
Mt. Gox Dwolla account frozen by DHS - manacit
https://bitcointalk.org/index.php?topic=205396.0
======
declan
A Department of Homeland Security representative confirmed the investigation a
few minutes ago and told me this:

"In order not to compromise this ongoing investigation being conducted by ICE
Homeland Security Investigations Baltimore, we cannot comment beyond the
information in the warrant, which was filed in the District of Maryland
earlier today."

More: [http://news.cnet.com/8301-13578_3-57584511-38/homeland-
secur...](http://news.cnet.com/8301-13578_3-57584511-38/homeland-security-
cuts-off-dwolla-bitcoin-transfers/)

~~~
nullc
Thanks, Mr. McCullagh, for doing some actual journalism and not just repeating
a rumor.

------
minimax
Using bitcoin as a way to launder dollars requires the ability to turn USD
into bitcoin and back again, which, incidentally, is exactly what Mt Gox does.

    
    
      dirty money -> mt gox -> bitcoin -> mt gox -> clean money
    

I'm obviously speculating here, but this seems like a logical reason for the
DHS to come in and shut things down.

~~~
outside1234
How is this different tho from USD -> Swiss Franc -> USD? I don't see how that
cleans the money...

~~~
nwzpaperman
Bitcoin doesn't launder money, but does enable the barter economy to be more
liquid and scalable. Barter is very difficult to tax, so there is the issue.

I have personally discussed this with a friend that is a federal reserve
spokesman, so anyone that wants to argue otherwise should consider that first.

~~~
pbreit
Cash is difficult to tax. I don't have a friend in the fed.

~~~
nwzpaperman
What's your daily ATM withdrawal limit? Familiar with the letters SAR? Mere
suspicion of structuring requires a report. If you know any local people that
work at a bank, ask he or she how many SARs are filed in the one branch per
week, on average.

A major federal reserve branch maybe has $30 billion in cash on hand at any
given time. The marginalization of the US cash market is almost complete after
the past decade.

Lastly, consider the possiblity that those back scatter xray machines aren't
about weapons.

~~~
pbreit
I didn't understand a word you just wrote.

~~~
nwzpaperman
The paper money market is being closed down too.

------
downandout
The US government dislikes Bitcoin, and they figure that they can hurt it most
effectively by targeting Mt Gox. Whether or not they have a case is almost a
moot point. Vague allegations of money laundering will be enough to take a
serious bite out of Mt. Gox's business. The feds will accomplish it in the
exact same way that they destroyed Megaupload: by seizing their domain.

As part of the case apparently filed against MtGox in Maryland, they will
likely soon confiscate the domain (since it is a .com and the US has declared
itself the emperor of all .com's). Then, it won't matter whether they actually
win the case. Having the domain gone for a long period of time will make a
serious dent in their business. It probably won't be the death knell, since
Bitcoin users tend to be more sophisticated and used to complications like
this, but the filing of this case is probably a sign that Mt Gox will be
headed out as the market leader.

~~~
tptacek
_it in the exact same way that they destroyed Megaupload_

You mean by filing a case against them and then, in the discovery process,
locating the emails in which the founders of Mt. Gox openly admit that the
whole enterprise is built on deliberate cultivation of commercial copyright
infringement, so much so that the operators of Mt. Gox actually pay their
users to upload pirated movies?

That sounds far fetched. If the US is going to try to take down Mt. Gox, I
think they'll do it a different way than how they went after Mega.

~~~
downandout
No, it's the same way that they go after any online business. Take away their
domain, and the business is dead. Within days, any hope of the domain
returning to life is gone and people are onto the next site. Even if the
business ultimately wins the case and gets the domain back, the government
will have long since achieved its goal of destroying the business. A domain
seizure is equivalent to a death sentence for an internet company.

~~~
smartwater
Tell that to The Pirate Bay.

~~~
corin_
> _death sentence for an internet company_

Big difference between an internet company and an internet website.

------
tomelders
Before governments start clamouring (in vain) to shut down Bitcoin exchanges
on spurious claims that they're money laundering havens, I thought I'd remind
everyone that neither HSBC, Barclays, Credit Suisse, Standard Chartered or ING
were shut down when they were caught laundering money.

[http://dealbook.nytimes.com/2012/12/10/hsbc-said-to-
near-1-9...](http://dealbook.nytimes.com/2012/12/10/hsbc-said-to-
near-1-9-billion-settlement-over-money-laundering/)

"Give me control over a nations currency, and I care not who makes its laws.”

Baron M.A. Rothschild

------
vijayboyapati
So the outcome looks something like this:

1\. holders of dollars at MtGox will buy as many btc as possible and remove
them from MtGox, because there's no other escape for their dollars

2\. holders of btc at MtGox will presumably send them elsewhere because
selling them for dollars doesn't make sense if you can't get the dollars
(although perhaps it still makes sense for euros/pounds/yen etc)

3\. There is a loss of liquidity at Gox from all the btc being pulled from
there

4\. The dollar price at other exchanges starts falling because they are still
exit points for dollars

Most of the trading volume is in dollars at Gox if I'm not mistaken, so this
might be the death blow for them. Although given their history of
incompetence, it was kind of sad the network effect was protecting them.
Perhaps a phoenix will rise from the ashes.

~~~
3pt14159
Here is the actual outcome:

1\. Holders of dollars at MtGox that live _outside_ the US and have already
had successful withdraws to their home-country banks withdraw now. (Source: I
just did)

2\. Then we sell a large portion of our bitcoins (essentially just leaving
the, "if I'm wrong" fund of bitcoins, about 20% of what we bought way back
when it was $1 or $5 or whatever).

3\. Then we withdraw that amount to our home country bank.

4\. Then we wait for the next 2 months as speculation of DHS swings the price
down then up then down until DHS stikes against MtGox and the price collapses
to about $20 or $30.

5\. Then we figure out a way to buy back in.

6\. We wait 2 years and start selling out at $1000 / BTC while people scream
"currency of the future".

------
jpdoctor
With the various shutdowns of US-based exchanges (and US purchase mechanisms
for foreign exchanges), it is driving the bitcoin biz offshore from the US.

I don't think it takes too much of a crystal ball to figure out this strategy
is a bad idea. Conversely, I hope all of our foreign friends remember to send
a few bitcoins our way for putting this generous gift of a multi-billion
dollar finance industry into their laps.

~~~
jlgreco
Are we sure that bitcoin originated in America? Maybe they gave us this gift,
and we promptly mishandled it and lost it.

~~~
gwern
No, we're not... The default assumption for anything cryptography is American,
yes, but Satoshi's original claims of being Japanese (which no one believes
given his great English and complete absence of any displayed Japanese
phrases, allusions, references, knowledge, or anything) aside, the timing of
his posts and some phrasing suggests he may've been in the United Kingdom.

~~~
TazeTSchnitzel
The Genesis block references The Times, too.

~~~
runeks
The Times is the world's largest financial newspaper. I regularly deliver the
FT to individuals here in Denmark when delivering mail on Saturdays. It's an
international newspaper.

~~~
TazeTSchnitzel
No, _The Times_ , as in _The Times of London_ , NOT the _Financial Times_ or
the _New York Times_.

------
jonathanmarcus
According to Aaron Greenspan in his recent lawsuit "a vast sum, if not the
majority, of Dwolla’s transaction volume is the result of Bitcoin
speculation."

So it should be interesting to see what impact this has on Dwolla's business.

~~~
sachingulaya
Considering it cost me exactly $0.25 to send $30,000 to mtgox through Dwolla I
imagine the impact is minimal.

Although, now that I have a Dwolla account I am more likely to use it in the
future.

~~~
wiredfool
I can't believe Dwolla took a 30k risk for $0.25. Their risk management just
isn't priced into their fees.

~~~
dusing
It's very slow and they wait until its "in the bank". So the whole business
model of Dwolla is low risk.

~~~
wiredfool
If they do ACH, it's never really settled, it just hasn't returned yet. Some
classes of returns are limited to 3 days, some 60, and some can be clawed back
a year later.

Their proprietary exchange might have different rules, but iirc, it's not very
widely distributed yet.

------
qdog
Seems likely this has to do with money laundering. Even if bitcoins themselves
aren't regulated, the exchange of them for illicit goods is. While the Silk
Road or whatever to buy drugs is something I can see being frowned upon,
profits from sex slavery and other human trafficking or mob activities would
be the real problem. Also taxation. I suspect the exchange of bitcoins for
goods in the US isn't going to be as easy as some people thought.

~~~
wiredfool
Since it's DHS, I'd bet it's Customs related, and from there, Silk Road.

If it was money laundering/ofac, you'd see Treasury or Secret Service
involved. Widespread fraud would add the FBI and AGs.

~~~
declan
Actually DHS takes the lead on money laundering investigations. That would be
ICE, part of DHS. And remember that the Secret Service is also part of DHS.

But DHS/ICE/HSI's mandate is so broad it's difficult to know what they're
targeting here. Could be money laundering, could be something else. Their
mandate also includes drug smuggling and computer crime, for instance.

~~~
wiredfool
Huh, I didn't realize the Secret Service been removed from the Treasury.

~~~
declan
Yep, part of the 2002 law creating the Department of Homeland Security. (I
still forget on occasion myself.)

~~~
qdog
Interesting, I'm just guessing. Since Dwolla operates in the US, from the
recent regulatory announcement targeted at bitcoin(or any online currency),
I'm just thinking that Mtg.OX not registering itself in the US, it won't be
able to do business directly with US entities. The Ars article
[http://arstechnica.com/tech-policy/2013/03/us-regulator-
bitc...](http://arstechnica.com/tech-policy/2013/03/us-regulator-bitcoin-
exchanges-must-comply-with-money-laundering-laws/) would lead me to believe
the money laundering is the most likely aspect to run afoul of regulation at
the moment.

However, I have little insight, it just seems the most likely reason to me.

------
mindcrime
Somebody should freeze the DHS.

~~~
base698
I think that was what Libertarian-Socialists thought bitcoin would accomplish
:)

~~~
liquidise
As someone who follows politics very closely, i found the term "Libertarian-
Socialists" borderline oxymoronic. I am upset to learn that it is in fact a
well documented philosophy. How i would love to have a political debate with a
self-proclaimed member of this way of thinking.

<http://en.wikipedia.org/wiki/Libertarian_socialism>

~~~
pessimizer
I think that it's largely a way for Anarcho-Syndicalists to describe ourselves
without using an anachronistic word like Syndicalist:)

If it helps, I find "liberty" as associated with "property rights" crazy.
Totally ordered property rights are a symptom of a completely overarching
state. The idea that people who are repulsed by aggressive force support land
ownership rights and think that works is weird.

~~~
zanny
I consider myself pretty far anarcho-libertarian in many things (especially
the removal of the exclusive use of force from any way humans organize) but I
just can't pitch a world where you don't own anything and can't claim
something as yours. As long as we exist in a world of scarcity we need some
means of claiming something as ours, especially if we spend our time to
acquire it without harming others.

Likewise, the only way I can think to facilitate the concept of private
property (including land - I don't prescribe to the ideology that since you
can't pick up the dirt to the core of the planet and the air some distance
over your head, plus the coordinates and area of that portion of the planets
surface and move it it can't belong to you) is to have some kind of
collaborative agreement between all parties in good faith to not do business
with anyone that actively violates any member parties property rights, and you
need to depend on that collaborative organization to have enough economic
influence to keep people from robbing them. But likewise, if they have
sufficient economic influence to manipulate behavior, you are pretty much at a
borderline government because they can act in self interest to harm others for
their own benefit since others depend on their economic productivity.

So how do you not "own" anything and have a functioning interaction between
peoples? How could someone walk up to me, take the computer I just placed on a
table (through no altercation of force, which is more cut and dry - party A
engaged in violence against B, and must be ostracized by the group - who owns
what is more nebulous - but even who initiates violence can be a conflated
argument) and walk away with it, and I lose that possession but have no
recourse to claim its mine. I mean, I could go and pick up someone elses
laptop, but I "lost" anything I put into the work on mine (without distributed
backups or something, which also aren't "mine"), and the party I take the
laptop from will lose any input they impart on theirs.

I don't see how you can have productivity without ownership, but you can't
enforce ownership without either violence or a collective entity power enough
economically to influence behavior to their whims, which is no better than
most governments. They end up acting in their own self interest, which often
means witch hunts.

~~~
agent00f
I sympathize with your sentiments because it's very difficult to break out of
the "conventional wisdom" of the zeitgeist.

If it helps, consider that the idea of democracy was very radical to the age
when conventional wisdom said only property owners deserved political power.
After all, the country does _belong_ to them. In comparison, the idea that
_everyone_ had _equal_ say was basically inconceivable, and function
infeasible with lack of ballot technology anyway.

Now substitute the word economic for political, it's similar to how capitalism
works today. The factory owner gets to tell you what do because he _owns_ the
place. "Communism" as an idea wasn't any sort of immaculate conception, but
the simple application of democracy to the economic realm. Socialism was just
an intermediate step from capitalism (ie aristocracy) whereby only the factory
employees (the stakeholders) are given input rather than everyone.

As to the "impractical" argument, as mentioned folks must've had the same
reservations before all the implementation details of democracy (eg republics,
parliament, congress, etc) were hashed out. For example, in your computer
case, it might be simply recognized that sharing some things is not practical
and thus some system of reservations/allocation is devised, just as we figured
out who gets to write laws when it's clear not everyone can it simultaneously
(or otherwise it becomes a mess).

~~~
zanny
I don't think there is enough evidence to go either way, but from the
traditional animalistic self-preservation mindset, I don't see any large group
of people willingly giving up their right to "own" things. It seems like an
implied natural order of things to possess - in the presence of scarce
resources, it is impossible to organize socially in a way without force that
also "forces" people to give up their right to try to keep things theirs. It
is also impractical for the vast majority of resources.

Factory ownership and ownership of labor I always felt wasn't an issue with
property rights but with an ongoing millennial long battle with inheritance
and grandfathering, compounded by race and sex biases. The elites of a
thousand years ago have, indirectly, maintained perptual ownership of the
upper echelons of society for hundreds of years.

If you started everyone truly equal, without one man getting a billion dollars
inheritance and another being born as a crack baby, ownership rights wouldn't
be much of an issue because by merit you would come to possess things you
deserve through your efforts. I also think it would be easier to eliminate
illogical biases and classism towards other humans than to eliminate the
desire to own and possess physical goods.

The reason the industrial revolution had so many issues revolving around the
introduction of wage labor was that, even then, very few owned tremendous land
and material resources and there was a great wealth divide. That divide
enables some to exploit the desire for goods of the other to put them in a
position where they don't benefit from their own productivity.

I _am_ for communal ownership of the workplace, and that any worker who
doesn't get his share of the profits is effectively a wage slave (just at a
wage they agreed to be enslaved at). But I don't think you can render all
land, material goods, etc public and expect anyone to aspire or behave any
certain way because on a consistent basis humans reveal themselves to act in
self interest.

Maybe in another hundred years when we have robots fabbing carbon from rock
and they can manufacture anything on demand for no labor and there is no
scarcity, communal resource ownership will be a reality. It will at least be
essential with an automated means of production as is emerging now, because if
the extremely small ultrawealthy class continues to own foundries of unlimited
productivity with magnitudes less human capital invested, they are going to
drain everyone except other wealthy automation owners dry. It is happening
now, but the extreme case is there is no need for the worker and the owner
controls the resource production in entirety. I'd also argue we are in an
exponential spiral towards this now that human capital is no longer the most
in demand resource to consume in the market.

But I think that just requires an extremely progressive tax system (although I
lean anarcho, I still can't construct a functioning society without at least
some consensus representative law council, even if they can't exercise force,
that can direct culture through logical process rather than mob mentality, so
I call myself libertarian) to allow people to prosper, but to prevent the run
away successes (Apple is the obvious candidate of our age) from accumulating
absurd amounts of total economic wealth and exploiting it as ownership of the
means of production.

~~~
agent00f
IMO people are too caught up with the ideal of personal ownership, and this
likely stems from being constantly bombarded with an individual culture of
consumption. "Communism" doesn't mean there's no "ownership" all, only that
ownership/possession is determined by society at large, not unlike democracy
for political decision making. For example, if a few friends pool money to buy
something none can afford on their own and find some equitable way to allocate
possession -- or similarly the instinct to share is already quite strong with
close tribe members (family, BFFs). Likewise, sharing the burden of work is
also fairly natural, eg roommates and chore schedule. Note the similarities to
the democratic goal of sharing (political) power, where potential fear of
giving up "ownership" of personal determination (ie having to follow
everyone's rules) isn't realized as long as implementation of
election/leadership is reasonably fair.

Frankly you already seem like a libertarian in the classical sustainable
sense, and not the american "free market" bastardization built only to protect
the upper crust with the language of "freedom" (from taxation). A parting
point worth mentioning in that vein is the "free market" and all its siblings
are entirely artificial constructs of our mutually agreed rules. For instance,
if you desired to trade your wool for my corn, the only incentive I have to
leave with only the wool instead of the corn, the wool, and a slave is the
_social_ consequence of break the rules. Everyday we already implicitly follow
hundreds/thousands of rule of conduct, so I have little reason to doubt that
people can live perfectly fine with more equitable rulesets of conducting
economics just as they have for politics.

------
dsimmons
Already a thread going on here: <https://news.ycombinator.com/item?id=5707537>

------
yid
I'm guessing there are some sweaty brows at Coinbase today...

~~~
dangrossman
Incidentally, I transferred some BTC from MtGox to Coinbase when I heard this
news. It might be safer to have it in my own wallet somewhere, but if there's
no way to get BTC back into USD, it doesn't matter where the BTC is to me; I'd
consider it written off.

~~~
trevelyan
I will happily purchase from you at a discount.

------
jstalin
Another reason to buy at <https://localbitcoins.com/>

------
wmf
Discussion from a few months back on "how Bitcoin dies":
<https://news.ycombinator.com/item?id=5109961>

------
dylz
Took long enough. Magic the Gathering: Online Exchange needed to be shut down
long ago.

~~~
jstanley
I realise I'm probably feeding a troll, but why do you think that?

~~~
rrouse
It's a play on the name of the site. Mt. Gox -> MtG: OX

~~~
dustyleary
Not a "play"... But a common 'talking point' related by Bitcoin naysayers
attempting to discredit Bitcoin.

Mtgox.com really did start off as "magic the gathering online exchange", and
was a site where people could buy/sell Magic cards.

Nerds being nerds, the guy who ran the site got into Bitcoin when it first
came out, because Bitcoin is interesting to nerds.

After Bitcoin got big, Mtgox became "just bitcoins", and was eventually
purchased by the company now running it.

~~~
narcissus
I know eh? God forbid they pivot into a Bitcoin trading site and we let them
live it down. I mean, if you can't be forgiven for pivoting on HN then where
can you be?

I wonder if dylz still refers to LG as 'Lucky Goldstar'?

~~~
recursive
Wait, what does LG stand for now?

~~~
narcissus
It doesn't really stand for anything. From Wikipedia: 'In 1995, to compete
better in the Western market, the Lucky-Goldstar Corporation was renamed
"LG"'.

So while it was named LG because of the initials of Lucky Goldstar, its name
is still just LG (or I guess "LG Corporation").

------
quackerhacker
Guess it was only a matter of time before "the man," got involved in bitcoin
somehow.

Side Note: if we think we actually own the dollars in our wallets...remember
that it's illegal to deface government property (like writing on it)...so no
we don't.

~~~
dangrossman
Defacing paper money is not illegal, only defacing it with intent to render it
unfit for circulation is. Those "where has this bill been?" websites where
people write/stamp the address onto the dollar are completely legal. Those
machines at tourist cities that smash your pennies into local images are legal
too; it's only illegal to destroy coinage for fraudulent purposes or to melt
it down for the raw metals.

~~~
Domenic_S
> _it's only illegal to destroy coinage for fraudulent purposes or to melt it
> down for the raw metals._

It's more nuanced than that.

Back in 1965, the Treasury prohibited exporting or melting of silver coins,
but that prohibition has long since been rescinded.

Currently it's unlawful to melt pennies or nickels, but not silver coins.
Although silver coins (talking pre-1965 stuff here) trade for somewhere around
and above spot value anyway, so melting is pointless.

------
hisabness
this is great, freeze a company's bank account without even serving them:

[https://mtgox.com/pdf/20130515_statement_regarding_dhs_court...](https://mtgox.com/pdf/20130515_statement_regarding_dhs_court_order.pdf)

------
changdizzle
If we have money in MtGox what are our options for cashing out now?

~~~
fnordfnordfnord
BTC transfer to CampBX and then out through Dwolla or any other method they
offer. BTC trade for services or goods. BTC trade with private party. BTC to
another exchange with different banking arrangements.

~~~
zanny
This, you can still transfer bitcoins between any exchange service offering
transactions.

Though I have to fear for both campbx and coinbase - they are the next two
biggest ways to convert USD to BTC.

~~~
marshray
> you can still transfer bitcoins

So would one rather be holding BTC or USD right now?

~~~
fnordfnordfnord
Some of each, I'd like to be a little heavy on USD, to take advantage of any
buying opportunities that may arise in the near term.

------
chris_gogreen
Seriously, why not just answer the questions on the form truthfully? I hope
that was an oversight. Fibbing to the feds will get you in big trouble.

------
tocomment
Why isn't this causing the price of bitcoin to drop?

~~~
carbocation
In the past 6 hourse, the price of a bitcoin in USD on MtGox went from a
(previously stable) ~$119 to $105.

------
Uchikoma
Haha, we have no accounts to trace, bitcoin works differently! DHS: Shut
everything down.

------
godgod
DHS (US govt) is deathly afraid of bitcoin.

------
camus
"... this is what you get, when you mess with us..."

------
beedogs
Sort of hoping and praying for the collapse of the US government. This shit is
getting out of hand.

~~~
vecinu
What a bunch of dribble. This comment is so toxic on HN.

~~~
beedogs
You're right; your comment was crap.

