Could Federal Seizure Be the Beginning of the End for Bitcoin?

<a href="http://www.flickr.com/photos/zcopley/5914558006/sizes/m/">ZCopley</a>/Flickr

Fight disinformation. Get a daily recap of the facts that matter. Sign up for the free Mother Jones newsletter.


In what may be the first move toward a federal shutdown of the wildly popular online currency known as Bitcoin, the Department of Homeland Security today issued an order that has restricted the transfer of funds in and out of Mt. Gox, the Bitcoin exchange that handles some 60 percent of the transactions.

A creation of bank-fearing techies, Bitcoins are now worth more than $1 billion, and consumer interest has been skyrocketing. For more background, read our Bitcoin explainer.

The DHS is focusing on Dwolla, an online payment system (sort of like PayPal) that has become a popular way for Bitcoin users to transfer money to and from Mt. Gox. A Dwolla spokesman confirmed to BetaBeat that DHS and the US District Court for the District of Maryland have issued a “seizure warrant” for funds associated with the company’s Mt. Gox account, which is known as Mutum Sigillum.

“In light of the court order,” Dwolla told BetaBeat, “…Dwolla has ceased all account services associated with Mutum Sigillum.”

The shutdown was first brought to light earlier today by Chris Coyne, the founder of OKCupid, who posted the following screenshot of an email from Dwolla notifying him of the DHS crackdown:

The reason for the seizure is not entirely clear. Up to a point, Bitcoins may be allowable under federal law, but “if Bitcoins facilitate too much drug-dealing or money laundering, the US government could make their production illegal,” Harvard public policy lecturer Steven Strauss wrote recently on the Huffington Post. And, of course, there are federal statues making it illegal to produce a separate currency.

Calls and emails from Mother Jones to Mt. Gox, Dwolla, and DHS were not immediately returned.

HERE ARE THE FACTS:

Our fall fundraising drive is off to a rough start, and we very much need to raise $250,000 in the next couple of weeks. If you value the journalism you get from Mother Jones, please help us do it with a donation today.

As we wrote over the summer, traffic has been down at Mother Jones and a lot of sites with many people thinking news is less important now that Donald Trump is no longer president. But if you're reading this, you're not one of those people, and we're hoping we can rally support from folks like you who really get why our reporting matters right now. And that's how it's always worked: For 45 years now, a relatively small group of readers (compared to everyone we reach) who pitch in from time to time has allowed Mother Jones to do the type of journalism the moment demands and keep it free for everyone else.

Please pitch in with a donation during our fall fundraising drive if you can. We can't afford to come up short, and there's still a long way to go by November 5.

payment methods

ONE MORE QUICK THING:

Our fall fundraising drive is off to a rough start, and we very much need to raise $250,000 in the next couple of weeks. If you value the journalism you get from Mother Jones, please help us do it with a donation today.

As we wrote over the summer, traffic has been down at Mother Jones and a lot of sites with many people thinking news is less important now that Donald Trump is no longer president. But if you're reading this, you're not one of those people, and we're hoping we can rally support from folks like you who really get why our reporting matters right now. And that's how it's always worked: For 45 years now, a relatively small group of readers (compared to everyone we reach) who pitch in from time to time has allowed Mother Jones to do the type of journalism the moment demands and keep it free for everyone else.

Please pitch in with a donation during our fall fundraising drive if you can. We can't afford to come up short, and there's still a long way to go by November 5.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate