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US seizes and freezes funds at biggest Bitcoin exchange

US seizes and freezes funds at biggest Bitcoin exchange


Mobile payments startup Dwolla says it shut down account belonging to MtGox after receiving a seizure warrant from Homeland Security

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bitcoin 1020 (casascius)
bitcoin 1020 (casascius)

Authorities in the US have reportedly frozen a mobile payments account associated with Bitcoin exchange MtGox, as part of an investigation announced Tuesday. Dwolla, an Iowa-based mobile payment startup, confirmed to Betabeat Tuesday that it has halted all activity associated with the account belonging to MtGox, after receiving a warrant from the Department of Homeland Security. A spokesperson for the US Immigration and Customs Enforcement (ICE) later told CNET that an investigation is underway, though she declined to comment on its scope or nature.

OKCupid cofounder Chris Coyne was among the first to publicize the seizure, posting a screenshot of an email he received from Dwolla yesterday. In the email, published to Coyne's Twitter account, Dwolla confirms that it cannot transfer funds to the MtGox account due to orders from the feds, while adding that it is "not party" to the government's investigation. MtGox, the world's largest Bitcoin exchange, says it is still looking into the matter.

Details of the investigation remain unclear

"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)," a Dwolla representative said in a statement to Betabeat. "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."

Thus far, the nature of the investigation remains unclear, and it is not known whether it may include other mobile payment services, as well. "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," ICE spokesperson Nicole Navas told CNET. ICE's Homeland Security Investigations unit covers a broad range of crimes, including drug smuggling, trade violations, and financial crimes.

MtGox says it is aware of reports of the investigation, though the company says it has yet to receive a court order or warrant.

"[A]s 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 said in a statement published to its Facebook page late Tuesday. "MtGox is investigating and will provide further reports when additional information becomes known."