More Bad News for Bitcoin

The feds are upping the pressure on bitcoin, launching new investigations into cryptocurrency exchanges and businesses that accept bitcoin, according to the Wall Street Journal.

The suspicion: bitcoin-based firms were directly tied to the now-shuttered online drug market Silk Road.

This May 1, 2014 photo taken in Washington, DC shows bitcoin medals. Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Karen Bleier/AFP/Getty Images

The investigations could lead to more arrests of leaders in the bitcoin community, like the January arrest of 24-year-old Charles Shrem, the CEO of the BitInstant exchange, who was charged with Silk Road-connected money-laundering.

It’s not yet clear which exchanges are being investigated in the new push, the Wall Street Journal reported Monday evening, but many exchanges including the Tokyo-based Mt. Gox have already received subpoenas.

“One of the people familiar with the matter said the investigation was at an early stage,” the Journal reported, “and conclusions hadn’t been reached as to whether the exchanges were connected with Silk Road.”

Bitcoin was the only currency accepted by Silk Road before the drug market was shut down and its founder, Ross Ulbricht, was arrested last year.

It’s just the latest in a string of bad luck for bitcoin, including the February theft of $470 million worth of bitcoin — 7 percent of the world’s supply — from the Mt. Gox exchange and the pervasive public opinion that the cryptocurrency is shady and unsafe.

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