The leading Bitcoin exchange Mt. Gox has been facing a lot of problems recently. Now, the U.S. government has seized over $5 million from it. Earlier the government seized $2.9m from Mutum Sigillum LLC, a subsidiary of Bitcoin exchange Mt. Gox, and now took an additional $2.9 million from Mt. Gox’s Wells Fargo account.
According to news agencies, the U.S. government seized the money from Mt. Gox after a judge found probable cause to suspect that Mt. Gox was engaged in money transmitting without a license. In order to operate as a financial organization Mt. Gox needs a proper license, and comply with the existing laws and regulations.
From the recent seizure of Mt. Gox’s accounts shows that the government considers that merely because the money is virtual, it doesn’t mean it’s above the law. A couple of months ago in June, Mt. Gox even stopped letting users withdraw funds in U.S. dollars; however, that seems a smokescreen as it wanted to stall customers and avoid any trouble with the government.
Legal Trouble Abound for Mt. Gox
There are several glitches the way Mt. Gox operates and that may be a reason that it is facing legal problems. On the other hand, several venture capital-backed Bitcoin exchanges like Buttercoin and others are expanding their operations and reach to new areas and customer base. In fact, Mt. Gox’s troubles have been boon for BitInstant, Buttercoin, etc.
FinCEN seemed concerned about the involvement of Bitcoin like virtual currencies in money laundering and for that it even issued guidelines for applying traditional money-laundering rules to virtual currencies in March. Mt. Gox, the world’s largest Bitcoin exchange, took measures to comply with US money-laundering regulations and even applied for registration with the U.S. Treasury Department.
Why So Much Trouble for Mt. Gox?
The U.S. government does not want the Wild West in the revolutionary virtual currency market. It also does not want to give a free hand to one of the largest Bitcoin companies and challenge the USD. The government may also be looking for complete control over Bitcoin and want to have access to information on the owners to bust money laundering.
To rule out any misunderstanding Bitcoin Foundation is even trying to educate the legislative bodies and ordinary users as it feels only this can help it gain acceptance and prove that it is not being used as a money laundering tool.
To contact the reporter of this story: Deepak Tiwari at firstname.lastname@example.org