it can control US financial institutions and other companies that need to interact with those financial institutions.

    We'll now see how well the BitCoin market can operate as a completely stand-alone entity.

    • Re:It's started... (Score:5, Informative)

      by M0j0_j0j0 (1250800) on Tuesday May 14, 2013 @06:36PM (#43726077)

      Flash-news for you, there are other currencies apart from the $$....

      • by gatfirls (1315141)
        Yes, all of those other currencies the exchanges trade at in the .01% range.
    • I think you're giving them too much credit. The DHS, like the TSA, is a very stimulus-driven organism. More likely they discovered some suspicious activity was utilizing Dwolla with Bitcoin, and decided to break the link between the two. The intelligence community in the US generally avoids bad PR as long as possible.
      • I think you're giving them too much credit. The DHS, like the TSA, is a very stimulus-driven organism. More likely they discovered some suspicious activity was utilizing Dwolla with Bitcoin, and decided to break the link between the two. The intelligence community in the US generally avoids bad PR as long as possible.

        Which is why the TSA is so beloved of us all, and why none of us cheered when Yukari Mihamae groped the TSA agent back...

        http://www.huffingtonpost.com/2011/07/17/yukari-mihamae-61yearold-_n_900969.html [huffingtonpost.com]

        The only real surprise in that case is that you can't buy T-shirts with her face on it.

        • by Samantha Wright (1324923) on Tuesday May 14, 2013 @09:51PM (#43727653) Homepage Journal

          All anyone needs to know:

          I've often wondered why TSA seems so unresponsive to the American public, and this book offered me a plausible explanation. Hawley seems to view TSA almost exclusively as a weapon in the US war against Al Qaeda. When TSA implements policies that seem crazy or ineffective to the rest of us, it doesn't use outside opinions to judge the effectiveness of its policies. Instead it uses information gathered from the intelligence community unavailable to outsiders. A policy change is considered effective if Al Qaeda reacts in a desirable way. For example, if a TSA operation deploys VIPR teams at public transportation centers and suspected Al Qaeda operatives leave the US afterwards, the operation is considered successful.

          (From here [slashdot.org].)

          Which, really, is despicable and absurd all on its own.

          But it does lend a lot of strength to the theory that all strange law enforcement actions of agencies created by or in the spirit of the PATRIOT Act are actually direct responses to some form of undesired activity.

      • Re:It's started... (Score:5, Insightful)

        by philip.paradis (2580427) on Wednesday May 15, 2013 @05:25AM (#43729705)

        Referring to the DHS as a legitimate member of the intelligence community is beyond laughable. They're effectively a domestic secret police outfit that operates at the behest of the executive branch, and they can't seem to get most of that right, let alone serious intelligence work. The CIA, NSA, and FBI comprise the effective intelligence apparatus of the United States, and with any luck DHS activities will be severely curtailed in coming years. Incidentally, the TSA is a child agency of the DHS.

    • Re:It's started... (Score:5, Insightful)

      by fredprado (2569351) on Tuesday May 14, 2013 @06:45PM (#43726191)
      No modern currency has innate value.
      • Re:It's started... (Score:4, Insightful)

        by LordLimecat (1103839) on Tuesday May 14, 2013 @06:56PM (#43726329)

        Neither does gold, by that logic.

        • Re:It's started... (Score:5, Informative)

          by fredprado (2569351) on Tuesday May 14, 2013 @07:11PM (#43726499)
          Gold has some innate value in the sense that it can be used directly to build stuff. It is just a much lesser value than its current market value at the moment. Fiat currencies have absolute no innate value.
          • Even that "innate value" is only value because of the uses we apply to it. It is not an intrinsic property to the gold itself.

            More practically, the "innate value" you describe is very low, and comprises a teeny percentage of the gold we mine and stockpile.

            • Any value comes from the use we apply to stuff. "Innate value" comes from the value something has on its own, without some external source adding value to it. Gold does have innate value because it would still be required to create many things even if all governments in the planet ceased to be tomorrow. The money in your bank account does not. If you have some cash it may still be used to make a good fire and warm your feet, though.

              That said, yes, gold current value comes more from it being used as a cur
            • Re:It's started... (Score:5, Insightful)

              by Dunbal (464142) * on Tuesday May 14, 2013 @08:36PM (#43727205)
              It's rare. It doesn't rust. It barely reacts with anything at all. It's highly malleable. It's ductile. It conducts electricity. It has plenty of desirable properties. The fact that it's a rare metal that will never corrode makes it perfect as a store of wealth. You can argue all you want with thousands of years of human history. You're still wrong.
          • It's always been funny to me, I find it silly that Humans all but worship Element 79, other Metals and Paper. The only value any of it has, is the value given to it by feeble Human minds.

            • by Jeremi (14640)

              The only value any of it has, is the value given to it by feeble Human minds.

              Well yeah, but that's the value that matters. The whole point of currency is that you can trade it for goods and services from... humans (including their feeble minds).

            • So so silly, it's a pretty good element.

              It's a good conductor of electricity and heat
              It's easy to work with.
              It's non-toxic.
              It plays nice with other elements.
              Its very "non-reactive" only certian acids will dissolve it.

              It's used in industry, electronics, food and medicine.

          • by geekoid (135745)

            BY you're logic sand should be the currency.
            not that I am surprised to see yet another person on /. not know jack about currency:

            Fiat money is money that derives its value from government regulation or law. SO it has value, even innate value.

            Innate is not the word you want. 'intrinsic value' is what you are looking for; look up intrinsic Value theory.

            When talking economic, value USUALLY means An amount, as of goods, services, or money, considered to be a fair and suitable.
            SO fiat money has value, by defini

            • Innate value is intrinsic value. In this context innate and intrinsic are synonyms. And no, I haven't said anything that would imply sand or anything else (including dollars) should or should not be currencies. Sand does have innate value though, albeit low, differently from dollars.

              Fiat money does have value, and again, nowhere I said or implied it does not, but it has no innate value, in the very same way bitcoins do not.
          • Re: (Score:2, Funny)

            by Anonymous Coward

            " Fiat currencies have absolute no innate value."
            Nonsense. If you choose small Italian cars as your unit of currency, they can always be driven, (providing value) no matter how much you've devalued them.

          • by jwdb (526327)

            Gold has some innate value in the sense that it can be used directly to build stuff.

            Yes, and paper money can be used to do origami, and pennies can be used as floor tiles. It just happens that we currently value gold-based jewelry and electronics more than origami, but I don't assume this will necessarily always be the case.

            Anything can be used for something if you're creative enough.

        • by Dunbal (464142) *
          Right. So if you see a gold nugget or a piece of gold jewelry on the ground I expect you not to pick it up because it has no value.
          • by Teancum (67324)

            Right. So if you see a gold nugget or a piece of gold jewelry on the ground I expect you not to pick it up because it has no value.

            Here is a better analogy: If you could manufacture unlimited quantities of Gold with your handy replicator which rearranges atoms on the fly with transporter technology..... would you still be using gold or silver? This is assuming of course that the Mr. Fusion home reactor operating off of tap water also provides unlimited cheap energy to power the replicator.

            A society with such devices wouldn't give a damn about things like Euros, but gold and silver would still have some value. In fact, a gold nugget

          • Of course, but other people have already stated and demonstrated a willingness to accept gold as payment. It's quite circular to say that this is the origin of its value.

            What is more interesting are the conditions which led to the first gold-accepting person accepting gold (before which gold did not have "intrinsic" value.

      • Re:It's started... (Score:4, Insightful)

        by trout007 (975317) on Tuesday May 14, 2013 @06:59PM (#43726369)

        All value is subjective.

      • Funny Money (Score:5, Interesting)

        by M. Baranczak (726671) on Tuesday May 14, 2013 @07:25PM (#43726641)

        There's no such thing as innate value. Value is context-dependent. All money is funny money. It's just a question of what brand of humor you prefer.

        The US Dollar is like Jay Leno. Dull and unimaginative, but shows up for work on time every night.

        Bitcoin is like Richard Pryor. Offensive, unstable, unpredictable, implicated in tax-evasion, and prone to setting itself on fire.

        • There's no such thing as innate value. Value is context-dependent. All money is funny money. It's just a question of what brand of humor you prefer.

          The US Dollar is like Jay Leno. Dull and unimaginative, but shows up for work on time every night.

          Bitcoin is like Richard Pryor. Offensive, unstable, unpredictable, implicated in tax-evasion, and prone to setting itself on fire.

          So where does the "funny" bit come in for Bitcoin? Only I remember Richard Pryor actually making me laugh.

          Cheers,

        • Re: (Score:3, Funny)

          by fustakrakich (1673220)

          Bitcoin is like Richard Pryor. Offensive, unstable, unpredictable, implicated in tax-evasion, and prone to setting itself on fire.

          And dead?

        • There's no such thing as innate value. Value is context-dependent. All money is funny money. It's just a question of what brand of humor you prefer.

          So, basically you're saying it has inane value instead?

    • Re:It's started... (Score:4, Insightful)

      by pla (258480) on Tuesday May 14, 2013 @07:59PM (#43726899) Journal
      The government finally decided to care and used the one achilles heel of BitCoin...conversion to and from dollars.

      Why would you consider that an achilles' heel? Those of us using BitCoin use it because it blows the dollar away for convenience in certain types of transactions (by which I don't mean "drugs" - Tide Unscented remains the king there, followed by US cash). In particular, any movement of small amounts of money (in the $100 range) between countries typically takes upwards of 50% of the total in various fees (and that assumes 1st-world countries with more-or-less legitimate banking and postal systems on both ends of the transaction).

      So, for the reasons I would choose to denominate a given transaction in Bitcoins, the ability to convert it directly to USD has little to no value.


      We'll now see how well the BitCoin market can operate as a completely stand-alone entity.

      So far, the exchange rate (even if "exchange" may have just become a lot harder) hasn't even dipped outside the normal standard daily swings for USD:BTC. We'll see if the market panics tomorrow, but I wouldn't count on it. I don't use BitCoin because of its value in dollars, and neither, I suspect, do most of its (non-speculating) users.
  • by LordLimecat (1103839) on Tuesday May 14, 2013 @06:37PM (#43726093)

    A warrant from the district court of Maryland, does anyone know whether thats likely to be a state tax issue? If it were truly a federal concern, youd think the warrant would come from a federal court....

    Can any lawyers comment?

    • by SteveFoerster (136027) <{moc.retsreofevets} {ta} {evets}> on Tuesday May 14, 2013 @06:50PM (#43726263) Homepage

      I'm not a lawyer, but I used to work in a law library, and that's know enough to know that "U.S. District Court for the District of Maryland" is a federal court, not a state one.

    • by hedwards (940851)

      If it's a tax issue then DHS wouldn't likely be involved. That would likely be the IRS or DoJ, because anything that's likely to violate state tax laws is probably also going to violate federal tax laws as well. Most likely it would be people hiding taxable income.

      DHS would probably be involved because there's money being sent into and out of the country without it being properly reported to customs. ICE itself being a part of the DHS these days.

      • by gatfirls (1315141)
        You're probably right but DHS has their fingers in *everything* because, ya know, it's all part of the wildly ambiguous term "homeland security".
  • In fact, I think we need a new Department: DERP - Department of Earnings from Role Playing. Then we can finally shut down the other online currencies like WoW Gold that threaten the almighty buck!

  • by tocs (866673) on Tuesday May 14, 2013 @06:46PM (#43726205)
    I think maybe some one from DHS wanted to generate some bad publicity for bitcoins. Now they can buy some and make a little money.
    • by hedwards (940851)

      Well, why shouldn't they? It's not like BTC aren't already being exploited by pump and dump con artists.

    • by lucm (889690) on Tuesday May 14, 2013 @07:10PM (#43726475)

      I think maybe some one from DHS wanted to generate some bad publicity for bitcoins. Now they can buy some and make a little money.

      If your explanation for this situation was part of a list of 50 explanations where the 49 others are redacted and I had to gamble every dollar I have, I would definitely pick at random one of the other 49.

      Yes, that's how bad I think your explanation is. It's like a bad plot for a Steven Seagal movie except instead of being a former Special Ops operative trying to save an orphan from a ukrainian pedophile ring he would be the owner of an indian-friendly BitCoin exchange that throws a fit when he finds out that a retarded intern at the DHS has added the name of his exchange to the no-fly list in order to damage his business and make money. The movie would end with no explanation as to how exactly the retarded intern was planning to make money with this scheme because even while they were high the writers could not find an explanation that would make sense to their undemanding audience.

  • by shaitand (626655) on Tuesday May 14, 2013 @06:55PM (#43726313) Journal
    Contrary to what people have said Bitcoin has all the same government protection any other property does. This could be the DHS looking into the billion dollar attacks on gox as a form of terrorism/cyberthreat. They've just cut off the most likely way for the attackers to cash out.
  • Obama administration knows that they'll be branded fascist after the last week's revelations. Guess they figured they might as well own it and spank the technology they don't like. They got nothing to lose reputation-wise at this point.
    • by anagama (611277) <obamaisaneocon@nothingchanged.org> on Tuesday May 14, 2013 @07:19PM (#43726575) Homepage

      Actually, it is more correct to say that the Obama administration can be as GWB-like as it wants, and its reputation will remain amazingly high with Democrats. It's proof that Democrats didn't hate GWB's policies, they just hated GWB personally.

      • by superwiz (655733) on Tuesday May 14, 2013 @07:25PM (#43726637) Journal
        I had no love for Bush, but I think it's quite a smear to compare him to Obama. Bush's administration wiretapped suspected terrorists. They never sank so low as to wiretap reporters. And you'd have to reach back to Nixon to find an administration using IRS to target political opponents. I also don't recall Bush starting any wars without Congressional approval (albeit approval obtained under very, very questionable auspices).
        • by geekoid (135745)

          So tell me, do pubs just not have the ability to remember anything after the guy is out of office? It's like as soon as the term is up you people purge all negative data.

        • by arbulus (1095967)
          That is completely and totally wrong. The NSA has been wiretapping every single US citizen for the past decade. This is well known. And Bush started it. Obama is only making it bigger. Now the NSA has to build a new, gigantic data center out west to house all the data they're collecting.
          • Re: (Score:3, Insightful)

            by Teancum (67324)

            That is completely and totally wrong. The NSA has been wiretapping every single US citizen for the past decade. This is well known. And Bush started it. Obama is only making it bigger. Now the NSA has to build a new, gigantic data center out west to house all the data they're collecting.

            You can believe that one if you like.

            Do you honestly thing the government (choose whichever one you want) started to listen in just a decade ago? I got some real estate between Manhattan and Brooklyn to sell to you if you believe that one. At best, Bush Jr. only expanded earlier efforts that were well under way and expanded that to include scanning nearly every IP packet transmitted more than a couple hops.

            Nixon did plenty of wire tapping himself without warrants, and the technology wasn't even new with h

            • by rahvin112 (446269) on Tuesday May 14, 2013 @10:32PM (#43727955)

              Up to the GWB administration wire tapping was a case by case basis, after 911 the Bush administration asked for direct links to all the telecom operators. ATT, Verizon and all the others provided direct fiber optic connections to their networks and funneled copies of everything going across their network directly to the government. This is the reason Congress was forced to give them immunity because if they didn't the class action suits would have sunk the phone companies. The need for immunity alone should point to just how serious of an expansion in wire taping occurred under the Bush administration.

              In fact as the previous poster said, it was those very links that caused the creation of the Data Center in Utah. I live in Utah and I can tell you that Data Center was already planned and sited in 2008 when Obama took office. The formerly 2-lane highway leading up to Camp Williams (where the data center is) was upgraded in 2008 in anticipation, new power lines were installed at the same time (the data center uses more power than the entire salt lake city valley). Though Obama has done nothing to stop this massive expansion of federal power it most certainly did start under Bush. And though I agree that the government's been spying on people for a long time, the passive acceptance of full monitoring of every single communication didn't start till after 9/11/2001. You are arguing that tapping a few phones here and there is no different than recording every single phone call/text/internet traffic going across the network. And there is a very big difference.

              • by Teancum (67324)

                The telecommunications access points (usually at central offices) and forced engineering of telecom equipment standards that required ease of monitoring are things I remember happening in the Reagan administration and certainly were encouraged under Bill Clinton and Bush Sr. as well.

                I'm just saying dumping all of this on George W. Bush when there was ample evidence of this kind of thing happening well before he became president is uncalled for.... even though the "war on terrorism" did provide plenty of ex

        • by anagama (611277) <obamaisaneocon@nothingchanged.org> on Tuesday May 14, 2013 @08:02PM (#43726917) Homepage

          Love it -- hope you get a plus 5 insightful. That was a nice reworking of the "calling him an idiot is an insult to the wider idiot community" type quip.

          I totally agree that Obama has been worse than GWB but what is even more disturbing is how Democrats don't even want to know about it and have gone totally silent now that it is their guy doing the abuses.

        • by Microlith (54737)

          Bush's administration wiretapped suspected terrorists.

          Did they? We'll never know, because Congress moved to shield the collaborators from any sort of legal action.

  • by PopeRatzo (965947) on Tuesday May 14, 2013 @07:16PM (#43726541) Homepage Journal

    I can't believe we've gone this many comment and nobody has mentioned that "Mutum Sigillium" sounds like the name of a inter-galactic criminal from Dimension X.

  • Extra butter and the refillable size please. I'm gonna be here for a while.
  • by sirwired (27582) on Tuesday May 14, 2013 @08:16PM (#43727041)

    The likelihood that Mt Gox was complying with the "Know Your Customer" anti-money-laundering rules that apply to all financial institutions that handle currency was approx. zero. I'm not surprised in the least. If a bank was doing what Mt. Gox was, (as in, not even pretending to comply with the law), the same thing would happen.

    (That's not to say that disobedience of money laundering never occurs, just that experienced banks are substantially better at hiding it.)

    • Re: (Score:3, Insightful)

      by fonos (847221)
      I used Dwolla to fund my Mt. Gox account and vis-versa before the shutdown. At first you didn't need any ID, then you needed to upload a copy of your passport/driver's license and also something that verified your address (Bill). Then Dwolla itself started requiring my passport copy. Is there anything else really required?
      • by sirwired (27582) on Tuesday May 14, 2013 @09:20PM (#43727497)

        For a small customer like yourself, nothing more than ID is required, which you've supplied. Once you start moving decent amounts of cash, the institution receiving the money is required to know something about the activities the cash came from. It doesn't matter that the currency was BitCoins; the same rules still apply. There are reports to file, records to keep, etc. For instance, a bank is expected to report activities like a hot dog cart suddenly depositing stacks of $20's well out of proportion to a plausible amount of sales.

        Not complying with these rules (which is "Financial Institution Regulatory Framework 101") is not going to end well.

        Mt. Gox was a shoestring operation that got in WAY over its head. (As in, actual banks have entire departments of employees dedicated to pretending to comply with these kinds of rules, warehouses (or tape libraries) full of documents stored away, etc.)

    • by pantaril (1624521) on Wednesday May 15, 2013 @08:25AM (#43730377)

      The likelihood that Mt Gox was complying with the "Know Your Customer" anti-money-laundering rules that apply to all financial institutions that handle currency was approx. zero.

      Mt.Gox is not US company. This is not mt.gox account being closed, this is Dwolla account being closed.

      What japanese anti-money laundering regulations does Mt.Gox violate? I don't know about any. I read that they are fully compliant with japanase KYC laws. But you probably have more information if you could write that they have almost zero probability to be compliant. Please share it, otherwise, it's just FUD.

  • by xaosflux (917784) on Tuesday May 14, 2013 @10:48PM (#43728079) Homepage

    "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."

    https://mtgox.com/press_release_20130515.html [mtgox.com]

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