Feds Issue Warrant to Seize Bitcoin Account for Unlicensed Money Transmitting

A symbol in the window of a local pub indicates the acceptance of Bitcoins for payment on April 11, 2013 in Berlin, Germany. Bitcoins are a digital currency traded on the MTGox exchange. (Photo: Sean Gallup/Getty Images)

The Bitcoin trading platform Mt. Gox in Tuwsday was issued a warrant that stopped its ability to send or accept transfers of the electronic currency through its Dwolla payment service.

Betabeat reported that the Department of Homeland Security issued a “seizure warrant” for the Dwolla account, and a copy of the warrant obtained by Ars Technica revealed it was for “unlicensed money transmitting.”

The warrant, in part, states:

(a) 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.
(b) As used in this section—
(1) the term “unlicensed money transmitting business” means a money transmitting business which affects interstate or foreign commerce in any manner or degree…

The warrant identifies Mark Karpeles, the president and CEO of Mt. Gox, as opening a Wells Fargo bank account in May 2011 under Mt. Gox’s subsidiary company Mutum Sigillum. The application for the account, the warrant states, explicitly asked if the company exchanges currency for customers and if it “[accepts] funds from customers or [sends] the funds based on customer instructions (Money Transmitter)?”

To both of these, Karpeles answered no.

If Mt. Gox or Mutum Sigillum were transmitting money, it would need to be registered with FinCen, and neither are, according to the records mentioned in the warrant.

The warrant goes on to show how a “confidential informant” was able to reveal that the company was “engaged in a money transmitting business but is not registered with FinCen.”

Through the Dwolla account, the feds established that it has probable caused to believe Mt. Gox or Mutum Sigillum were violating 18 U.S.C. section 1960. Due to this, the Wells Fargo account and the Dwolla account, which was held through Veridian Credit Union, were subject to seizure.

This is the latest statement Mt. Gox issued on its Facebook profile, which was nearly 24 hours ago:

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. We take this information seriously. 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. MtGox is investigating and will provide further reports when additional information becomes known.

This news comes after bitcoin saw a rapid rise in its value within the last couple months.  The currency did go through a bit of a “bitcrash” but was still significantly higher than it had been before.

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