Funds of Mt. Gox have been seized after the worlds largest Bitcoin exchange is accused of violating US money transfer regulations. Mt. Gox is a Bitcoin trading platform and mobile payment service and this news will no doubt add to the recent wave of concerns about the currency known as Bitcoin.
The U.S. District Court in Maryland ordered the seizure of Mt. Gox’s funds on Tuesday, which were taken from the account at Dwolla, although the warrant does not indicate that Dwolla (a payments service) is under investigation, which can be seen on this seizure order which the U.S. Immigration and Customs Enforcement (ICE) spokeswoman provided here.
Mt. Gox failed to register as a “money transmitting business”, which could lead to up to five years in prison and this isn’t something that will be taken lightly given the size or the Mt. Gox website and it’s critical role in the world of the Bitcoin currency.
Accounts were setup to transfer money between Mt. Gox and Dwolla, before exchanging them for USD in to the Dwolla account, proving that the business was in fact in the money transmitting business.
Mt. Gox is one of the most established Bitcoin exchanges, a place for people to do business with the worlds popular online currency and these new developments will no doubt play hell with the value of Bitcoins and any related stocks, but I guess we won’t know for a day or two what the real damage will be.
We’ll keep you posted on any future developments, but for now we expect the case to go to court sometime in the near future.