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Lawsuit illustrates Bitcoin’s chargeback problem.
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Lawsuit illustrates Bitcoin’s chargeback problem.

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Bitcoin

Lawsuit illustrates Bitcoin's chargeback problem.
A Bitcoin exchange site had a falling out with an online payment company. The ...
Timothy B. Lee - Mar 8, 2012 1:00 am UTC.
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Tradehill, the major Bitcoin exchange that shut down last month citing regulatory problems, has filed a lawsuit against the payment startup Dwolla. Tradehill charges that Dwolla cheated it out of more than $160,000. According the lawsuit, the loss of funds forced most of Tradehill's employees to work without pay beginning in September 2011 and was a major factor in the exchange's collapse last month.
Tradehill claims the two firms had a falling-out over "chargebacks." A customer in a traditional bank can dispute a charge he believes to be fraudulent; the bank will typically reverse the transaction and begin an investigation to determine the truth of the accusations. Evidently, some of Tradehill's users transferred funds to Tradehill from their banks using Dwolla, purchased Bitcoins, and then disputed the original Dwolla withdrawals with their banks. Dwolla responded by deducting the funds from Tradehill's account.
The problem, according to Tradehill, is that Dwolla had advertised its service as having "no chargebacks." Tradehill says Dwolla's website had stated that transactions were "as good as cash," and that representatives from the e-commerce site repeatedly confirmed that transactions made through Dwolla were final.
Tradehill claims it tried to address the issue with the startup when money started disappearing from Tradehill's account. But Dwolla allegedly stonewalled, forcing Tradehill to go public with its concerns. The Bitcoin exchange says Dwolla reacted by "scrubbing" its website of references to its "no chargebacks" policy, and allegedly altered its terms of service to specify that customers were responsible for chargebacks.
This put Tradehill in a bind because while Dwolla only claimed to offer irreversible transactions, Bitcoin transactions really are irreversible. So when Dwolla began reversing previously confirmed transactions, the company had no way to recover the lost funds. Tradehill says it lost $94,000 due to chargebacks, and another $70,000 when Dwolla blocked Tradehill from withdrawing its remaining funds by accusing the Bitcoin exchange of fraud.
Obviously, there may be another side to this story. Dwolla declined to comment to us, but in a statement to American Banker, it confirmed that the dispute was over chargebacks. Dwolla denounced Tradehill's lawsuit as consisting of "specious allegations made by those who have a self-serving interest in seeking publicity."
The dispute illustrates what's likely to be a persistent difficulty for firms that attempt to straddle the line between Bitcoin and the traditional banking system. Traditional banks are built on a web of trust. They do business with other institutions with established reputations. Because they know who they're dealing with, they can expect to use after-the-fact investigations and legal penalties as a backstop against fraud. This creates headaches for merchants who need to deal with fraud complaints, but it makes the system safe and convenient for consumers.
Bitcoin, in contrast, is built on the premise that no one has to trust anyone else. Transactions are irreversible, and a Bitcoin user is out of luck if his money is taken fraudulently. That's a headache for consumers, but it has an important upside: Bitcoin transactions really are final.
That works fine as long as everyone is dealing in Bitcoins. But it creates friction when people want to transfer funds from traditional banks to Bitcoin. Depositing dollars into a Bitcoin exchange is invariably a reversible transaction, while withdrawing Bitcoins from an exchange is not. If the deposit is later disputed, the exchange will wind up holding the bag.

Bitcoin

To be fair, this problem isn't unique to Bitcoin. If Tradehill is telling the truth about Dwolla's abrupt change in its "no chargebacks" policy, Dwolla didn't fully think through the implications of offering cheap, irreversible payments. Merchants understandably hate chargebacks, so the idea of a chargeback-free financial system is intuitively appealing. But the flip side of no chargebacks is that there are no remedies for defrauded consumers. And, ultimately, consumers are the ones spending all the money, so businesses have little choice but to cater to their whims.


Bitcoin

Homeland Security orders Dwolla to cease payments to Mt. Gox.
The Department of Homeland Security appears to have shut down the ability to use Dwolla, a mobile payment service, to withdraw and deposit money into Mt. Gox, a Bitcoin trading platform. A Dwolla representative confirmed the move to Betabeat.
A representative for Dwolla told Betabeat that the company is “not party” to this matter and encourages those with questions to reach out to Mt. Gox or the DHS.
“ 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) ,” he said. “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.”.
Mt. Gox has posting the below statement to their Facebook page.
Like many who have contacted us, MtGox has read on the Internet that the United States Department of Homeland Security had a court order and/or warrant issued from the United States District Court in Maryland which it served upon the Dwolla mobile payment service with respect to accounts used for trading with MtGox. We take this information seriously. However, as 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 is investigating and will provide further reports when additional information becomes known.
Below is a screen shot of the email being received by Dwolla users who have recently made trasnfers to Mt. Gox.

Bitcoin

Feds seized $2.9M in Bitcoin funds from Mt. Gox, court docs show.
The federal government sent a strong signal to Bitcoin traders earlier this year when the U.S. Department of Homeland Security seized an account belonging to Mt. Gox, the most popular exchange for people to buy and sell the crypto-currency. It was unclear at the time just how much currency the government confiscated.
But a new filing in Baltimore federal court (embedded below) shows the feds seized $2,915,507.40 held in an account controlled by Dwolla, a third-party payment platform similar to PayPal. The funds belonged to Mutum Sigillum LLC, a U.S. subsidiary of Tokyo-based Mt. Gox.
It's unclear what will become of the funds. Neither the US Attorney's Office in Maryland nor Mt. Gox immediately returned a request for comment.
The feds decided to seize the account because Mt. Gox owner Mark Karpeles had allegedly concealed the fact that he opened the account in order to run a money transfer business. Karpeles has since stated that Mt. Gox is in compliance with federal and state financial regulations.
At the time, the seizure was significant because Dwolla-based payments to Mt. Gox were the easiest way that Americans could buy and sell large quantities of Bitcoin. While Mt. Gox has continued to process American transactions after the seizure, it has been slow to deliver withdrawals and has from time to time suspended them.
The company has blamed the slowdowns on technical measures and implemented new techniques to boost performance. But in recent months, its role as the dominant Bitcoin exchange has come to be challenged by newer competitors like Bitstamp.
Other startups like Coinbase, which is backed by prominent venture capitalist Fred Wilson, have also arrived on the scene, promising to make the crypto-currency experience more consumer friendly.
Even as people continue to debate whether Bitcoin is a fad or here to stay, entrepreneurs are offering new twists on the currency -- including a fantastical machine that turns bills in Bitcoin.
The value of Bitcoins, which are also swapped informally in places like New York's Satoshi Square, has stabilized in recent months at around $110.

Bitcoin

Bitcoin Processor Mt Gox Dwolla Account Shutdown.
Ars Technica reports that Mt. Gox has been shut down. Mt. Gox was the largest Bitcoin exchange on the Internet. The reporting states that Dwolla users will no longer be able to use this service as a funds transfer conduit from Mt. Gox.
The shutdown occurred after Dwolla was presented with a seizure warrant from a federal court, according to Ars Technica quoting the New York Observer.
According to the story, the order was presented by the US Department of Homeland Security and the US District Court for the District of Maryland. This caused the end of all activity at Dwolla.
The DHS is not saying anything about the case, citing it being an "ongoing investigation", according to the reporting at Ars Technica. The statement they released said that the investigation is being headed by ICE Homeland Security Investigations in Baltimore.
According to the reporting, over 60 percent of all Bitcoin exchanges go through Mt. Gox. With this service down, users may have to find other ways to make their currency exchanges.
Problems for Bitcoin.
Exchanging for Bitcoins can already be difficult. PayPal, the largest online payment processor, for instance, does not allow users to use the service for currency exchange purposes, including exchanges to the Bitcoin currency. Users who have been considering moving over to this currency were expressing concern on the AT board. Some of them speculate that the action was taken due to money laundering, but point out that DHS is unlikely to state why they shut down Dwolla to begin with. Regardless of the reasons for the shutdown, it has made some users more aware of the fact that Bitcoin can be hindered by legal actions on the part of governments, sometimes without any reason being given, as is the case here.
One of the concerns expressed on the forums is that criminals using the Internet currency for illegal purposes will end up hampering its growth. Provided that the currency can remain available and exchanges aren't hindered by government-led shutdowns, as has apparently happened in this case, Bitcoin could potentially succeed as a viable currency. For the moment, however, Dwolla remains shut down and the DHS is not saying why it's been shut down, how long it will be shut down for or anything else about what it terms an ongoing investigation. Bitcoin users will need to find some other way to conduct their exchanges.
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Bitcoin

Homeland Security seizes funds at main Bitcoin exchange.
The U.S. government has reportedly shut down a prime source of liquidity for Bitcoin by seizing an account connecting a Japanese currency exchange, Mt. Gox, and payment services provider Dwolla.
The action by Homeland Security, reported by Betabeat, appears to be timed to send a clear message, coming during a week when Google Ventures (s goog) and others announced major new investments in the popular cyber currency. The seizure itself is described in a screenshot posted by OKCupid cofounder Chris Coyne (see it below). It shows a message from Dwolla stating that Homeland Security has executed a "seizure warrant" against its account with Mt. Gox -- the exchange where many people buy and sell Bitcoins.
What this means in practical terms is that Bitcoin traders are now shut off from one of the few ways to supply and receive funds from Mt. Gox. The Japanese exchange doesn't work with mainstream banks -- it only accepts funds via wire transfers and a handful of shadowy e-currencies.
Homeland Security typically executes seizure warrants in connection with criminal investigations, and Coyne's screenshot refers to actions in the US District Court of Maryland. A search of court records, however, comes up empty -- which could mean the records are under seal. The US government has yet to issue a statement.
Tuesday's development is likely to provide a blow to the fledgling currency, which is mined by computers and is beyond the authority of any central bank. Last month's Bitcoin crash, which saw its value fall from $266 to $105 in a single day, is believed to have been set off by liquidity problems at Mt. Gox. U.S.-based exchanges like Coinbase, which last week received a $5 million investment from Fred Wilson's Union Square Ventures, provide a means to change dollars for Bitcoin, but only permits trades of up to $100.
Dwolla, which has raised more than $20 million in funding from investors including Andreessen Horowitz, Village Ventures, Thrive Capital and Union Square Ventures, offers a free web-based software platform that lets users send, receive and request funds from any other user. It says it now has 250,000 account holders.
The Homeland Security actions comes amid uncertainty about the US government's regulatory powers over Bitcoin, which appears to be beyond the purview of the SEC.
If you want to learn more about the possibilities -- and the perils -- of Bitcoin, come join us at GigaOM's free meet-up in San Jose on Thursday between 6 p.m and 9 p.m. We'll be chatting with the CEOs of Expensify and Lemon, and engineers from Facebook(s fb) and Google. There will be cocktails too, courtesy of our friends at Ribbit Capital.
Here's the screenshot which was posted to Hacker News:

Bitcoin

REPORT: Department Of Homeland Security Prevents Payment Provider From Transferring Money To Bitcoin Exchange.
One of the big questions about the viability of Bitcoin, the anonymous, virtual currency that has surged in value this year, is what sort of government oversight and regulation it would have to deal with.
We may find out soon.
Today, Dwolla, a payment service that had allowed users to transfer funds into and out of accounts at Mt. Gox - the world's largest Bitcoin exchange - said it's been ordered by the U.S. Department of Homeland Security to cease fund transfers to and from Mt. Gox.
The email below, courtesy of Betabeat, was sent to several Dwolla users today.
Homeland Security's reason for interfering here is unclear, but because transacting in Bitcoin is essentially an anonymous process, it may be appealing for those looking to conduct illegal activities, and hence, it makes sense that it's a target for regulators.
ConvergEx Group strategist Nick Colas recently devoted some space to Bitcoin regulation in a note to clients:
If the venture capital community wants to make bitcoin the "Next big thing", staving off regulation by bringing the currency into the light is just as important as their other goals. Yes, the U.S. Treasury recently issued some guidance, essentially bringing bitcoin into the regulatory fold. At the same time, regulators do have the facility to make life difficult for bitcoin if they so choose. Recall that they were able to essentially shut down online gambling in the U.S. a few years back by forbidding U.S. banks to fund overseas accounts for the purpose of playing cards or games of chance.
In the end, however, it would be very hard to shut down bitcoin on a global basis. Recall that the system runs on thousands of servers around the world and once money enters the system, the only trace of its existence is a letter-and-number key. Anyone who has that identifier can exchange it for sovereign currency in any country that allows its banking system to plug into a bitcoinexchange.
My humble recommendation to venture capitalists to avoid further regulation or an outright ban is to quickly convince global charities to use the bitcoin system for both donations and money transfers. It is, after all, ideally suited to the purpose of taking in money in rich countries and efficiently moving it abroad to places with limited financial infrastructure. According the National Philanthropic Trust, individual Americans gave $218 billion in 2011, the most recent information available, and there are over one million charitable groups operating in the U.S. Presumably they all have bank accounts to process payments and would like a more efficient way to distribute funds.
Needless to say, Dwolla users will be anxiously awaiting Homeland Security's reasoning for today's actions.

Bitcoin

Dwolla Sued by TradeHill, Bitcoin Exchanger.
TradeHill Inc., exchange operator for online currency Bitcoin, has filed a lawsuit against payment startup Dwolla.
In the suit, TradeHill alleges that "fraudulently reversed nearly $100,000 in supposedly 'credited' transactions and unjustifiably blocked an attempt by TradeHill to transfer $70,000 of its funds from Dwolla's control," a press release shows.
Dwolla CEO Ben Milne has since responded. While Dwolla has not yet been served a formal notice regarding any potential lawsuit, Milne says, his company would "vigorously defend all allegations of wrongdoing" should that service take place.

Dwolla Partners with International Payments Provider.
Des Moines, Iowa, Sept. 10, 2019 (GLOBE NEWSWIRE) -- Financial technology company Dwolla, Inc . announced a partnership with Currencycloud to allow its clients to facilitate international payments. Currencycloud is a global payments platform built on smart technology and is a leader in international payments. The partnership between Dwolla and Currencycloud provides businesses with a solution to send and receive international payments in a digital economy.
Dwolla's ACH payment API connects businesses to the ACH Network to facilitate payments within the United States. With Currencycloud, Dwolla's clients can expand their payment experience with international payments in 35 currencies and 180 countries. The partnership is part of the Dwolla Partner Ecosystem, a network full of forward-thinking businesses to better support its clients' growth.
"We live in a world that is ever more connected. We want our phones to control our thermostats and our televisions, we want our messaging apps to sync up with our calendar apps. The Dwolla Partner Ecosystem was born out of that idea of interconnectivity," says Stephanie Atkin, Dwolla's Vice President of Marketing. "Dwolla is the leader in domestic payments, Currencycloud brings that same level of trust for international payments. This partnership allows our customers to get the best of both worlds. We couldn't be more excited about this opportunity and its potential."
Dwolla, Inc. is a financial technology company that offers businesses an onramp to the Automated Clearing House Network, the electronic funds-transfer system used by U.S. financial institutions that moves $51 trillion annually. The Dwolla Partner Ecosystem was formed to provide Dwolla's clients with access to services that can help them scale effectively.
"We're thrilled to join the Dwolla Partner Ecosystem, a group of fintechs with shared passion for removing payments pain points with flexible API technology," says Richard Arundel, co-founder and general manager, North America at Currencycloud. "We pride ourselves on helping to simplify international payments for businesses so that they can focus on delivering great customer experience, and with this new partnership our clients can now leverage Dwolla's domestic payments API.
With Currencycloud, Dwolla's clients no longer have borders for their payments.
Partnerships help you #DoMoreWithDwolla.
About Dwolla.
Dwolla, Inc. is a financial technology company that is changing the way businesses send and receive funds. The company offers a seamless, white-label API platform to connect to the ACH Network to initiate payments.

Bitcoin

A Company Innovating On The Way We Pay For Stuff Ditched Bitcoin And Concentrated On The Dollar Instead.
Iowa-based startup Dwolla has made a name for itself with its rather painless approach to sending money over the Internet -- sending someone $US10 or less is free. Sending more than $US10 costs $US0.25. That's all there is to it.
"What about Bitcoin?" becomes the obvious question.
The company did previously deal in the virtual currency, but the relationship ended poorly when the federal government seized $US2.9 million worth of Bitcoin from Dwolla as part of its investigation into the Mt. Gox Bitcoin exchange.
As Dwolla was merely the payments processor, the money actually belonged to Mutum Sigillum LLC, a U.S. subsidiary of Mt. Gox. This incident saw Dwolla pull the plug on its Bitcoin functionality late last year, likely due to it's grey legal status.
Bitcoin's only become more mainstream in the months since then, so what are Dwolla's current feelings toward the currency? Dwolla's Jordan Lampe elaborated via email with Business Insider:
Dwolla's made the decision to focus its efforts on moving the US Dollar ... We look forward to reevaluating Bitcoin's status as a commodity or currency ... Whereas we work inside and with the constraints, regulations, and stakeholders of the existing US payment systems, Bitcoin is tackling the problem outside ... There's a powerful potential partnership here that I'm personally really excited about. Things just need to fall into place. We hope they do.

PayPal who? Dwolla is the most daring digital payment startup you've never heard of.
The company kills the fees and delays of the old system, but can't fully escape it yet.
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A wall of investors' photos at Dwolla headquarters.
When it comes to radically altering the fabric of digital payments, there is no startup more interesting than Dwolla. The Iowa-based company has built its own alternative to the credit card networks and Automated Clearing House (ACH), the decades-old infrastructure which powers everything from bank transfers to cutting-edge payment companies like Square. Creating its own network from scratch has given Dwolla two powerful advantages over its competitors. First, it can avoid the hefty interchange fees levied by the credit card companies. And second, it can offer instantaneous transfers, avoiding the sometimes multi-day waiting periods associated with ACH. The company says it's on pace to process around $1 billion in transactions this year.
"Dwolla is trying to build an end run around the system."
"Dwolla is trying to build an end run around the system," says Eric Weiss, a tech investor who has backed payment companies like Venmo and Braintree. "The problem with that is, as soon as people need to move their money back into the old system for any reason, you're in big trouble, because all the same fees and wait times will apply." Users need to be able to pay merchants and transfer money to friends without ever leaving the Dwolla system. The network has to reach a large number of merchants and consumers before it's valuable enough to exist in isolation from the traditional banking and credit system. "There is only one company who achieved that kind of scale to date, and that's Paypal," says Weiss.
Last week, Dwolla took a big step towards expanding the utility of its network with the introduction of Dwolla Credit. Backed by billions from Comenity Capital Bank, the service allows Dwolla users to sign up for a virtual credit card that works just like traditional Visa or Mastercard, but doesn't levy the same 2 to 3 percent fees on every transaction. Instead, Dwolla charges a flat rate: free for purchases under $10 and 25 cents for anything over that. Because Dwolla knows both the buyer and seller, users can apply for the line of credit and, if approved, start using it instantly. Depending on the customer's credit rating their limit may be anywhere between $1,000 and $12,000.
Ideally, this would mean merchants using Dwolla could pass on the savings to their customers. In its home state of Iowa, for example, citizens can use Dwolla to pay their taxes or registration fees online, cutting costs from $5.45 down to just 40 cents. But so far no major merchants have begun to offer a similar deal.
"Dwolla is a fascinating company, because they are trying to build a whole new set of rails for moving money," says Mark Egerman, who ran the mobile payments division at the Consumer Financial Protection Bureau. "The ACH system is completely broken, and it's amazing to watch someone take that on." Working at the CFPB, Egerman saw firsthand how hard merchants were hit by the credit card system. "Restaurants were losing huge amounts of money and having to wait weeks to get their funds. Whoever can solve that problem will have a huge impact and a huge business"
But while Egerman is excited about Dwolla's mission, he remains skeptical about their chances. "In order for it to be really useful you need a ton of supply and demand. They are trying to build a two-sided market, and that is very tough, because you can't attract one without the other. It's a chicken and egg problem."
"As soon as people need to move their money back into the old system, for any reason, you're in big trouble."
Ben Milne, Dwolla's founder and CEO, touted the instantaneous aspect of his company's new credit product. "Instead of waiting two to three days for the money to hit their account, it's there the second someone makes a purchase." For a young business with tight cash flow, this could be huge. But once again, it's constrained by the size of the network. Unless they can pay their expenses through the Dwolla network, the merchant will have to transfer that money back into their traditional bank, which tacks on the standard ACH waiting period. And Paypal offers merchants its own take on instantaneous payments through its branded debit card.
Dwolla says that more than 25,000 merchants, nonprofits, and government agencies are currently using its service. But at launch, Dwolla credit will only be accepted by a little over 40 merchants. In an effort to prevent fraud, the network will also be constrained on the consumer side. The product is rolling out in beta to a few hundred Dwolla users each day, and will slowly expand leading up to a public launch in the first quarter of 2014.
Appealing to consumers, not armchair economists.
Milne says the slow rollout will allow Dwolla to work the kinks out of the system and help to prevent fraud, which was rampant during PayPal's early days. According to Paypal founder Max Levchin, the company was earning $14 million in revenue by 2001, but was losing $10 million a month to fraudsters. "We know that you're not going to walk into your local steakhouse tomorrow and pay for dinner with Dwolla," he admits. "But we feel like this is the next big step moving us forward from a service that's interesting to armchair economists and to the average customer looking to save time and money."
Dwolla has raised $22 million in venture capital to date and likely keeps costs far lower than startups based in New York or San Francisco, where rents are extremely high. But it is facing off against a wide array of extremely well-funded companies like Square, PayPal, and even giants like Google, all of whom want to play in the payments market. Dwolla won't confirm it's current number of users, but will say it had 250,000 registered users at the end of 2012. Even if that number has doubled since then, Dwolla still trails well behind the 2 million people registered with Square and the 110 million Paypal accounts.
But the company's investors aren't worried. "Whenever you are creating a company that relies on a network effect, there is going to be a cold start problem," says Albert Wegner, the partner from Union Square Ventures. "But I prefer not to invest in thing where you need to get the timing right. We invested in Dwolla for the same reason we invested in Bitcoin, because we believe that in the long term, payments will need to become cheaper and faster, and we want to back the companies that will be part of the revolution, even if it takes a while to get there."

Bitcoin

Dwolla bitcoin.
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UPDATED 14:41 EDT / MAY 15 2013.
Bitcoin Weekly 2013 May 15: Bitcoin Hard Fork Today, Mt. Gox Dwolla Account Seized by DHS, BitPay Hires Core-Developer Jeff Garzik.
It seems like this is the week for odd financial troubles for Mt. Gox, specifically the events pertaining to a lawsuit between Bitcoin's biggest exchange vs CoinLab and now a warrant seizing the company's Dwolla account.
Fortunately, not all is darkness and rainclouds--the Bitcoin hard fork today is going off without a hitch and barely anybody noticed that it's even happening. A testament to how effective the highly democratized and peer-to-peer infrastructure that makes up the cryptocurrency's internal function can work.
And finally, BitPay is hiring on Bitcoin core-developer Jeff Garzik so that he can work full-time on keeping Bitcoin innovative.
U.S. Department of Homeland Security issue 'seizure warrant' for Mt. Gox's Dwolla Account.
Mid-afternoon yesterday, Dwolla users discovered themselves unable to transfer money to MtGox and were presented with an odd e-mail when they attempted to do so. The e-mails indicated that a recent court order made it impossible to process transfers to Mutum Sigillium (a.k.a Mt. Gox's account.)
A representative of Dwolla told BetaBeat that the mobile payments company does not act without a warrant from the applicable federal agency. "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)," he said. "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."
A copy of the e-mail has been posted to Hacker News:
So far, no other Bitcoin exchange has reported having issues of this sort with Dwolla.
Ars Technica managed to get a copy of the warrant and spoke briefly to DHS representatives; the warrant reveals that the account was sized on account that Mt. Gox might be "transmitting money" without a license. While the DHS has refused to comment on the ongoing investigation, the warrant affadavits that Mark Karpeles originally agreed he would not be in the business of money exchange in the US--according to a document signed with Wells Fargo called the "Money Services Business (MSB) Accounts, Identification of an MSB Customer" form.
Also, according to the affidavit in the warrant, Mt. Gox (nor its subsidiary Mutum Sigillum LLC) are registered with FinCEN.
Bitcoin blockchain hard fork happens today as versions migrate.
Today, Wednesday, May 15th, is the day that the Bitcoin blockchain--the public record of all transactions over the entire peer-to-peer network--hard forks from a previous version to a new version. The newer version will allow updated protocol for v0.8 to use different sized blocks from v0.7 and will cause older Bitcoin clients to fail to operate in the future. Most people and a vast majority of Bitcoin miners are already upgraded so no ill effects are expected.
All in all, this looks a lot like a ho-hum mechanical change for the BTC protocol; but it's also a big and impressive step that shows that the community can move with the times readily and keep up with the changing needs of the infrastructure of the currency.
This is necessary to prevent what happened last time when a disagreement happened between different versions of Bitcoin clients and started to cause a less-controlled hard fork. That too was handled extremely well and while it gave insights into what could happen should a similar event happen with the protocol in the future, it also revealed how robust the current infrastructure is; but it raises questions about the governance and scalability of the community.
In all, both that uncontrolled fork and this carefully agreed upon hard fork between versions right now are beginning to show that a highly democratized infrastructure and a currency that works on a peer-to-peer protocol can still work extremely well even without a central authority.
BitPay brings Bitcoin core-developer Jeff Garzik on board.
One of the best-known Bitcoin merchant payment-services, BitPay, has recently hired Bitcoin core-developer Jeff Garzik to be part of their team. Garzik worked full-time for Red Hat while he worked on and off on the now-world-famous cryptocurrency's protocol and clients.
"BitPay recognizes the need for more resources and developments in the core Bitcoin protocol, especially in the areas of scalability and reliability," says Tony Gallippi, co-founder and CEO of BitPay. "We strongly encourage other Bitcoin companies to do the same, either through crowdfunding efforts or direct contracts, grants, or scholarships."
Getting a job at BitPay will allow Garzik to work full-time on Bitcoin and that could mean a lot of good things for the development of the core principles related to the currency.
"Bitcoin is growing up, no longer a hobby but now a professional payment network used worldwide," says Garzik. "BitPay's contributions to the bitcoin open source software will benefit the entire community. After working on bitcoin open source software for years as a volunteer, I'm excited that BitPay is now sponsoring my work."
In the market of today, corporations are akin to the patron merchant-lords of Venice who would hire on artists in order so that they could work on magnificent works of art. Nowadays it's programmers, developers, and R&D that run the world and BitPay is in the midst of the bitcoin revolution so this could be a very good thing.
There's also little sense of a conflict of interest here (which could be a concern for anyone looking at a business "controlling" a developer) because BitPay is part of the Bitcoin ecology and depends heavily on its proper and healthy operation.
Much applause for BitPay and we hope good things come from Garzik's newfound employment.
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